SureWest Reports First Quarter 2012 Results

SureWest Reports First Quarter 2012 Results

- Total revenues increased 4% year-over-year driven by 10% Broadband growth

- Broadband business services revenues grew 16% with continued strong wireless carrier backhaul growth and fiber network sales

- Broadband residential revenues increased 9% due to ARPU, subscriber and RGU growth

- Broadband accounted for 80% of total first quarter revenues

- Net loss of $3.9 million reflects final scheduled subsidy decline and transaction costs related to the merger with Consolidated Communications

ROSEVILLE, Calif., May 2, 2012 /PRNewswire/ -- SureWest Communications (NASDAQ: SURW) today announced operating results for the first quarter ended March 31, 2012.

(Logo: http://photos.prnewswire.com/prnh/20050908/SFSUREWESTLOGO)

Steve Oldham, SureWest's president and chief executive officer, said, "We experienced strong Broadband business and residential revenue growth during the quarter, driven by increased HDTV take rates, larger video packages and faster Internet speeds. Business services growth during the quarter reflects the success of the wireless backhaul service and higher ARPU for new and existing customers on our fiber networks.

"In April, we launched a new video product in our Kansas City market that features Whole Home DVR and an advanced user interface, and the initial response from customers has been excellent. We expect these new video features to help us achieve the success that was driven by the Advanced Digital TV service in the Sacramento market.

"The continued growth of our Broadband segment is a result of our investments in fiber-to-the-home networks and our suite of advanced products. Looking forward, we're excited about our future in light of our pending merger with Consolidated Communications, and we will continue to focus on obtaining the necessary approvals to close this transaction as expeditiously as possible. We expect Broadband revenues and adjusted EBITDA to continue increasing through the expansion of both our residential and business product offerings in the communities we serve."

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

Y-O-Y comparison Q-O-Q comparison
---------------- ----------------
Consolidated Q1'12 Q1'11 Change % Q4'11 Change %
----- ----- ------ --- ----- ------ ---
Broadband Revenue $49,987 $45,379 $4,608 10% $49,010 $977 2%
Telecom Revenue 12,771 15,176 (2,405) (16%) 14,529 (1,758) (12%)
Total Revenue 62,758 60,555 2,203 4% 63,539 (781) (1%)
Adjusted EBITDA 19,451 19,721 (270) (1%) 21,602 (2,151) (10%)
Net Income (Loss) (3,914) (1,644) (2,270) (138%) 1,483 (5,397) (364%)
Capital Expenditures 16,100 11,452 4,648 41% 21,747 (5,647) (26%)
Net Cash Provided by
Operating Activities 15,490 19,372 (3,882) (20%) 20,259 (4,769) (24%)
Free Cash Flow (4,068) 2,679 (6,747) (252%) (4,241) 173 4%
Adjusted Free Cash
Flow (532) 4,094 (4,626) (113%) 3,281 (3,813) (116%)
Net Debt 202,054 197,119 4,935 3% 200,167 1,887 1%
-------- ------- ------- ----- --- ------- ----- ---
See Non-GAAP measure notes near end of release, and Adjusted EBITDA, Free Cash Flow and Net Debt reconciliations for adjustments.


First Quarter Financial Results

Consolidated revenues increased 4% year-over-year to $62.8 million as Broadband revenues grew by $4.6 million, or 10%, more than offsetting Telecom revenue declines of $2.4 million, or 16%. Adjusted EBITDA decreased 1% year-over-year to $19.5 million, with Broadband adjusted EBITDA increasing 13% to account for 60% of total adjusted EBITDA.

Operating expenses, exclusive of depreciation and amortization, increased 15% year-over-year to $49 million. This increase was primarily due to $3.3 million in transaction costs related to the merger with Consolidated Communications and increases in advertising costs, residential video license fees and transport charges associated with commercial services growth.

Net loss for the quarter was $3.9 million, or a loss of $0.28 per share, compared to net loss of $1.6 million, or a loss of $0.12 per share, in the same period last year. This decline was primarily due to the transaction costs of $3.3 million in the current year quarter and a sequential reduction of $510 thousand in the California High Cost Fund (CHCF) subsidy, which is now phased out.

