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SureWest Reports Fourth Quarter and Full Year 2009 Results
Feb 25, 2010 (03:02 PM EST)


Broadband-focused strategy continues to drive long-term revenue, adjusted EBITDA and free cash flow growth

-- Full year revenues increased 5% and adjusted EBITDA grew 13%

-- Full year Broadband revenues grew 19% from a 20% increase in residential revenues and 20% business services growth

-- Free cash flow increased by $33 million to positive $2 million for the full year

-- Debt, net of cash and cash equivalents, reduced by $23 million from year-end 2008, resulting in a net debt to adjusted EBITDA ratio of 2.77x

-- Net income decreased to $3.2 million compared to $18.9 million in 2008 as a result of the $18.8 million gain on the sale of SureWest's wireless assets in 2008

-- Average monthly revenue per customer (ARPU) in triple-play markets increased by 8% to $115

ROSEVILLE, Calif., Feb. 25 /PRNewswire-FirstCall/ -- SureWest Communications (Nasdaq: SURW) today announced operating results for the fourth quarter and full year ended December 31, 2009.

(Logo: http://www.newscom.com/cgi-bin/prnh/20050908/SFSUREWESTLOGO)

Steve Oldham, SureWest's president and chief executive officer, said, "Our results for the year were  driven by top-line revenue growth, increased adjusted EBITDA and three consecutive quarters of positive free cash flow as we continued to drive down net debt. Among our peers, we stood out with 5% revenue growth and 13% adjusted EBITDA growth. Our commercial service sales efforts are showing great results, particularly in the Kansas City market where our business customer count grew 27% from 2008 and pro forma revenues increased by 29%. We also increased residential revenues and ARPU by targeting high-value subscribers looking for the exceptional performance our superior networks deliver.

"Our ability to react quickly to market dynamics and to be flexible with our marketing strategies allowed us to grow the company during 2009's difficult economic and fiercely competitive climate. Having markets in both California and Kansas provides geographic and economic diversity in addition to cost-saving opportunities across the organization that allow for significant benefits.

"Looking ahead, we expect to continue growing our Broadband segment, focusing resources on expanding our business services customer base and increasing residential ARPU and the number of products our customers subscribe to (RGUs). Our competition is not standing still and we are seeing a significant response; however, they can only compete with us on price. We have the ability to cost effectively grow the company today largely because of investments we made over the last several years to extend our superior fiber networks, something our competitors have yet to even begin. Our new video service, Advanced Digital TV, has created an exciting buzz among both fiber and copper network customers in the Sacramento region due to its compelling features, such as Whole Home DVR, lightning-fast channel change times and an intuitive program guide. In Kansas City, improvements to the network in 2010 will allow us to add more HD channels and deliver faster Internet speeds. We are confident our superior networks will drive future growth, and we will continue to execute on the challenges and opportunities ahead in order to drive shareholder value."

The following table highlights financial results for continuing operations on a consolidated basis (dollars are in thousands):

    
    
                                        4th Quarter
    Consolidated              2009     2008      Change      %
                              ----     ----      ------     ---
      Broadband Revenue     $41,566  $36,929     $4,637     13%
      Telecom Revenue        18,733   22,009     (3,276)   (15%)
    Total Revenue            60,299   58,938      1,361      2%
    Adjusted EBITDA          19,585   17,015      2,570     15%
    Income (loss) from
     Continuing Ops            (100) (1,547)      1,447     94%
    Capital Expenditure      14,967   21,922     (6,955)   (32%)
    Free Cash Flow              359  (8,803)      9,162    104%
    Net Debt                215,556  238,848    (23,292)   (10%)
    
                                          Full Year
    Consolidated              2009     2008      Change      %
                             ----      ----      ------     ---
      Broadband Revenue    $161,222 $135,341     25,881     19%
      Telecom Revenue        80,478   95,032    (14,554)   (15%)
    Total Revenue           241,700  230,373     11,327      5%
    Adjusted EBITDA          77,898   69,239      8,659     13%
    Income (loss) from
     Continuing Ops             667      826       (159)   (19%)
    Capital Expenditure      58,330   86,489    (28,159)   (33%)
    Free Cash Flow            2,061  (30,636)    32,697    107%
    Net Debt                215,556  238,848    (23,292)   (10%)
    
    See Non-GAAP measure notes near end of release, and EBITDA, Free
    Cash Flow and Net Debt reconciliations for detailed adjustments.
    

Fourth Quarter Financial Results

Consolidated revenues increased 2% year-over-year to $60.3 million resulting from 13% Broadband revenue growth offset by Telecom revenue declines of 15%. Adjusted EBITDA, which is adjusted for non-cash pension expense of $642 thousand and non-cash stock compensation expense of $495 thousand, increased 15% year-over-year to $19.6 million as the company continued to recognize cost savings from initiatives such as consolidation of office space and employee attrition. Employee counts decreased 3% from the prior year to 893 employees.

Operating expenses, exclusive of depreciation and amortization, remained flat year-over-year at $41.9 million due to reductions in labor expense, and sales and advertising costs offset by increases in video license fees and transport charges related to commercial business revenue growth.

Net loss was $100 thousand compared to a loss of $2.1 million in the fourth quarter of 2008 due primarily to an increase in adjusted EBITDA and a decrease in interest expense. Earnings per share from continuing operations was zero compared to negative $.15 in the fourth quarter of 2008.

Capital expenditures totaled $15 million for the fourth quarter and $58.3 million for the full year compared to $86.5 million in 2008. The company passed 8,800 additional advanced fiber homes in 2009.

As previously announced, SureWest's video service is expanding to reach over 25,000 existing voice and data marketable ILEC homes on the Sacramento copper network, creating the ability to deliver a new IP-based triple-play option to these potential customers. The first 15,000 homes receiving SureWest's extended video became available in January 2010 and the second phase of over 10,000 homes will become available throughout the second quarter of 2010. These 25,000-plus homes will be served with video for a cost of just over $3 million, which is roughly 10% of the average cost to pass a home with fiber. SureWest's projected 2010 capital expenditure remains at $55-60 million, of which approximately two-thirds is scheduled for residential and business success-based investment.

Free cash flow, defined as income from continuing operations plus depreciation and amortization less capital expenditures, increased to positive $359 thousand – a $9.2 million increase year-over-year. The increase is due to adjusted EBITDA growth and lower capital expenditures related to the third quarter 2009 completion of the fiber network expansion. The company continues to focus on increasing revenues and free cash flow by growing residential ARPU and RGUs, and increasing business services revenues.

Cash and cash equivalents increased to $7.5 million from $2.8 million at December 31, 2008. During the year, SureWest paid down $18.6 million in debt resulting in $215.6 million in remaining total debt net of cash and cash equivalents (net debt), and a net debt to adjusted EBITDA ratio of 2.77x.

Broadband Segment Results

Broadband revenues increased 13% year-over-year and accounted for 69% of the company's total revenues, compared to 63% in the fourth quarter of 2008. This growth is due to the company's successful long-term strategy of growing its Broadband operations to counteract the industry-wide trend of declining Telecom segment revenues.

Broadband Residential:

Broadband Residential revenues increased 13% year-over-year to $30.5 million due to 12% growth in ARPU and a 4% increase in RGUs. To illustrate growth trends, Broadband RGUs, subscriber counts and ARPU are detailed both year-over-year and sequentially in the table and text below:

    
    
    
                    Q4 '09 vs. Q4 '08 change       Q4 '09 vs. Q3 '09 change
                    ------------------------       ------------------------
                               Kansas                        Kansas
                  Sacramento    City            Sacramento    City
                    Market     Market  Total      Market     Market  Total
                 ----------   ------   -----   ----------   ------   -----
    Broadband
     Residential
     RGUs                  6%       1%      4%           2%       0%      1%
    Data RGUs              0%       3%      1%           1%       1%      1%
    Video RGUs -
     Fiber & HFC          -4%       1%     -1%           0%       0%      0%
    Voice RGUs            30%      -1%     13%           4%      -1%      2%
    Total
     Residential
     Subscribers          -1%       1%      0%           0%      -1%      0%
    
    

ARPU for triple-play marketable homes, consisting of the company's fiber-to-the-home (FTTH) and hybrid fiber coaxial (HFC) networks, increased 8% year-over-year to $115 from $107. This was due to a fourth quarter 2009 video and data price increase that reinforced the company's ability to maintain growth while targeting customers who value superior service offerings. Additionally, continued customer demand for higher data speeds, HDTV and DVR impacted ARPU growth.

Broadband Business:

Broadband Business revenues increased by $1.3 million, or 14%, year-over-year to $10.3 million. Customer counts increased 9% year-over-year to 7,100 and ARPU grew 5% from the prior year to $492.  

Broadband Business growth expectations remain high in both Sacramento and Kansas City due to several operational and sales factors. The company has the competitive advantage of being able to add business customers at lower initial investment costs where service is provided over its extensive fiber network. Aggressive sales and renewal tactics, superior customer satisfaction levels and catered packages coupled with a host of product solutions including wireless backhaul, data center services and the upcoming launches of Hosted IP PBX and SIP Trunking will drive future growth. And as the economy begins to turn and businesses return, SureWest anticipates it will capture additional business customers.  

Telecom Segment Results

The Telecom segment, which only services the Sacramento market, experienced revenue declines of 15% year-over-year to $18.7 million from the industry-wide trend of residential access line attrition and associated access revenue declines. The Telecom segment accounted for just 31% of total revenues compared to 37% in the fourth quarter of 2008 as the company continues to successfully grow its Broadband segment and perform as a Broadband-driven company. Forecasts anticipate Telecom segment declines will begin to slow over the next several years.

