Annual Shareholder Meeting Little Rock, AR April 21, 2005.

Annual Shareholder Meeting

Little Rock, AR

April 21, 2005

2

“Safe Harbor” StatementThis presentation includes statements about expected future events and future financial results that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. ALLTEL claims the protection of the safe-harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to uncertainties that could cause actual future events and results to differ materially from those expressed in the forward-looking statements. These forward-looking statements are based on estimates, projections, beliefs, and assumptions and are not guarantees of future events and results. Actual future events and results may differ materially from those expressed in these forward-looking statements as a result of a number of important factors. Representative examples of these factors include (without limitation) adverse changes in economic conditions in the markets served by ALLTEL; the extent, timing, and overall effects of competition in the communications business; material changes in the communications industry generally that could adversely affect vendor relationships with equipment and network suppliers and customer relationships with wholesale customers; changes in communications technology; the risks associated with pending acquisitions and the integration of acquired businesses; adverse changes in the terms and conditions of the company's wireless roaming agreements; the uncertainties related to ALLTEL's strategic investments; the effects of litigation; and the effects of federal and state legislation, rules, and regulations governing the communications industry. In addition to these factors, actual future performance, outcomes, and results may differ materially because of more general factors including (without limitation) general industry and market conditions and growth rates, economic conditions, and governmental and public policy changes.

“Safe Harbor” Statement and Regulation G Disclaimer

Regulation G Disclaimer

Today’s presentation will include certain non-GAAP financial measures. I refer you to the Investor Relations section of ALLTEL’s Web site where the company has posted additional information regarding these non-GAAP financial measures, including a reconciliation of each such measure to the most directly comparable GAAP measure. The company’s Web site is located at www.alltel.com.

3

2004 HighlightsSolid Earnings and Operating Metrics

$7.98

$4.73

$2.44

$8.25

$5.08

$2.42

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

Consolidated Wireless Wireline

$1.92

$1.00$0.88

$1.97

$1.02$0.93

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5


$3.05

$3.37

$0.00

$1.00

$2.00

$3.00

$4.00

Consolidated

153

243

0

50

100

150

200

250

300

BroadbandCustomer Base

Revenue (in billions) Operating Income (1) (in billions) EPS (1)

Wireless Wireline

3.096 3.009

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Access Lines

2.09%

1.74%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

Post-Paid Churn

274

511

0

100

200

300

400

500

600

Net Adds

2003 2004

3% yoy

7% yoy

(1)% yoy

3% yoy

2% yoy5% yoy

10% yoy

86% yoy (35 bp) yoy (3)% yoy 59% yoy

(In thousands, excluding acquisitions) (In millions) (In thousands)

(1) From Current Businesses

4

First Quarter 2005 Highlights

$1.96

$1.18

$0.60

$2.13

$1.35

$0.59

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5


$447

$211$228

$489

$272

$215

$0

$100

$200

$300

$400

$500


$0.71

$0.84

$0.00

$0.25

$0.50

$0.75

$1.00

Consolidated

21.5

39.8

0

10

20

30

40

50

Broadband Net Adds

Revenue (in billions) Operating Income (1) (in millions) EPS (1)

Wireless Wireline

$64.62 $66.08

$0.00

$20.00

$40.00

$60.00

$80.00

ARPU

1.93%

1.72%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

Post-Paid Churn

$45.96$48.80

$0.00

$20.00

$40.00

$60.00

ARPU

1Q04 1Q05

8% yoy

14% yoy

(1)% yoy

10% yoy

29% yoy(6)% yoy

18% yoy

6% yoy (21 bp) yoy 2% yoy 85% yoy

(In thousands)

(1) From Current Businesses

5

A Closer Look at ALLTELas of 3/31/05

1Q05

• Wireless 8.8M

• Wireline (ILEC & CLEC) 3.0M

• Long-Distance 1.8M

• DSL 283K

•

• Wireless• Wireline (ILEC, CLEC, Internet)• Communication Support Services

Business Mix Customers

Wireless• 64M POPs• ~2/3 of customers in Tier 2

and 3 markets

Wireline• ~50% of our wireline is

overlapped by our wireless

1Q05 % of Total Revenue

62%

28%

10%

6

1998 1999 2000 2002 2003 2005

OPERATIONAL FOCUS

• Point of Sale Experience• Customer Service Experience• Network Quality Experience