Capital expenditures totaled $16.1 million for the first quarter, an increase from $11.5 million in the same period last year. The 2012 capital plan prioritizes spending where the company has experienced the greatest return on investment. This includes continued business sales growth opportunities, residential RGU growth and increased residential penetration. SureWest added 2,000 new fiber-to-the-home (FTTH) marketable homes during the quarter and 17,800 year-over-year. The company upgraded 1,000 ILEC territory copper homes with Advanced Digital TV service during the quarter and completed 9,000 upgrades year-over-year. These upgrades increased fiber and copper triple-play marketable homes in the ILEC to 67%, up from 57% in the first quarter of 2011. A total of 11,000 new fiber homes are planned for 2012 in Kansas City where the company has experienced superior penetration levels. SureWest is reiterating projected capital expenditures of $60-70 million in 2012.

Free cash flow, defined as net income (loss) plus depreciation and amortization less capital expenditures, was negative $4.1 million for the quarter, compared to positive $2.7 million in the first quarter 2011. This decline was expected as a result of transaction costs and the $3.5 million investment in network expansion in the first quarter 2012 compared to $1.4 million in first quarter 2011. Adjusted free cash flow, defined as free cash flow excluding capital investments in network expansion, decreased $4.6 million to negative $532 thousand primarily due to the transaction costs and increases in advertising costs, residential video license fees and transport charges associated with commercial services growth.

Cash and cash equivalents increased by $1.2 million sequentially, from $4.2 million in the fourth quarter 2011 to $5.4 million. Total debt net of cash and cash equivalents (net debt) was $202.1 million, resulting in a net debt to adjusted EBITDA ratio of 2.40x.

Broadband Segment Results

Broadband revenues increased 10% year-over-year and accounted for 80% of the company's total revenues in the quarter, compared to 75% in the first quarter 2011. Broadband adjusted EBITDA increased 13% year-over-year and now represents 60% of the company's total adjusted EBITDA. Sequential Broadband adjusted EBITDA declined 1% due to increases in video license fees during the quarter. The resulting customer price increase is scheduled for the second quarter 2012.

Broadband Residential:

Broadband Residential revenues increased 9% year-over-year to $34.6 million as a result of 3% growth in RGUs and a 6% increase in ARPU, primarily driven by new triple-play Advanced Digital TV customers in the ILEC.

New products and features like Advanced Digital TV, increased Internet speeds, additional HD channels, home networking and Internet security software have continued to create enhanced subscriber value and some pricing power.

The April launch of Whole Home DVR in Kansas City is expected to positively impact subscriber and RGU growth. Initially, the new product is only being offered to new acquisitions and as a retention tool to manage inventory and capital expense.

In Sacramento, Advanced Digital TV continued to drive growth, increasing total net video RGUs by 5% year-over-year. SureWest served 23,771 Advanced Digital TV subscribers through the first quarter, representing 86% of the company's video RGUs in Sacramento. These subscribers have an ARPU of $144, with approximately 98% bundling Internet and 78% subscribing to a triple-play. ARPU for those triple-play subscribers is $151, compared to $140 in the same period last year.

Residential customer churn remained strong year-over-year and sequentially at 1.4% as a result of customer retention programs, value-added features and ongoing superior service levels.

To illustrate growth trends, Broadband RGUs and subscriber counts are detailed both year-over-year and sequentially in the table below:

Q1 '12 vs. Q1 '11 Change Q1 '12 vs. Q4 '11 Change
------------------------ ------------------------
Sacramento Kansas City Total Sacramento Kansas City Total
Market Market Market Market
------ ------ ------ ------
Broadband
Residential
RGUs 1% 4% 3% (1%) 0% 0%
Data RGUs (1%) 7% 2% (1%) 1% 0%
Video RGUs 5% 6% 6% 0% 1% 0%
Voice RGUs 2% (2%) 0% 0% (2%) (1%)
Total
Residential
Subscribers (1%) 6% 2% (1%) 0% 0%
Broadband Business:

Broadband Business revenues increased by $2 million, or 16%, year-over-year to $14.7 million. Business customers increased 8% year-over-year to 8,400 and ARPU grew 8% from the prior year to $584. The Kansas City market grew ARPU by 4% year-over-year while increasing customer counts by 11%. The Sacramento market grew customer counts by 6% and ARPU grew by 13% driven by wireless backhaul.

As of March 31, 2012, SureWest was billing for 366 wireless backhaul access points at annualized revenues of $4.4 million. The company currently has 398 contracts in place, and opportunities exist and are being pursued to serve additional connections in each region.

Small-to-medium business sales remained strong due to the benefits of SureWest's fiber network and IP-based services such as Internet, SIP Trunking and IPBX. First quarter revenue growth was driven by strong fiber network sales in the fourth quarter 2011, which continued in the first quarter. Broadband Business growth expectations remain high in both Sacramento and Kansas City.