Telecom Residential:

Telecom Residential revenues declined 26% year-over-year to $5.4 million resulting from losses in Telecom voice RGUs of 29% year-over-year. The company continues to mitigate Telecom voice line losses as customers elect to move to its Broadband Voice over IP (VoIP) product. Though 15,500 Telecom Residential voice RGUs were lost on a year-over-year basis, 7,100, or 46%, of that number was reclaimed through new growth in SureWest's Broadband VoIP service.

Telecom Business:

Telecom Business revenues declined 5% year-over-year to $8.6 million due to a decline in small- and medium-sized business customers, particularly those impacted by California's depressed real estate industry. In addition, some carrier consolidation activity took place during the year. Growth opportunities are expected once the Sacramento office market recovers and businesses begin to return.

Telecom Access:

Telecom Access revenues decreased $950 thousand year-over-year to $4.5 million due to scheduled reductions in the California High Cost Fund (CHCF) subsidies and a decline in switched access revenues. As previously announced, CHCF subsidies are scheduled to decline by $2 million per year through 2011, in line with a negotiated transition.

Non-GAAP Measures

In addition to the results presented in accordance with generally accepted accounting principles (GAAP) throughout this press release; the company has presented non-GAAP financial measures such as adjusted EBITDA, free cash flow and net debt. Adjusted EBITDA represents net income (loss) from continuing operations excluding amounts for income taxes, depreciation and amortization, non-cash pension and certain post-retirement benefits, non-cash stock compensation, and all other non-operating income/expenses. Free cash flow represents net income (loss) from continuing operations plus depreciation and amortization less capital expenditures. Net debt is a measure of total debt (current, plus long-term) less cash and cash equivalents. The company believes these non-GAAP measures, viewed in addition to but not in lieu of its reported GAAP results, provide useful information to investors as they are an integral part of the internal evaluation of operating performance. In addition, they are measures that the company uses to evaluate management's effectiveness. Reconciliation to the comparable GAAP measures is provided in the accompanying financial and operating summaries. SureWest's non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies.

Conference Call and Webcast

SureWest will host a conference call providing details of its results and business strategy at 5 p.m. Eastern Time on Thursday, February 25, 2010. Open to the public, a simultaneous live webcast of the call will be available from the company's investor relations Web site at www.surw.com. A telephone replay of the call will be available shortly after completion through Thursday, March 4 by dialing 888.286.8010 and entering pass code 36995627. Visit www.surw.com for updates prior to the call.  

About SureWest

SureWest Communications (www.surewest.com) is a leading integrated communications provider and the bandwidth leader in the markets it serves. Headquartered in Northern California for more than 95 years, the company expanded into the Kansas City region in February 2008 with the acquisition of Everest Broadband, Inc. and offers bundled residential and commercial services that include IP-based digital and high-definition television, high-speed Internet, Voice over IP, and local and long distance telephone. SureWest was the nation's first provider to launch residential HDTV over an IP network and offers one of the nation's fastest symmetrical Internet services with speeds of up to 50 Mbps in each direction on its fiber-to-the-home network.

Safe Harbor Statement

Statements made in this news release that are not historical facts are forward-looking statements and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995.  In some cases, these forward-looking statements may be identified by the use of words such as may, will, should, expect, plan, anticipate, or project or the negative of those words or other comparable words.  We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  Such forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause the company's actual results to differ from those projected in such forward-looking statements.

Important factors that could cause actual results to differ from those set forth in the forward-looking statements include, but are not limited to, advances in telecommunications technology, changes in the telecommunications regulatory environment, changes in the financial stability of other telecommunications providers who are customers of the company, changes in competition in markets in which the company operates, adverse circumstances affecting the economy in California, Kansas and Missouri in general, and in the greater Sacramento, California and greater Kansas City, Kansas and Missouri areas in particular, the availability of future financing, changes in the demand for services and products, new product and service development and introductions, and pending and future litigation.

Contacts:

Ron Rogers

Corporate Communications

916-746-3123

r.rogers@surewest.com


Misty Wells

Investor Relations

916-786-1799

m.wells@surewest.com


    
    
    
    
    
                            SUREWEST COMMUNICATIONS                       
                     CONSOLIDATED STATEMENTS OF OPERATIONS                
          (Unaudited; Amounts in thousands, except per share amounts)     
                                                                          
                                      Quarter    Quarter                  
                                        Ended      Ended   
                                      December   December     $       %   
                                      31, 2009   31, 2008  Change  Change 
                                     ---------  ---------  ------  ------ 
    Operating revenues:                                                   
      Broadband                        $41,566    $36,929  $4,637      13%
      Telecom                           18,733     22,009  (3,276)    -15%
                                        ------     ------  ------     --- 
        Total operating revenues        60,299     58,938   1,361       2%
                                                                          
    Operating expenses:                                                   
      Cost of services and products                                       
       (exclusive of depreciation                                         
       and amortization)                24,929     23,875   1,054       4%
      Customer operations and                                             
       selling                           8,173      9,260  (1,087)    -12%
      General and administrative         8,749      8,578     171       2%
      Depreciation and amortization     15,426     14,666     760       5%
                                        ------     ------     ---      -- 
        Total operating expenses        57,277     56,379     898       2%
                                        ------     ------     ---      -- 
                                                                          
    Income from operations               3,022      2,559     463      18%
                                                                          
    Other income (expense):                                               
         Investment income                  22         83     (61)    -73%
         Interest expense               (2,916)    (3,281)    365      11%
         Other, net                        264        261       3       1%
                                           ---        ---      --      -- 
        Total other income                                                
         (expense), net                 (2,630)    (2,937)    307      10%
                                        ------     ------     ---      -- 
                                                                          
      Income (loss) from continuing                                       
      operations before income taxes       392       (378)    770     204%
                                                                          
    Income tax expense                     492      1,169    (677)    -58%
                                           ---      -----    ----     --- 
                                                                          
    Loss from continuing operations       (100)    (1,547)  1,447      94%
                                                                          
    Discontinued operations, net of tax:                                  
      Loss from discontinued                                              
       operations                           $-       (229)    229     100%
      Loss on sale of discontinued                                        
       operations                            -       (358)    358     100%
                                            --       ----     ---     --- 
        Total discontinued                                                
         operations                         $-       (587)    587     100%
                                            ==       ----     ---     --- 
                                                                          
    Net loss                             $(100)   $(2,134) $2,034      95%
                                         =====    =======  ======      == 
                                                                          
    Basic and diluted earnings
     per common share:                          
      Loss from continuing                                                
       operations                           $-     $(0.11)  $0.11         
      Discontinued operations, net                                        
       of tax                                -      (0.04)   0.04         
                                           ---      -----    ----         
      Net loss per basic common                                           
       share                                $-     $(0.15)  $0.15         
                                           ===     ======   =====         
                                                                          
                                                                          
    Shares of common stock used to
     calculate earnings per share:          
      Basic and diluted                 13,956     13,976     (20)        
                                        ======     ======     ===         
    
    
    
                             SUREWEST COMMUNICATIONS                        
                      CONSOLIDATED STATEMENTS OF OPERATIONS                 
           (Unaudited; Amounts in thousands, except per share amounts)      
                                                                            
                                        Quarter    Quarter                  
                                          Ended      Ended   
                                        December  September     $       %   
                                        31, 2009   30, 2009  Change  Change 
                                       ---------  ---------  ------  ------ 
    Operating revenues:                                                     
      Broadband                          $41,566    $40,175  $1,391       3%
      Telecom                             18,733     19,354    (621)     -3%
                                          ------     ------    ----      -- 
        Total operating revenues          60,299     59,529     770       1%
                                                                            
    Operating expenses:                                                     
      Cost of services and products                                         
       (exclusive of depreciation and                                       
       amortization)                      24,929     24,563     366       1%
      Customer operations and selling      8,173      9,017    (844)     -9%
      General and administrative           8,749      8,073     676       8%
      Depreciation and amortization       15,426     15,260     166       1%
                                          ------     ------     ---      -- 
        Total operating expenses          57,277     56,913     364       1%
                                          ------     ------     ---      -- 
                                                                            
    Income from operations                 3,022      2,616     406      16%
                                                                            
    Other income (expense):                                                 
         Investment income                    22         28      (6)    -21%
         Interest expense                 (2,916)    (3,046)    130       4%
         Other, net                          264        205      59      29%
                                             ---        ---      --      -- 
        Total other income (expense),                                       
         net                              (2,630)    (2,813)    183       7%
                                          ------     ------     ---      -- 
                                                                            
       Income (loss) from continuing                                        
       operations before income taxes        392       (197)    589     299%
                                                                            
    Income tax expense                       492         14     478      nm 
                                             ---         --     ---      -- 
                                                                            
    Loss from continuing operations         (100)      (211)    111      53%
                                                                            
    Discontinued operations, net of tax:                                    
      Loss from discontinued                                                
       operations                              -          -       -       - 
      Loss on sale of discontinued                                          
       operations                              -          -       -       - 
                                              --         --      --      -- 
        Total discontinued operations          -          -       -       - 
                                              ==         ==      ==      == 
                                                                            
    Net loss                               $(100)     $(211)   $111      53%
                                           =====      =====    ====      == 
                                                                            
    Basic and diluted earnings per
     common share:                            
      Loss from continuing operations         $-     $(0.02)  $0.02         
      Discontinued operations, net of                                       
       tax                                     -          -       -         
                                              --         --      --         
      Net loss per basic common share         $-     $(0.02)  $0.02         
                                              ==     ======   =====         
                                                                            