FINANCIAL DISCIPLINE

• Invest in Businesses Not Products• Best Customer/Best Price• Stay Relevant

OPPORTUNISTIC GROWTH

• Focus on Free Cash Flow• Operational “Fit”• Think Long-Term (5+ years)

Strategic Model Access is Key and Wireless is Driving Telecom Growth

360° Aliant/ Liberty VZ Swap VZ KY Access Lines/CTL Wireless

Sale of AIS Cingular Properties/

Western Wireless

17%

39%

44%

68%

23%

9%

Shifting the Mix to WirelessWireless

WirelessWirelineWireline

1997 Revenue $3.3B

2004 Pro-Forma Revenue $10.3B

(Pro-Forma includes Cingular and Western Wireless)

Other

Other

7

Strategic Model Driving Consistent Growth While Maintaining Solid Credit Metrics

$6.3$6.6

$7.1

$8.0 $8.2

2000 2001 2002 2003 2004

Revenue ($bn)1

$2.44$2.59

$2.94 $3.05$3.37

2000 2001 2002 2003 2004

Earnings per Share1

1 From Current Businesses2 Equity Free Cash Flow defined as Net Income + Depreciation & Amortization – Capital Expenditures3 Ratings from S&P / Moody’s / Fitch, respectively4 From current businesses – OIBDA defined as operating income before depreciation and amortization.Note: Assumes 80% equity credit for AT equity units.

CAGR = 6.9%

CAGR = 8.4%

$510$642

$799$1,008

$1,180

2000 2001 2002 2003 2004

ALLTEL Credit Metrics (3/31/05)– Net Debt / OIBDA 1.1X4

– Net Debt / Total Cap 33%

ALLTEL Credit Ratings3 – A1 / Prime-1 / F1 - CP ratings – A / A2 / A - Long-term credit ratings

Equity Free Cash Flow2

CAGR = 23.3%

8

Strategic Model Generating Leading Total Returns(1)

• Quarterly dividends have been raised for 44 consecutive years– ~2.7% yield

• Return of capital to shareholders in 2004– Dividends of more than

$450M

– Share repurchases of almost ~$600M

Returned More than $1 Billion of Cash to Shareholders in 2004

Stock Price Appreciation & Dividends – Rank

2

5

4

1

3

2

4

5

1

3

1

4

3

5

2

ALLTEL

BellSouth

SBC

Sprint

Verizon

Note: (1) Total return based on stock price appreciation and dividends(2) Based on the periods ending 3/31/05Source: FactSet database and Company reports

1 Year (2) 3 Year (2) 5 Year (2)

9

The Industry Structure Changed Significantly in 2004

Wireless

– Cingular combines with AT&T Wireless

– ALLTEL will combine with Western Wireless

– Sprint will combine with Nextel

Strategic activity within the industry is accelerating and will likely continue

Wireline/Interexchange

– Sprint to spin-off local business– Verizon considering access line

sale/spin– RLEC public offerings and

“high yield” strategy– SBC and AT&T– Verizon and MCI

10

ALLTEL & Western Wireless Increases Presence in Markets Where We Add Significant Value

Pro Forma Domestic Footprint

ALLTEL Pro Forma(Dollars in Billions, POPs and Subs in Millions)

Wireless Customers 12.0

Wireline Access Lines 3.0

Revenue $10.3

OIBDA $3.9

Revenue and OIBDA LTM 12/31/04

Covered U.S. POPs 75.9M

Network Coverage >1M sq. mi.

Spectrum Position Avg. ~30MHZ(primarily in 850MHz band)

11

ALLTEL & Western Wireless Diversifies Our Roaming Revenue Sources

PRO FORMA ALLTELCingular

PRO FORMA ALLTELVerizon

PRO FORMA ALLTELNextelSprint

PRO FORMA ALLTELT- Mobile

Cingular Verizon

Sprint/Nextel T-Mobile

Note: ALLTEL Pro Forma licensed coverage. All others represent approximate network build out.