    Shares of common stock used to
     calculate earnings per share:            
      Basic and diluted                   13,956     13,936      20         
                                          ======     ======      ==         
    
    
                            SUREWEST COMMUNICATIONS                        
                       CONSOLIDATED STATEMENTS OF INCOME                   
          (Unaudited; Amounts in thousands, except per share amounts)      
                                                                           
                                      Twelve     Twelve                    
                                      Months     Months                    
                                       Ended      Ended   
                                     December   December      $        %   
                                     31, 2009   31, 2008   Change   Change 
                                    ---------  ---------   ------   ------ 
    Operating revenues:                                                    
      Broadband                      $161,222   $135,341   $25,881      19%
      Telecom                          80,478     95,032   (14,554)    -15%
                                       ------     ------   -------     --- 
        Total operating revenues      241,700    230,373    11,327       5%
                                                                           
    Operating expenses:                                                    
      Cost of services and                                                 
       products (exclusive of                                              
       depreciation and                                                    
       amortization)                   99,624     89,684     9,940      11%
      Customer operations and                                              
       selling                         33,770     32,933       837       3%
      General and administrative       35,009     37,588    (2,579)     -7%
      Depreciation and amortization    59,724     55,027     4,697       9%
                                       ------     ------     -----      -- 
        Total operating expenses      228,127    215,232    12,895       6%
                                      -------    -------    ------      -- 
                                                                           
    Income from operations             13,573     15,141    (1,568)    -10%
                                                                           
    Other income (expense):                                                
      Investment income                   121        676      (555)    -82%
      Interest expense                (11,318)   (12,126)      808       7%
      Other, net                          297        274        23       8%
                                          ---        ---        --      -- 
        Total other income                                                 
         (expense), net               (10,900)   (11,176)      276       2%
                                      -------    -------       ---      -- 
                                                                           
    Income from continuing                                                 
     operations before income taxes     2,673      3,965    (1,292)    -33%
                                                                           
    Income tax expense                  2,006      3,139    (1,133)    -36%
                                        -----      -----    ------     --- 
                                                                           
    Income from continuing                                                 
     operations                           667        826      (159)    -19%
                                                                           
    Discontinued operations, net of tax:                                   
      Income (loss) from                                                   
       discontinued operations            (69)       103      (172)   -167%
      Gain on sale of discontinued                                         
       operations                       2,568     18,004   (15,436)    -86%
                                        -----     ------   -------     --- 
        Total discontinued                                                 
         operations                     2,499     18,107   (15,608)    -86%
                                        -----     ------   -------     --- 
                                                                           
    Net income                         $3,166    $18,933  $(15,767)    -83%
                                       ======    =======  ========     === 
                                                                           
    Basic and diluted earnings per
     common share:                           
      Income from continuing                                               
       operations                       $0.05      $0.06    $(0.01)        
      Discontinued operations, net                                         
       of tax                            0.18       1.28     (1.10)        
                                         ----       ----     -----         
      Net income per basic common                                          
       share                            $0.23      $1.34    $(1.11)        
                                        =====      =====    ======         
                                                                           
    Shares of common stock used to
     calculate earnings per share:           
      Basic                            13,996     14,096      (100)        
                                       ======     ======      ====         
      Diluted                          13,996     14,099      (103)        
                                       ======     ======      ====         
    
    
    
    
    
    SureWest Communications                                          
    Unaudited Pro Forma Selected Financial Results (3)               
    (on a pro forma consolidated and a pro forma segment basis)      
      (Amounts in thousands)                                         
                                                                     
                                                              
                                                              
                                                               
                                      For 2008               Twelve 
                                   Quarters Ended:           Months 
                                  ----------------            Ended 
                          March    June  September December  December
      Consolidated          31      30       30        31    31, 2008 
                          -----    ----  --------- --------  --------        
    Operating
     revenues  (1)                                          
    Residential          $34,647 $34,621   $33,959  $34,180  $137,407
    Business              16,946  18,188    19,342   18,218    72,694
    Access                 6,647   6,393     6,308    5,922    25,270
    Other                    630     650       661      618     2,559
                             ---     ---       ---      ---     -----
    Total operating                                                  
     revenues from                                                   
     external customers   58,870  59,852    60,270   58,938   237,930
                          ------  ------    ------   ------   -------
                                                                     
    Operating expenses                                               
     (1)                  41,274  39,903    42,034   41,713   164,924
    Depreciation and                                                 
     amortization         13,259  14,075    14,219   14,666    56,219
                          ------  ------    ------   ------    ------
    Income from                                                      
     operations           $4,337  $5,874    $4,017   $2,559   $16,787
                          ======  ======    ======   ======   =======
                                                                     
                                                                     
                                                                     
                                                              
                                                              
                                                               
                                      For 2009               Twelve 
                                   Quarters Ended:           Months 
                                  -----------------           Ended
                          March    June  September December  December        
      Consolidated          31      30       30        31    31, 2009        
                          -----    ----  --------- --------  --------        
    Operating revenues  (1)                                          
    Residential          $35,713 $36,180   $35,246  $35,845  $142,984
    Business              18,633  18,704    18,705   18,969    75,011
    Access                 6,031   5,351     5,031    4,942    21,355
    Other                    565     695       547      543     2,350
                             ---     ---       ---      ---     -----
    Total operating                                                  
     revenues from                                                   
     external customers   60,942  60,930    59,529   60,299   241,700
                          ------  ------    ------   ------   -------
                                                                     
    Operating expenses                                               
     (1)                  42,812  42,087    41,653   41,851   168,403
    Depreciation and                                                 
     amortization         14,810  14,228    15,260   15,426    59,724
                          ------  ------    ------   ------    ------
    Income from                                                      
     operations           $3,320  $4,615    $2,616   $3,022   $13,573
                          ======  ======    ======   ======   =======
    
    
    
      Consolidated Reconciliation of Adjusted                               
     EBITDA to Net Income (Loss) from Continuing Operations                 
                                                                            
                                                                      
                                                                      
                                                                     
                                         For 2008                   Twelve 
                                      Quarters Ended:               Months 
                                     ----------------                Ended
                           March     June    September  December   December 
                             31        30        30         31     31, 2008 
                           -----     ----    ---------  --------   -------- 
    Net income (loss)                                                       
     from continuing                                                        
     operations              $376    $1,729       $622   $(1,547)    $1,180 
    Add back: income                                                        
     tax expense              489     1,139        582     1,169      3,379 
    Less: other                                                             
     (income)/expense       3,472     3,006      2,813     2,937     12,228 
                            -----     -----      -----     -----     ------ 
    Income from                                                             
     operations             4,337     5,874      4,017     2,559     16,787 
    Add (subtract):                                                         
      Depreciation and                                                      
       amortization        13,259    14,075     14,219    14,666     56,219 
      Non-cash pension                                                      
       (income)/expense      (393)     (524)      (458)     (433)    (1,808)
      Non-cash stock                                                        
       compensation                                                         
       expense                141       345        170       223        879 
                              ---       ---        ---       ---        --- 
    Adjusted EBITDA (2)   $17,344   $19,770    $17,948   $17,015    $72,077 
                          =======   =======    =======   =======    ======= 
                                                                            
    Other data:                                                             
    Total debt           $277,830  $231,828   $233,827  $241,688       n/a    
                                                                            
                                                                            
                                                                            
                                                                      
                                                                      
                                                                       
                                         For 2009                  Twelve 
                                     Quarters Ended:               Months 
                                    -----------------                Ended
                           March     June    September  December   December
                             31        30        30         31     31, 2009
                           -----     ----    ---------  --------   -------- 
    Net income (loss)                                                       
     from continuing                                                        
     operations               $79      $899      $(211)    $(100)      $667 
    Add back: income                                                        
     tax expense              884       616         14       492      2,006 
    Less: other                                                             
     (income)/expense       2,357     3,100      2,813     2,630     10,900 
                            -----     -----      -----     -----     ------ 
    Income from                                                             
     operations             3,320     4,615      2,616     3,022     13,573 
    Add (subtract):                                                         
      Depreciation and                                                      
       amortization        14,810    14,228     15,260    15,426     59,724 
      Non-cash pension                                                      
       (income)/expense       755       552        642       642      2,591 
      Non-cash stock                                                        
       compensation                                                         
       expense                608       464        443       495      2,010 
                              ---       ---        ---       ---      ----- 
    Adjusted EBITDA (2)   $19,493   $19,859    $18,961   $19,585    $77,898 
                          =======   =======    =======   =======    ======= 
                                                                            
    Other data:                                                             
    Total debt           $240,187  $236,685   $226,683  $223,045        n/a  
    
    
    SureWest Communications                                          
    Unaudited Pro Forma Selected Financial Results (3)               
    (on a pro forma consolidated and a pro forma segment basis)      
      (Amounts in thousands)                                         
                                                                
                                        For 2008                
                                     Quarters Ended:                Twelve    
                                    ----------------             Months Ended 
                          March     June   September  December   December 31, 
      Broadband             31       30        30         31         2008     
                          -----     ----   ---------  --------    ------- 
    Data                 $10,128  $10,338    $10,348    10,491    $41,305 
    Video                 10,359   10,365     10,264    10,522     41,510 
    Voice                  5,258    5,395      5,542     5,933     22,128 
                           -----    -----      -----     -----     ------ 
    Total residential                                                     
     revenues             25,745   26,098     26,154    26,946    104,943 
    Business               7,899    8,374      9,271     9,084     34,628 
    Access                   305      370        414       449      1,538 
    Other                    439      459        441       450      1,789 
                             ---      ---        ---       ---      ----- 
    Total operating                                                       
     revenues from                                                        
     external customers   34,388   35,301     36,280    36,929    142,898 
    Intersegment                                                          
     revenues                140      141        138       120        539 
                             ---      ---        ---       ---        --- 
    Total operating                                                       
     revenues             34,528   35,442     36,418    37,049    143,437 
                          ------   ------     ------    ------    ------- 
                                                                          