12

ALLTEL & Western WirelessThe Premier Regional Communications Company

This transaction:

• Is accretive to ALLTEL in first full year of operations (2006)

• Combines complementary assets geographically and technologically

• Increases ALLTEL’s wireless revenue mix to nearly 70%

• Increases our retail position in markets where we add significant value

• Creates the leading independent roaming partner in our markets with the top four national players offering multiple technologies (CDMA, GSM, TDMA)

• Adds diversity and increased growth through International markets

• Creates revenue upside and cost synergy opportunities

• Preserves a solid balance sheet

• Maintains flexibility for strategic options

13

2005 Major Activities

• Changes in Capital Structure (Equity Units)

• Integrate Cingular properties

• Close/Integrate Western Wireless

• Review of Strategic Alternatives in Wireline Business

• Rebranding Initiative

15

Reconciliation of Non-GAAP Financial Measures for the years ended December 31, 2004, 2003, 2002, 2001 and 2000:

Revenues and sales from Current Businesses(Dollars in millions) 2004 2003 2002 2001 2000Revenues and sales under GAAP 8,246.1$ 7,979.9$ 7,112.4$ 6,615.7$ 6,308.9$ Items excluded from measuring results from current businesses: Litigation settlement - - - - 11.5 Revenues and sales from current businesses 8,246.1$ 7,979.9$ 7,112.4$ 6,615.7$ 6,320.4$

OIBDA from Current Businesses(Dollars in millions) 2004 2003 2002 2001 2000Operating income under GAAP 1,921.6$ 1,898.0$ 1,719.6$ 1,548.7$ 1,536.2$ Items excluded from measuring results from current businesses: Write-down of receivables due to interexchange carrier's bankruptcy filing - - 14.0 - - Litigation settlement - - - - 11.5 Restructuring and other charges 50.9 19.0 69.9 76.3 15.3 Operating income from current businesses 1,972.5 1,917.0 1,803.5 1,625.0 1,563.0 Depreciation and amortization expense 1,299.7 1,247.7 1,095.5 1,082.0 903.7 OIBDA from current businesses 3,272.2$ 3,164.7$ 2,899.0$ 2,707.0$ 2,466.7$

Diluted Earnings per Share from Current Businesses2004 2003 2002 2001 2000

Diluted earnings per share under GAAP $3.39 $4.25 $2.96 $3.40 $6.08Items excluded from measuring results from current businesses, net of tax: Write-down of receivables due to interexchange carrier's bankruptcy filing - - .03 - - Net financing costs related to prefunding the Company's wireline and wireless acquisitions - - .05 - - Litigation settlement - - - - .02 Restructuring and other charges .10 .04 .14 .14 .02 Gain on disposal of assets - (.06) (.03) (.68) (3.57) Write-down of investments - .01 .03 - .03 Termination fees on early retirement of long-term debt - .01 - .01 - Reversal of income tax contingency reserves (.06) - - - - Discontinued operations (.06) (1.15) (.24) (.22) (.26) Cumulative effect of accounting change - (.05) - (.06) .12Diluted earnings per share from current businesses $3.37 $3.05 $2.94 $2.59 $2.44

For the years ended December 31



16

Reconciliation of Non-GAAP Financial Measures for the years ended December 31, 2004, 2003, 2002, 2001 and 2000:

Equity Free Cash Flow(Dollars in millions) 2004 2003 2002 2001 2000Net cash provided from operations 2,466.8$ 2,474.7$ 2,392.2$ 1,882.1$ 1,428.9$ Adjustments to reconcile to net income under GAAP: Income from discontinued operations 19.5 361.0 74.2 69.5 82.7 Cumulative effect of accounting change - 15.6 - 19.5 (36.6) Depreciation and amortization expense (1,299.7) (1,247.7) (1,095.5) (1,082.0) (903.7) Provision for doubtful accounts (184.9) (184.7) (265.9) (138.4) (110.7) Non-cash portion of integration expenses and other charges (25.6) (13.2) (12.6) (37.7) (1.6) Gain on disposal of assets - 31.0 17.4 357.6 1,943.5 Write-down of investments - (6.0) (16.4) - (15.0) Increase in deferred income taxes (263.4) (225.0) (357.6) (190.4) (131.0) Reversal of income tax contingency reserves 19.7 - - - - Other non-cash changes, net 14.4 11.4 25.6 8.7 35.8 Changes in operating assets and liabilities, net of the effects of acquisitions and dispositions 299.4 113.0 162.9 178.1 (363.5) Net income under GAAP 1,046.2 1,330.1 924.3 1,067.0 1,928.8 Adjustments to reconcile to net income from current businesses: Write-down of receivables due to interexchange carrier's bankruptcy filing, net of tax - - 8.7 - - Net financing costs related to prefunding the Company's wireline and wireless acquisitions, net of tax - - 16.3 - - Litigation settlement, net of tax - - - - 7.0 Restructuring and other charges, net of tax 31.1 11.5 42.3 45.3 9.1 Gain on disposal of assets, net of tax - (18.9) (10.6) (214.4) (1,133.5) Write-down of investments, net of tax - 3.9 10.1 - 9.2 Termination fees on early retirement of long-term debt, net of tax - 4.4 - 1.7 - Reversal of income tax contingency reserves, net of tax (19.7) - - - - Income from discontinued operations, net of tax (19.5) (361.0) (74.2) (69.5) (82.7) Cumulative effect of accounting change, net of tax - (15.6) - (19.5) 36.6 Net income from current businesses 1,038.1$ 954.4$ 916.9$ 810.6$ 774.5$ Adjustments to reconcile to equity free cash flow from current businesses: Depreciation and amortization expense 1,299.7 1,247.7 1,095.5 1,082.0 903.7 Capital expenditures (1,125.4) (1,137.7) (1,154.8) (1,170.1) (1,120.2) Capitalized software development costs (32.3) (56.7) (58.4) (80.5) (47.6) Equity free cash flow from current businesses 1,180.1$ 1,007.7$ 799.2$ 642.0$ 510.4$


17

Other Reconciliations of Non-GAAP Financial Measures

Debt to Equity Ratio Under GAAP as of March 31:(Dollars in millions) 2005Long-term debt, including current maturities (A) 5,598.4$ Total shareholders equity 7,240.1 Total debt and equity (B) 12,838.5$ Debt to equity ratio under GAAP (A) / (B) 44%

Net Debt to Total Capitalization as of March 31:(Dollars in millions) 2005Long-term debt, including current maturities 5,598.4$ Cash and short-term investments (888.4) Net debt 4,710.0$ Assumed conversion of equity units (80% of $1,385.0) (1,108.0) Adjusted net debt (A) 3,602.0$

Net debt 3,602.0$ Total shareholders' equity 7,240.1 Total capitalization (B) 10,842.1$ Net debt to total capitalization (A) / (B) 33%

18


Net Debt to Operating Incomefor the twelve months ended March 31:(Dollars in millions) 2005Long-term debt, including current maturities 5,598.4$ Cash and short-term investments (888.4) Net debt 4,710.0$ Assumed conversion of equity units (80% of $1,385.0) (1,108.0) Adjusted net debt (A) 3,602.0$

Operating income under GAAP (B) 1,996.1$ Net debt to operating income (A) / (B) 1.8

Net Debt to OIBDA from Current Businessesfor the twelve months ended March 31:(Dollars in millions) 2005Adjusted net debt (see above) (A) 3,602.0$

Operating income under GAAP 1,996.1$ Restructuring and other charges (0.9) Change in accounting for operating leases with scheduled rent increases 19.8 Depreciation and amortization expense 1,319.6 OIBDA from current businesses (B) 3,334.6$ Net debt to OIBDA from current businesses (A) / (B) 1.1

19


Pro Forma Segment OIBDA for the year ended December 31, 2004: Western(Dollars in millions) ALLTEL Wireless Pro Forma Wireless segment income under GAAP 1,020.2$ 308.4$ 1,328.6$ Depreciation & amortization 738.8 270.7 1,009.5 Wireless OIBDA 1,759.0 579.1 2,338.1

Wireline segment income under GAAP 926.0 - 926.0 Depreciation & amortization 516.5 - 516.5 Wireline OIBDA 1,442.5 - 1,442.5

Communications support services segment income under GAAP 62.7 - 62.7 Depreciation & amortization 34.3 - 34.3 Communications support services OIBDA 97.0 - 97.0 Total Business Segments OIBDA 3,298.5$ 579.1$ 3,877.6$

20

Reconciliation of Non-GAAP Financial Measures for the three months ended March 31:

Operating Income from Current Businesses(Dollars in millions) 2005 2004Operating income under GAAP 469.3$ 394.8$ Change in accounting for operating leases 19.8 - Restructuring and other charges - 51.8 Operating income from current businesses 489.1$ 446.6$

Diluted Earnings per Share From Current Businesses:2005 2004

Diluted earnings per share under GAAP $1.03 $.61Items excluded from measuring results from current businesses, net of tax: Special dividend received on Fidelity National Financial, Inc. common stock (.23) - Change in accounting for operating leases .04 - Restructuring and other charges - .10Diluted earnings per share from current businesses $.84 $.71

Annual Shareholder Meeting Little Rock, AR April 21, 2005.

Documents

Transcript of Annual Shareholder Meeting Little Rock, AR April 21, 2005.