      Operating expenses                                                  
       without                                                            
       depreciation       30,742   31,085     32,844    32,698    127,369 
    Depreciation and                                                      
     amortization          9,597   10,335     10,700    11,051     41,683 
                           -----   ------     ------    ------     ------ 
      Loss from                                                           
       operations        $(5,811) $(5,978)   $(7,126)  $(6,700)  $(25,615)
                         =======  =======    =======   =======   ======== 
                                                                              
                                                                              
                                                                              
                                                                  
                                                                  
                                        For 2009                  
                                    Quarters Ended:               Twelve      
                                   -----------------           Months Ended 
                          March     June   September  December December 31, 
      Broadband             31       30        30         31       2009     
                          -----     ----   ---------  --------    ------- 
    Data                 $10,763  $11,184    $11,236   $11,878    $45,061 
    Video                 11,689   11,995     11,711    12,127     47,522 
    Voice                  6,399    6,594      6,442     6,462     25,897 
                           -----    -----      -----     -----     ------ 
    Total residential                                                     
     revenues             28,851   29,773     29,389    30,467    118,480 
    Business               9,585    9,615     10,018    10,336     39,554 
    Access                   384      398        427       419      1,628 
    Other                    402      473        341       344      1,560 
                             ---      ---        ---       ---      ----- 
    Total operating                                                       
     revenues from                                                        
     external customers   39,222   40,259     40,175    41,566    161,222 
    Intersegment                                                          
     revenues                 91       94         93       160        438 
                              --       --         --       ---        --- 
    Total operating                                                       
     revenues             39,313   40,353     40,268    41,726    161,660 
                          ------   ------     ------    ------    ------- 
                                                                          
      Operating expenses                                                  
       without                                                            
       depreciation       34,695   34,294     34,615    34,247    137,851 
    Depreciation and                                                      
     amortization         11,620   11,283     12,199    12,257     47,359 
                          ------   ------     ------    ------     ------ 
      Loss from                                                           
       operations        $(7,002) $(5,224)   $(6,546)  $(4,778)  $(23,550)
                         =======  =======    =======   =======   ======== 
    
    
    
      Broadband Reconciliation of Adjusted EBITDA to Net Loss                 
       from Continuing Operations                                             
                                                                              
                                                                  
                                                                  
                                        For 2008                  
                                     Quarters Ended:               Twelve     
                                    ----------------            Months Ended 
                          March     June   September  December  December 31, 
                            31       30        30         31        2008     
                          -----     ----   ---------  --------   -------- 
    Loss from                                                            
     continuing                                                          
     operations          $(5,416) $(5,391)   $(5,856)  $(6,667)  $(23,330)
    Add back: income                                                     
     tax benefits         (4,054)  (3,690)    (3,994)   (3,179)   (14,917)
    Less: other                                                          
     (income)/expense      3,659    3,103      2,724     3,146     12,632 
                           -----    -----      -----     -----     ------ 
    Loss from operations  (5,811)  (5,978)    (7,126)   (6,700)   (25,615)
    Add (subtract):                                                      
      Depreciation and                                                   
       amortization        9,597   10,335     10,700    11,051     41,683 
      Non-cash pension                                                   
       (income)/expense     (162)    (212)      (186)     (178)      (738)
      Non-cash stock                                                     
       compensation                                                      
       expense                54      173         77       103        407 
                              --      ---         --       ---        --- 
    Adjusted EBITDA (2)   $3,678   $4,318     $3,465    $4,276    $15,737 
                          ======   ======     ======    ======    ======= 
                                                                              
                                                                              
                                                                              
                                                                  
                                                                  
                                        For 2009                  
                                    Quarters Ended:                Twelve    
                                   -----------------            Months Ended 
                          March     June   September  December  December 31, 
                            31       30        30         31        2009     
                          -----     ----   ---------  --------   -------- 
    Loss from                                                            
     continuing                                                          
     operations          $(5,398) $(4,884)   $(5,619)  $(4,881)  $(20,782)
    Add back: income                                                     
     tax benefits         (3,656)  (3,312)    (3,810)   (2,675)   (13,453)
    Less: other                                                          
     (income)/expense      2,052    2,972      2,883     2,778     10,685 
                           -----    -----      -----     -----     ------ 
    Loss from operations  (7,002)  (5,224)    (6,546)   (4,778)   (23,550)
    Add (subtract):                                                      
      Depreciation and                                                   
       amortization       11,620   11,283     12,199    12,257     47,359 
      Non-cash pension                                                   
       (income)/expense      327       56        197       199        779 
      Non-cash stock                                                     
       compensation                                                      
       expense               304      231        221       246      1,002 
                             ---      ---        ---       ---      ----- 
    Adjusted EBITDA (2)   $5,249   $6,346     $6,071    $7,924    $25,590 
                          ======   ======     ======    ======    ======= 
    
    
    
    SureWest Communications                                          
    Unaudited Pro Forma Selected Financial Results (3)               
    (on a pro forma consolidated and a pro forma segment basis)      
      (Amounts in thousands)                                         
                                                             
                                      For 2008               
                                   Quarters Ended:               Twelve   
                                  ----------------            Months Ended
                          March    June  September December   December 31,
      Telecom               31      30       30        31         2008    
                          -----    ----  --------- --------       -------
    Residential           $8,902  $8,523    $7,805   $7,234       $32,464
    Business               9,047   9,814    10,071    9,134        38,066
    Access                 6,342   6,023     5,894    5,473        23,732
    Other                    191     191       220      168           770
                             ---     ---       ---      ---           ---
    Total operating                                                      
     revenues from                                                       
     external customers   24,482  24,551    23,990   22,009        95,032
    Intersegment                                                         
     revenues              4,343   4,560     4,706    4,846        18,455
                           -----   -----     -----    -----        ------
    Total operating                                                      
     revenues             28,825  29,111    28,696   26,855       113,487
                          ------  ------    ------   ------       -------
                                                                         
    Operating expenses                                                   
     without                                                             
     depreciation         15,015  13,519    14,034   13,981        56,549
    Depreciation and                                                     
     amortization          3,662   3,740     3,519    3,615        14,536
                           -----   -----     -----    -----        ------
    Income from                                                          
     operations          $10,148 $11,852   $11,143   $9,259       $42,402
                         ======= =======   =======   ======       =======
                                                                         
                                                                         
                                                                         
                                                             
                                                             
                                      For 2009               
                                   Quarters Ended:                Twelve   
                                  -----------------            Months Ended
                          March    June  September December    December 31,
      Telecom               31      30       30        31          2009    
                          -----    ----  --------- --------       -------
    Residential           $6,862  $6,407    $5,857   $5,378       $24,504
    Business               9,048   9,089     8,687    8,633        35,457
    Access                 5,647   4,953     4,604    4,523        19,727
    Other                    163     222       206      199           790
                             ---     ---       ---      ---           ---
    Total operating                                                      
     revenues from                                                       
     external customers   21,720  20,671    19,354   18,733        80,478
    Intersegment                                                         
     revenues              4,874   4,981     5,043    4,999        19,897
                           -----   -----     -----    -----        ------
    Total operating                                                      
     revenues             26,594  25,652    24,397   23,732       100,375
                          ------  ------    ------   ------       -------
                                                                         
    Operating expenses                                                   
     without                                                             
     depreciation         13,082  12,868    12,174   12,763        50,887
    Depreciation and                                                     
     amortization          3,190   2,945     3,061    3,169        12,365
                           -----   -----     -----    -----        ------
    Income from                                                          
     operations          $10,322  $9,839    $9,162   $7,800       $37,123
                         =======  ======    ======   ======       =======
    
    
    
      Telecom Reconciliation of Adjusted EBITDA to Net Income                 
       from Continuing Operations                                             
                                                                              
                                                                  
                                                                  
                                        For 2008                  
                                     Quarters Ended:               Twelve     
                                    ----------------            Months Ended
                          March     June   September  December  December 31,
                            31       30        30         31        2008    
                          -----     ----   ---------  --------    ------- 
    Net income from                                                       
     continuing                                                           
     operations           $5,792   $7,120     $6,478    $5,120    $24,510 
    Add back: income                                                      
     tax expense           4,543    4,829      4,576     4,348     18,296 
    Less: other                                                           
     (income)/expense       (187)     (97)        89      (209)      (404)
                            ----      ---         --      ----       ---- 
    Income from                                                           
     operations           10,148   11,852     11,143     9,259     42,402 
    Add (subtract):                                                       
      Depreciation and                                                    
       amortization        3,662    3,740      3,519     3,615     14,536 
      Non-cash pension                                                    
       (income) /                                                         
       expense              (231)    (312)      (272)     (255)    (1,070)
      Non-cash stock                                                      
       compensation                                                       
       expense                87      172         93       120        472 
                              --      ---         --       ---        --- 
    Adjusted EBITDA (2)  $13,666  $15,452    $14,483   $12,739    $56,340 
                         =======  =======    =======   =======    ======= 
                                                                              
                                                                              
                                                                              
                                                                 
                                                                 
                                                                 
                               For 2009 Quarters Ended:            Twelve     
                               -------------------------        Months Ended 
                          March     June   September  December  December 31, 
                            31       30        30         31        2009     
                          -----     ----   ---------  --------    ------- 
    Net income from                                                       
     continuing                                                           
     operations           $5,477   $5,783     $5,408    $4,781    $21,449 
    Add back: income                                                      
     tax expense           4,540    3,928      3,824     3,167     15,459 
    Less: other                                                           
     (income)/expense        305      128        (70)     (148)       215 
                             ---      ---        ---      ----        --- 
    Income from                                                           
     operations           10,322    9,839      9,162     7,800     37,123 
    Add (subtract):                                                       
      Depreciation and                                                    
       amortization        3,190    2,945      3,061     3,169     12,365 
      Non-cash pension                                                    
       (income) /                                                         
       expense               428      496        445       443      1,812 
      Non-cash stock                                                      
       compensation                                                       
       expense               304      233        222       249      1,008 
                             ---      ---        ---       ---      ----- 
    Adjusted EBITDA (2)  $14,244  $13,513    $12,890   $11,661    $52,308 
                         =======  =======    =======   =======    ======= 
                                                                              
                                                                              
                                                                              
                                                                              
    (1) External customers only.                                              
                                                                              
    (2) Adjusted EBITDA represents net income (loss) from continuing          
        operations excluding amounts for income taxes; depreciation and 
        amortization; non-cash pension and certain post-retirement benefits;
        non-cash stock compensation; and all other non-operating 
        income/expenses. Adjusted EBITDA is a common measure of operating 
        performance in the telecommunications industry. Adjusted EBITDA is not
        a measure of financial performance under United States generally
        accepted accounting principles and should not be considered in 
        isolation or as a substitute for consolidated net income (loss) as a
        measure of performance.          
                                                                              
    (3) The pro forma selected financial results are based on the historical  
        consolidated financial statements of SureWest Communications and 
        Everest Broadband, Inc. ("Everest") and have been adjusted to reflect
        the Everest acquisition, which was consummated on February 13, 2008. 
        The unaudited condensed combined pro forma financial statements give
        the effect as if the acquisition had occurred on January 1, 2008.  On
        May 9, 2008, the sale of the Wireless assets was completed and the pro
        forma financial results reflect for all periods presented the 
        classification of the sold Wireless operations as discontinued 
        operations. Also, on February 27, 2009, SureWest Communications 
        completed the sale of its Tower Assets and the pro forma financial
        results reflect the classification of the operations for the Tower
        Assets sold as discontinued operations for all periods presented. 
    
    
    
    
    
                SUREWEST COMMUNICATIONS            
              CONSOLIDATED BALANCE SHEETS          
           (Unaudited; Amounts in thousands)       
                                                   
                                                   
                            December 31,  December 31, 
                                2009          2008 
                                ----          ---- 
    ASSETS                                         
      Current assets:                              
        Cash and cash                              
         equivalents          $7,489        $2,840 
        Short-term                                 
         investments           4,306           610 
        Accounts                                   
         receivable,                               
         net                  19,734        21,415 
        Income tax                                 
         receivable            2,221         6,391 
        Inventories            5,263         6,527 
        Prepaid                                    
         expenses              3,704         4,539 
        Deferred                                   
         income taxes          3,373         2,989 
        Other current                              
         assets                1,760         1,752 
        Assets held                                
         for sale              6,009         7,388 
        Assets of                                  
         discontinued                              
         operations                -         5,002 
                                 ---         ----- 
      Total current                                
       assets                 53,859        59,453 
                                                   
      Property, plant                              
       and equipment,                              
       net                   517,230       515,843 
                                                   
      Intangible and other assets:                 
        Long-term                                  
         investments               -         3,508 
        Customer                                   
         relationships,                            
          net                  3,847         5,062 
        Goodwill              45,814        45,814 
        Deferred                                   
         charges and                               
         other assets          2,113         4,129 
                               -----         ----- 
                              51,774        58,513 
                              ------        ------ 
                            $622,863      $633,809 
                            ========      ======== 
                                                   
                                                   
    LIABILITIES AND SHAREHOLDERS' EQUITY           
                                                   
      Current liabilities:                         
        Current                                    
         portion of                                
         long-term debt                             
         and capital                               
         lease                                     
         obligations         $15,636       $15,643 
        Accounts                                   
         payable               2,547         2,798 
        Other accrued                              
         liabilities          18,315        19,050 
        Advance                                    
         billings and                              
         deferred                                  
         revenues              8,580         8,960 
        Accrued                                    
         compensation                              
         and pension                               
         benefits              9,172        11,292 
        Liabilities of                             
         discontinued                              
         operations                -           453 
                                 ---           --- 
      Total current                                
       liabilities            54,250        58,196 
                                                   
      Long-term debt         207,409       226,045 
      Deferred income                              
       taxes                  54,856        46,358 
      Accrued pension                              
       and other post-                             
       retirement                                  
       benefits               32,451        36,046 
      Other                                        
       liabilities and                             
       deferred                                    
       revenues                4,714         5,819 
                                                   
      Commitments and                              
       contingencies               –             – 
                                                   
      Shareholders' equity:                        
        Common stock,                              
         without par                               
         value; 100,000                            
         shares                                    
         authorized,                               
         14,148 and                                
         14,082 shares                             
         issued and                                
         outstanding at                            
         December 31,                              
         2009 and                                  
         December 31,                              
         2008,                                     
         respectively        146,844       146,558 
        Accumulated                                
         other                                     
         comprehensive                             
         loss                (15,280)      (19,248)
        Retained                                   
         earnings            137,619       134,035 
                             -------       ------- 
      Total                                        
       shareholders'                               
       equity                269,183       261,345 
                             -------       ------- 
                            $622,863      $633,809 
                            ========      ======== 
    
    
    
    
    
                           SUREWEST COMMUNICATIONS                       
     ADJUSTED EBITDA RECONCILIATION TO NET INCOME (LOSS) FROM CONTINUING 
                                  OPERATIONS                             
                      (Unaudited; Amounts in thousands)                  
                                                                         
                                                                         
                                          Twelve Months ended December   
                                                     31, 2009            
                                          ----------------------------   
                                        Broadband  Telecom  Consolidated 
                                        ---------  -------  ------------ 
                                                                         
    Income (loss) from continuing                                        
     operations                          $(20,782) $21,449          $667 
                                                                         
    Add (subtract):                                                      
                                                                         
      Income taxes (benefit)/expense      (13,453)  15,459         2,006 
                                                                         
      Other (income)/expense               10,685      215        10,900 
                                                                         
      Depreciation and amortization        47,359   12,365        59,724 
                                                                         
      Non-cash pension (income)/expense       779    1,812         2,591 
                                                                         
      Non-cash stock compensation                                        
       expense                              1,002    1,008         2,010 
                                                                         
                                          -------  -------       ------- 
    Adjusted EBITDA (1)                   $25,590  $52,308       $77,898 
                                          =======  =======       ======= 
                                                                         
                                                                         
                                                                         
                                          Twelve Months ended December   
                                                     31, 2008            
                                          ----------------------------   
                                        Broadband  Telecom  Consolidated 
                                        ---------  -------  ------------ 
                                                                         
    Income (loss) from continuing                                        
     operations                          $(23,684) $24,510          $826 
                                                                         
    Add (subtract):                                                      
                                                                         
      Income taxes (benefit)/expense      (15,157)  18,296         3,139 
                                                                         
      Other (income)/expense               11,580     (404)       11,176 
                                                                         
      Depreciation and amortization        40,491   14,536        55,027 
                                                                         
      Non-cash pension (income)/expense      (738)  (1,070)       (1,808)
                                                                         
      Non-cash stock compensation                                        
       expense                                407      472           879 
                                                                         
                                          -------  -------       ------- 
    Adjusted EBITDA (1)                   $12,899  $56,340       $69,239 
                                          =======  =======       ======= 
                                                                         
                                                                         
                                                                         
    (1) Adjusted EBITDA represents net income (loss) from continuing     
        operations excluding amounts for income taxes; depreciation and     
        amortization; non-cash pension and certain post-retirement benefits; 
        non-cash stock compensation; and all other non-operating income/    
        expenses.  Adjusted EBITDA is a common measure of operating         
        performance in the telecommunications industry. Adjusted EBITDA is  
        not a measure of financial performance under United States generally
        accepted accounting principles and should not be considered in      
        isolation or as a substitute for consolidated net income (loss) as a
        measure of performance.                                             
    
    
    
                    SUREWEST COMMUNICATIONS               
    CONSOLIDATED FREE CASH FLOW FROM CONTINUING OPERATIONS
               (Unaudited; Amounts in thousands)          
                                                          
                                                          
                                          Twelve Months   
                                          Ended December  
                                                31,       
                                         ---------------  
                                           2009      2008 
                                           ----      ---- 
                                                          
    Income from continuing operations      $667      $826 
                                                          
      Add: Depreciation and                               
       amortization                      59,724    55,027 
                                                          
      Less: Capital expenditures        (58,330)  (86,489)
                                                          
                                         ------  -------- 
    Free cash flow (2)                   $2,061  $(30,636)
                                         ======  ======== 
    
    
    
                    SUREWEST COMMUNICATIONS                
     CONSOLIDATED NET DEBT RATIO FROM CONTINUING OPERATIONS
               (Unaudited; Amounts in thousands)           
                                                           
                                                           
                                           Twelve Months   
                                         Ended December 31,        
                                         -----------------  
                                            2009      2008 
                                            ----      ---- 
    Net Debt:                                              
    Long-term debt, including current                      
     maturities                         $223,045  $241,681 
                                                           
    Less: Cash and cash equivalents       (7,489)   (2,840)
                                                           
                                        --------  -------- 
    Net debt (3)                        $215,556  $238,841 
                                        ========  ======== 
                                                           
    Ratio of Net Debt to Adjusted
     EBITDA:                  
    Net debt                            $215,556  $238,841 
                                                           
    Divided by: Adjusted EBITDA           77,898    69,239 
                                                           
    Ratio of net debt to Adjusted                          
     EBITDA (4)                             2.77      3.45 
                                                           
                                                           
                                                           
                                                           
                                                           
    (2) Free cash flow is a measure of operating cash      
        flows available for corporate purposes after providing
        sufficient fixed asset additions to maintain current  
        productive capacity.                                  
                                                           
    (3) Net debt is a measure of total long-term debt      
        (including current maturities) less cash and cash     
        equivalents.  Net debt is a component in measuring
        leverage. Net debt is not a measure determined in
        accordance with United States generally accepted
        accounting principles and should not be considered
        as a substitute for total long-term debt.                                       
                                                           
    (4) The ratio of net debt to Adjusted EBITDA is        
        calculated as net debt divided by Adjusted EBITDA.    
        This measure provides useful information to our       
        investors about our debt level relative to our        
        performance and about our ability to meet our         
        financial obligations.                                
    
    
    
                           SUREWEST COMMUNICATIONS                       
     ADJUSTED EBITDA RECONCILIATION TO NET INCOME (LOSS) FROM CONTINUING 
                                  OPERATIONS                             
                      (Unaudited; Amounts in thousands)                  
                                                                         
                                                                         
                                                                         
                                         Quarter Ended December 31, 2009 
                                         ------------------------------- 
                                        Broadband  Telecom  Consolidated 
                                        ---------  -------  ------------ 
                                                                         
    Income (loss) from continuing                                        
     operations                           $(4,881)  $4,781         $(100)
                                                                         
    Add (subtract):                                                      
                                                                         
      Income taxes (benefit)/expense       (2,675)   3,167           492 
                                                                         
      Other (income)/expense                2,778     (148)        2,630 
                                                                         
      Depreciation and amortization        12,257    3,169        15,426 
                                                                         
      Non-cash pension (income)/expense       199      443           642 
                                                                         
      Non-cash stock compensation                                        
       expense                                246      249           495 
                                                                         
                                           ------  -------       ------- 
    Adjusted EBITDA (1)                    $7,924  $11,661       $19,585 
                                           ======  =======       ======= 
                                                                         
                                                                         
                                                                         
                                        Quarter Ended September 30, 2009 
                                        -------------------------------- 
                                        Broadband  Telecom  Consolidated 
                                        ---------  -------  ------------ 
                                                                         
    Income (loss) from continuing                                        
     operations                           $(5,619)  $5,408         $(211)
                                                                         
    Add (subtract):                                                      
                                                                         
      Income taxes (benefit)/expense       (3,810)   3,824            14 
                                                                         
      Other (income)/expense                2,883      (70)        2,813 
                                                                         
      Depreciation and amortization        12,199    3,061        15,260 
                                                                         
      Non-cash pension (income)/expense       197      445           642 
                                                                         
      Non-cash stock compensation                                        
       expense                                221      222           443 
                                                                         
                                           ------  -------       ------- 
    Adjusted EBITDA (1)                    $6,071  $12,890       $18,961 
                                           ======  =======       ======= 
                                                                         
                                                                         
                                                                         
                                         Quarter Ended December 31, 2008 
                                         ------------------------------- 
                                        Broadband  Telecom  Consolidated 
                                        ---------  -------  ------------ 
                                                                         
    Income (loss) from continuing                                        
     operations                           $(6,667)  $5,120       $(1,547)
                                                                         
    Add (subtract):                                                      
                                                                         
      Income taxes (benefit)/expense       (3,179)   4,348         1,169 
                                                                         
      Other (income)/expense                3,146     (209)        2,937 
                                                                         
      Depreciation and amortization        11,051    3,615        14,666 
                                                                         
      Non-cash pension (income)/expense      (178)    (255)         (433)
                                                                         
      Non-cash stock compensation                                        
       expense                                103      120           223 
                                                                         
                                           ------  -------       ------- 
    Adjusted EBITDA (1)                    $4,276  $12,739       $17,015 
                                           ======  =======       ======= 
                                                                         
                                                                         
                                                                         
                                                                         
    (1) Adjusted EBITDA represents net income (loss) from continuing     
        operations excluding amounts for income taxes; depreciation and     
        amortization; non-cash pension and certain post-retirement benefits;
        non-cash stock compensation; and all other non-operating income/    
        expenses.  Adjusted EBITDA is a common measure of operating         
        performance in the telecommunications industry. Adjusted EBITDA is  
        not a measure of financial performance under United States generally
        accepted accounting principles and should not be considered in      
        isolation or as a substitute for consolidated net income (loss) as a
        measure of performance.                                             
    
    
    
                           SUREWEST COMMUNICATIONS                      
           CONSOLIDATED FREE CASH FLOW FROM CONTINUING OPERATIONS       
                      (Unaudited; Amounts in thousands)                 
                                                                        
                                                                        
                                                 Quarter Ended          
                                                 -------------          
                                         December  September   December 
                                         31, 2009   30, 2009   31, 2008 
                                        ---------  ---------  --------- 
                                                                        
    Loss from continuing operations         $(100)     $(211)   $(1,547)
                                                                        
      Add: Depreciation and                                             
       amortization                        15,426     15,260     14,666 
                                                                        
      Less: Capital expenditures          (14,967)   (13,841)   (21,922)
                                                                        
                                             ----     ------    ------- 
    Free cash flow (2)                       $359     $1,208    $(8,803)
                                             ====     ======    ======= 
                                                                        
                                                                        
                                                                        
    (2) Free cash flow is a measure of operating cash flows available   
        for corporate purposes after providing sufficient fixed asset      
        additions to maintain current productive capacity.                 
    
    
    
    
    
                SUREWEST COMMUNICATIONS - Consolidated Operations           
        SELECTED OPERATING METRICS (inc KC results from periods prior to    
                                   acquisition)                             
                         As of and for the quarter ended                    
                                                                            
                                     3/31/     6/30/     9/30/     12/31/   
    BROADBAND                        2008 (1)  2008 (1)  2008 (1)  2008 (1) 
    ---------                        --------  --------  --------  -------- 
      Residential                                                           
        Video                                                               
          Marketable Homes - Fiber                                          
           & HFC (2)                  211,000   217,700   221,700   232,400 
          RGUs - Fiber & HFC           52,500    54,500    55,900    57,500 
            Qtrly change                  800     2,000     1,400     1,600 
            YoY (% change)                  6%        9%       10%       11%
          RGUs - Copper                 2,700     2,600     2,600     2,600 
            Qtrly change                 (200)     (100)        0         0 
            YoY (% change)                -13%      -10%      -13%      -10%
          Penetration - Fiber & HFC      24.9%     25.0%     25.2%     24.7%
          ARPU                            $63       $62       $59       $59 
        Voice                                                               
          Marketable Homes            286,600   292,200   296,600   304,200 
          RGUs                         53,800    56,600    60,000    63,500 
            Qtrly change                  300     2,800     3,400     3,500 
            YoY (% change)                  3%        7%       13%       19%
          Penetration                    18.8%     19.4%     20.2%     20.9%
          ARPU                            $32       $33       $32       $32 
        Data                                                                
          Marketable Homes            286,600   292,200   296,600   304,200 
          RGUs                         91,800    94,000    95,700    97,400 
            Qtrly change                1,400     2,200     1,700     1,700 
            YoY (% change)                  7%        7%        7%        8%
          Penetration                    32.0%     32.2%     32.3%     32.0%
          ARPU                            $37       $37       $36       $36 
        Total                                                               
          Marketable Homes - Fiber,                                         
           HFC, Copper                286,600   292,200   296,600   304,200 
          RGUs                        200,800   207,700   214,200   221,000 
            Qtrly change                2,300     6,900     6,500     6,800 
            YoY (% change)                  5%        7%        9%       11%
                                                                            
        Subscriber totals                                                   
          Subscribers (3)              96,900    99,000   100,600   102,400 
            Qtrly change                1,100     2,100     1,600     1,800 
          Penetration                    33.8%     33.9%     33.9%     33.7%
          ARPU (4)                        $89       $89       $88       $89 
          Triple Play ARPU (5)           $110      $109      $106      $107 
          Triple Play RGUs per                                              
           Subscriber (5)                2.59      2.60      2.60      2.59 
          Churn                           1.4%      1.5%      1.7%      1.4%
                                                                            
      Business (6)                                                          
          Customers                     6,000     6,200     6,300     6,500 
          ARPU                           $444      $458      $494      $467 
                                                                            
                                                                            
                                                                            
                                     3/31/     6/30/     9/30/     12/31/   
    BROADBAND                        2009 (1)  2009 (1)  2009 (1)  2009 (1) 
    ---------                        --------  --------  --------  -------- 
      Residential                                                           
        Video                                                               
          Marketable Homes - Fiber                                          
           & HFC (2)                  236,500   239,800   240,000   240,500 
          RGUs - Fiber & HFC           57,600    56,900    57,000    56,900 
            Qtrly change                  100      (700)      100      (100)
            YoY (% change)                 10%        4%        2%       -1%
          RGUs - Copper                 2,400     2,200     2,200     2,200 
            Qtrly change                 (200)     (200)        0         0 
            YoY (% change)                -11%      -15%      -15%      -15%
          Penetration - Fiber & HFC      24.4%     23.7%     23.8%     23.7%
          ARPU                            $65       $67       $66       $68 
        Voice                                                               
          Marketable Homes            308,200   309,300   309,400   309,700 
          RGUs                         66,300    68,000    70,300    71,600 
            Qtrly change                2,800     1,700     2,300     1,300 
            YoY (% change)                 23%       20%       17%       13%
          Penetration                    21.5%     22.0%     22.7%     23.1%
          ARPU                            $33       $33       $31       $30 
        Data                                                                
          Marketable Homes            308,200   309,300   309,400   309,700 
          RGUs                         98,100    97,700    97,700    98,500 
            Qtrly change                  700      (400)        0       800 
            YoY (% change)                  7%        4%        2%        1%
          Penetration                    31.8%     31.6%     31.6%     31.8%
          ARPU                            $37       $38       $38       $40 
        Total                                                               
          Marketable Homes - Fiber,                                         
           HFC, Copper                308,200   309,300   309,400   309,700 
          RGUs                        224,400   224,800   227,200   229,200 
            Qtrly change                3,400       400     2,400     2,000 
            YoY (% change)                 12%        8%        6%        4%
                                                                            
        Subscriber totals                                                   
          Subscribers (3)             102,800   101,800   102,500   102,600 
            Qtrly change                  400    (1,000)      700       100 
          Penetration                    33.4%     32.9%     33.1%     33.1%
          ARPU (4)                        $94       $97       $96       $99 
          Triple Play ARPU (5)           $112      $115      $112      $115 
          Triple Play RGUs per                                              
           Subscriber (5)                2.59      2.58      2.57      2.57 
          Churn                           1.4%      1.7%      1.8%      1.5%
                                                                            
      Business (6)                                                          
          Customers                     6,700     6,800     7,000     7,100 
          ARPU                           $484      $475      $483      $492 
    
    
    
               SUREWEST COMMUNICATIONS - Consolidated Operations           
        SELECTED OPERATING METRICS (inc KC results from periods prior to    
                                   acquisition)                             
                         As of and for the quarter ended                    
                                                                            
                                     3/31/     6/30/     9/30/     12/31/   
    TELECOM                          2008 (1)  2008 (1)  2008 (1)  2008 (1) 
    -------                          --------  --------  --------  -------- 
      Residential                                                           
        Voice                                                               
          Marketable Homes             89,900    90,000    90,500    90,800 
          RGUs (7)                     66,800    62,900    58,500    54,000 
            RGU Migration to                                                
             Broadband Voice (8)            0     1,400     2,900     4,700 
          Penetration                    74.3%     69.9%     64.6%     59.5%
          ARPU                            $44       $44       $43       $43 
          Churn                           2.3%      2.1%      2.4%      2.2%
                                                                            
      Business (6)                                                          
          Customers                     9,600     9,600     9,400     9,200 
          ARPU                           $311      $341      $354      $327 
                                                                            
    CONSOLIDATED RESIDENTIAL VOICE                                          
     RGUs                                                                   
    ------------------------------                                          
          ILEC Voice RGUs                                                   
              Broadband                   100     2,000     4,400     7,100 
              Telecom                  66,800    62,900    58,500    54,000 
                                       ------    ------    ------    ------ 
          Total ILEC Voice RGUs (9)    66,900    64,900    62,900    61,100 
            Qtrly change               (2,300)   (2,000)   (2,000)   (1,800)
            YoY (% change)                -13%      -13%      -12%      -12%
          CLEC Residential Voice                                            
           RGUs (10)                   53,700    54,600    55,600    56,400 
                                       ------    ------    ------    ------ 
          TOTAL Residential Voice                                           
           RGUs (11)                  118,300   119,500   118,500   117,500 
            Qtrly change               (4,400)    1,200    (1,000)   (1,000)
            YoY (% change)                 -9%       -6%       -5%       -4%
                                                                            
                                     3/31/     6/30/     9/30/     12/31/   
    NETWORK METRICS                  2008 (1)  2008 (1)  2008 (1)  2008 (1) 
    ---------------                  --------  --------  --------  -------- 
          Marketable Homes - Fiber    119,900   125,700   129,000   138,800 
          Marketable Homes - HFC       91,100    92,000    92,700    93,600 
          Marketable Homes - Copper    75,600    74,500    74,900    71,800 
                                       ------    ------    ------    ------ 
          Total                       286,600   292,200   296,600   304,200 
            Qtrly change                2,700     5,600     4,400     7,600 
                                                                            
                                                                            
                                                                            
                                     3/31/     6/30/     9/30/     12/31/   
    TELECOM                          2009 (1)  2009 (1)  2009 (1)  2009 (1) 
    -------                          --------  --------  --------  -------- 
      Residential                                                           
        Voice                                                               
          Marketable Homes             90,800    90,900    90,900    91,000 
          RGUs (7)                     49,500    45,100    41,300    38,500 
            RGU Migration to                                                
             Broadband Voice (8)        6,900     9,000    10,700    11,800 
          Penetration                    54.5%     49.6%     45.4%     42.3%
          ARPU                            $44       $45       $45       $44 
          Churn                           2.1%      2.3%      2.3%      2.0%
                                                                            
      Business (6)                                                          
          Customers                     9,000     8,900     8,700     8,500 
          ARPU                           $332      $339      $329      $334 
                                                                            
    CONSOLIDATED RESIDENTIAL VOICE                                          
     RGUs                                                                   
    ------------------------------                                          
          ILEC Voice RGUs                                                   
              Broadband                 9,900    12,400    14,700    16,200 
              Telecom                  49,500    45,100    41,300    38,500 
                                       ------    ------    ------    ------ 
          Total ILEC Voice RGUs (9)    59,400    57,500    56,000    54,700 
            Qtrly change               (1,700)   (1,900)   (1,500)   (1,300)
            YoY (% change)                -11%      -11%      -11%      -10%
          CLEC Residential Voice                                            
           RGUs (10)                   56,400    55,600    55,600    55,400 
                                       ------    ------    ------    ------ 
          TOTAL Residential Voice                                           
           RGUs (11)                  115,800   113,100   111,600   110,100 
            Qtrly change               (1,700)   (2,700)   (1,500)   (1,500)
            YoY (% change)                 -2%       -5%       -6%       -6%
    
                                                                            
                                     3/31/     6/30/     9/30/     12/31/   
    NETWORK METRICS                  2009 (1)  2009 (1)  2009 (1)  2009 (1) 
    ---------------                  --------  --------  --------  -------- 
          Marketable Homes - Fiber    142,900   146,900   147,100   147,600 
          Marketable Homes - HFC       93,600    92,900    92,900    92,900 
          Marketable Homes - Copper    71,700    69,500    69,400    69,200 
                                       ------    ------    ------    ------ 
          Total                       308,200   309,300   309,400   309,700 
            Qtrly change                4,000     1,100       100       300 
                                                                            
                                                                            
    (1)  The calculation of certain metrics have been revised over time to   
         reflect the current view of our business.  Where necessary prior 
         period metric calculations have been revised to conform with current
         practice. All amounts rounded to the nearest 100s,           
                                                                            
    (2)  Marketable Homes - Fiber & HFC consists of Sacramento fiber homes  
         and Kansas City hybrid fiber coax (HFC) homes.                    
                                                                            
    (3)  A residential subscriber is a customer who subscribers to one or   
         more residential RGUs.                                             
                                                                            
    (4)  ARPU is the total residential revenue per average subscriber.      
                                                                            
    (5)  Triple play ARPU and RGU per Subscriber includes the total         
         residential revenue per average subscriber and ending RGUs per ending
         subscriber for the triple play markets, excluding the ILEC market.   
                                                                            
    (6)  A business customer is a customer who subscribes to business data,  
         voice or video and represents a unique customer account.  ARPU is the
         total business revenue per average customer.                         
                                                                            
    (7)  A voice RGU is a residential customer who subscribers to one or     
         more voice access line.                                             
                                                                            
    (8)  Telecom Voice RGU Migration to Broadband Voice are residential      
         Telecom voice RGUs in Line (7) that have ported their Telecom primary
         access line service to Broadband VoIP.                               
                                                                            
    (9)  Telecom Churn excludes disconnects in Line (8) that have ported     
         their Telecom primary access line service to Broadband VoIP.         
                                                                            
    (10) ILEC Voice RGUs are the total residential voice RGUs in the ILEC   
         franchise market area that are either a Telecom primary access line
         or Broadband VoIP subscriber.                                    
                                                                            
    (11) CLEC Voice RGUs are the total residential voice RGUs in the Kansas 
         City and Sacramento markets, excluding the ILEC market.           
                                                                            
    (12) Total Voice RGUs are the total of ILEC and CLEC residential voice  
         RGUs, and represent the total company residential voice RGUs of both
         the Broadband and Telecom Segments.                                 
                                                                            
    (13) For information purposes, sequential Telecom access line counts   
         (residential and business) were: 110,200   105,900   100,200  
         94,600   88,400   82,600   77,600   73,200         
    
    
    
           SUREWEST COMMUNICATIONS - Consolidated Operations      
                      SELECTED OPERATING METRICS                  
                    As of and for the quarter ended               
                                                                  
                                  12/31/    12/31/                
    BROADBAND                    2009 (1)  2008 (1)   Chg   Chg % 
    ---------                    --------  --------   ---   ----- 
      Residential                                                 
        Video                                                     
          Marketable Homes -                                      
           Fiber & HFC (2)        240,500   232,400  8,100      3%
          RGUs - Fiber & HFC       56,900    57,500   (600)    -1%
          RGUs - Copper             2,200     2,600   (400)   -15%
          Penetration - Fiber &                                   
           HFC                       23.7%     24.7%  -1.1%    -4%
          ARPU                        $68       $59     $9     15%
        Voice                                                     
          Marketable Homes        309,700   304,200  5,500      2%
          RGUs                     71,600    63,500  8,100     13%
          Penetration                23.1%     20.9%   2.2%    11%
          ARPU                        $30       $32    ($2)    -5%
        Data                                                      
          Marketable Homes        309,700   304,200  5,500      2%
          RGUs                     98,500    97,400  1,100      1%
          Penetration                31.8%     32.0%  -0.2%    -1%
          ARPU                        $40       $36     $4     11%
        Total                                                     
          Marketable Homes -                                      
           Fiber, HFC, Copper     309,700   304,200  5,500      2%
          RGUs                    229,200   221,000  8,200      4%
                                                                  
        Subscriber totals                                         
          Subscribers (3)         102,600   102,400    200      0%
          Penetration                33.1%     33.7%  -0.5%    -2%
          ARPU (4)                    $99       $89    $10     12%
          Triple Play ARPU (5)       $115      $107     $8      8%
          Triple Play RGUs per                                    
           Subscriber (5)            2.57      2.59  (0.01)    -1%
          Churn                       1.5%      1.4%   0.1%    10%
                                                                  
      Business (6)                                                
          Customers                 7,100     6,500    600      9%
          ARPU                       $492      $467    $25      5%
                                                                  
                                                                  
                                                                  
                                   9/30/                          
    BROADBAND                    2009 (1)     Chg    Chg %        
    ---------                    --------     ---    -----        
      Residential                                                 
        Video                                                     
          Marketable Homes -                                      
           Fiber & HFC (2)        240,000       500      0%       
          RGUs - Fiber & HFC       57,000      (100)     0%       
          RGUs - Copper             2,200         0      0%       
          Penetration - Fiber &                                   
           HFC                       23.8%     -0.1%     0%       
          ARPU                        $66        $2      3%       
        Voice                                                     
          Marketable Homes        309,400       300      0%       
          RGUs                     70,300     1,300      2%       
          Penetration                22.7%      0.4%     2%       
          ARPU                        $31       ($1)    -2%       
        Data                                                      
          Marketable Homes        309,400       300      0%       
          RGUs                     97,700       800      1%       
          Penetration                31.6%      0.2%     1%       
          ARPU                        $38        $2      5%       
        Total                                                     
          Marketable Homes -                                      
           Fiber, HFC, Copper     309,400       300      0%       
          RGUs                    227,200     2,000      1%       
                                                                  
        Subscriber totals                                         
          Subscribers (3)         102,500       100      0%       
          Penetration                33.1%      0.0%     0%       
          ARPU (4)                    $96        $3      3%       
          Triple Play ARPU (5)       $112        $3      3%       
          Triple Play RGUs per                                    
           Subscriber (5)            2.57      0.01      0%       
          Churn                       1.8%     -0.3%   -18%       
                                                                  
      Business (6)                                                
          Customers                 7,000       100      1%       
          ARPU                       $483        $9      2%       
    
    
    
                                                                    
                                  12/31/    12/31/                  
    TELECOM                      2009 (1)  2008 (1)    Chg    Chg % 
    -------                      --------  --------    ---    ----- 
      Residential                                                   
        Voice                                                       
          Marketable Homes         91,000    90,800      200      0%
          RGUs (7)                 38,500    54,000  (15,500)   -29%
            Cumulative                                              
             Migration to                                           
             Broadband Voice (8)                                    
                                   11,800     4,700    7,100    151%
          Penetration                42.3%     59.5%   -17.2%   -29%
          ARPU                        $44       $43       $1      2%
          Churn (9)                   2.0%      2.2%    -0.2%    -9%
                                                                    
      Business (6)                                                  
          Customers                 8,500     9,200     (700)    -8%
          ARPU                       $334      $327       $7      2%
                                                                    
    CONSOLIDATED RESIDENTIAL                                        
     VOICE RGUs                                                     
    ------------------------                                        
          ILEC Voice RGUs                                           
              Broadband            16,200     7,100    9,100    128%
              Telecom              38,500    54,000  (15,500)   -29%
                                   ------    ------  -------        
          Total ILEC Voice RGUs                                     
           (10)                    54,700    61,100   (6,400)   -10%
          CLEC Residential                                          
           Voice RGUs (11)         55,400    56,400   (1,000)    -2%
                                   ------    ------   ------        
          TOTAL Residential                                         
           Voice RGUs (12)        110,100   117,500   (7,400)    -6%
                                                                    
                                                                    
                                                                    
                                   9/30/                            
    TELECOM                      2009 (1)     Chg     Chg %         
    -------                      --------     ---     -----         
      Residential                                                   
        Voice                                                       
          Marketable Homes         90,900       100        0%       
          RGUs (7)                 41,300    (2,800)      -7%       
            Cumulative                                              
             Migration to                                           
             Broadband Voice (8)                                    
                                   10,700     1,100       10%       
          Penetration                45.4%     -3.1%      -7%       
          ARPU                        $45       ($1)      -2%       
          Churn (9)                   2.3%     -0.3%     -14%       
                                                                    
      Business (6)                                                  
          Customers                 8,700      (200)      -2%       
          ARPU                       $329        $5        2%       
                                                                    
    CONSOLIDATED RESIDENTIAL                                        
     VOICE RGUs                                                     
    ------------------------                                        
          ILEC Voice RGUs                                           
              Broadband            14,700     1,500       10%       
              Telecom              41,300    (2,800)      -7%       
                                   ------    ------                 
          Total ILEC Voice RGUs                                     
           (10)                    56,000    (1,300)      -2%       
          CLEC Residential                                          
           Voice RGUs (11)         55,600      (200)       0%       
                                   ------      ----                 
          TOTAL Residential                                         
           Voice RGUs (12)        111,600    (1,500)      -1%       
    
    
    
                                        12/31/         12/31/                 
    NETWORK METRICS                     2009 (1)      2008 (1)    Chg   Chg % 
    ---------------                     --------      --------    ---   ----- 
          Marketable Homes -                                                  
           Fiber                        147,600        138,800   8,800      6%
          Marketable Homes - HFC         92,900         93,600    (700)    -1%
          Marketable Homes -                                                  
           Copper                        69,200         71,800  (2,600)    -4%
                                         ------         ------  ------        
          Total                         309,700        304,200   5,500      2%
                                                                              
                                                                              
                                                                              
    NETWORK METRICS                   9/30/2009 (1)       Chg        Chg %    
    ---------------                   -------------       ---        -----    
          Marketable Homes -                                                  
           Fiber                        147,100            500       0%       
          Marketable Homes - HFC         92,900              0       0%       
                                                                              
          Marketable Homes -                                                  
           Copper                        69,400           (200)      0%       
                                         ------           ----                
          Total                         309,400            300       0%       
                                                                              
    (1)  The calculation of certain metrics have been revised over time to    
         reflect the current view of our business.  Where necessary prior 
         period metric calculations have been revised to conform with current
         practice. All amounts rounded to the nearest 100s, except percents
         and dollars.    
                                                                              
    (2)  Marketable Homes - Fiber & HFC consists of Sacramento fiber homes and
         Kansas City hybrid fiber coax (HFC) homes.                           
                                                                              
    (3)  A residential subscriber is a customer who subscribers to one or more
         residential RGUs.                                                   
                                                                              
    (4)  ARPU is the total residential revenue per average subscriber.    
                                                                              
    (5)  Triple play ARPU includes the total residential revenue per average 
         subscriber and Triple play RGUs per Subscriber includes ending RGUs
         per ending subscriber, for the triple play markets, excluding the
         ILEC market.                                                        
                                                                              
    (6)  A business customer is a customer who subscribes to business data, 
         voice or video and represents a unique customer account.  ARPU is the
         total business revenue per average customer.                     
                                                                              
    (7)  A voice RGU is a residential customer who subscribers to one or more
         voice access line.                                                
                                                                              
    (8)  Telecom Voice RGU Migration to Broadband Voice are residential       
         Telecom voice RGUs in Line (7) that have ported their Telecom primary
         access line service to Broadband VoIP.                               
                                                                              
    (9)  Telecom Churn excludes disconnects in Line (8) that have ported their
         Telecom primary access line service to Broadband VoIP.               
                                                                              
    (10) ILEC Voice RGUs are the total residential voice RGUs in the ILEC     
         franchise market area that are either a Telecom primary access line
         or Broadband VoIP subscriber.                                        
                                                                              
    (11) CLEC Voice RGUs are the total residential voice RGUs in the Kansas   
         City and Sacramento markets, excluding the ILEC market.              
                                                                              
    (12) Total Voice RGUs are the total of ILEC and CLEC residential voice    
         RGUs, and represent the total company residential voice RGUs of both
         the Broadband and Telecom Segments.                                  
                                                                              
    (13) Telecom access lines include residential and business access lines.  
         For information purposes, access line counts were 94,600 at 12/31/08,
         77,600 at 9/30/09, and 73,200 at 12/31/09.                           
    
    
    

SOURCE SureWest Communications