Telecom Segment Results

Telecom revenues declined 16% year-over-year to $12.8 million consistent with the industry-wide trend of declines in access lines, minutes of use and access revenues. This was partially due to the decrease of $510 thousand in regulatory support revenues that were reduced as scheduled in the first quarter 2012. The company's scheduled state regulatory support declines began in 2006 and are now fully phased out.

The Telecom segment has consistently generated adjusted EBITDA margins over 40% and continues to generate significant free cash flow, which is utilized to reduce debt and fund Broadband segment expansion. As the company focuses on growing its Broadband segment, the Telecom segment will continue to account for a smaller percentage of total revenues. For the first quarter 2012, Telecom revenues were 20% of total company revenues compared to 25% in the first quarter 2011.

Telecom Residential:

Telecom Residential revenues declined 22% year-over-year to $2.8 million resulting from a 21% decline in Telecom voice RGUs. However, of the 5,600 year-over-year Telecom Residential voice RGU losses, 2,500, or 45%, migrated to the SureWest Broadband VoIP service. The migration of existing Telecom ILEC access lines to Broadband VoIP enables the continued preservation of voice revenues on a consolidated basis.

Telecom Business:

Telecom Business revenues declined 6% year-over-year to $7.9 million as a result of a 4% decrease in business customers in the ILEC territory. The company is experiencing competitive pressure in the very small business customer segments; however, medium and large ILEC business customers remain stable. Telecom Business services revenues now represent 62% of the total Telecom segment revenues.

Telecom Access:

Telecom Access revenues decreased by $1.2 million year-over-year to $1.9 million primarily due to the scheduled reduction in the CHCF subsidy and a decline in interstate common line revenue related to NECA cost study settlements in the current year quarter. As planned and communicated, the final phase out of the CHCF occurred in the first quarter 2012, resulting in a $510 thousand quarterly access revenue decline. The annual CHCF subsidy was $2 million in 2011, a decrease from $4.1 million in 2010, and is zero in 2012.

Merger Update

As announced on February 6, 2012, SureWest entered into a definitive merger agreement under which Consolidated Communications (Nasdaq: CNSL) will acquire all outstanding shares of SureWest in a cash and stock transaction valued at $23.00 per share, or a total of approximately $340.9 million, exclusive of debt. The consideration represents a 47% premium to SureWest's stock price as of the close on February 3, 2012. Subject to the satisfaction of customary closing conditions, including federal and state regulatory approvals and the approval by both Consolidated and SureWest shareholders, the transaction is expected to close at the end of the second quarter or in the third quarter of 2012. The transaction was unanimously approved by the boards of directors of both companies.

SureWest will hold a special meeting of its shareholders on June 12, 2012 at 10 a.m., Pacific time, at SureWest's corporate headquarters, 8150 Industrial Avenue, Building A, Roseville, California 95678. At the SureWest special meeting, SureWest's shareholders will be asked (i) to approve the Merger Agreement, (ii) to approve, by an advisory vote, the change in control severance payments to SureWest's named executive officers, and (iii) to adjourn or postpone the SureWest special meeting, if necessary or appropriate, for among other reasons, the solicitation of additional proxies.

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, adjusted free cash flow and net debt. Adjusted EBITDA represents net income (loss) excluding amounts for income taxes, depreciation and amortization, non-cash pension and certain post-retirement benefits, non-cash stock compensation, transaction fees related to the merger with Consolidated Communications and all other non-operating income/expenses. Free cash flow represents net income (loss) plus depreciation and amortization less capital expenditures. Adjusted free cash flow represents free cash flow as defined above, excluding the network expansion capital investments. Free cash flow and adjusted free cash flow are a measure of operating cash flows available for corporate purposes after providing sufficient fixed asset additions to maintain current productive capacity. Net debt represents total long-term debt (including current maturities) less cash and cash equivalents. Net debt can be used as a component in measuring leverage. 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. Reconciliations to the comparable GAAP measures are 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

Due to the pending merger with Consolidated Communications, SureWest will not host an investor call with respect to the financial results.

Additional Information and Where to Find It

On April 27, 2012, Consolidated filed with the Securities and Exchange Commission ("SEC"), a definitive proxy statement on Form DEF 14A in connection with the proposed merger transaction. On May 1, 2012, SureWest sent to its shareholders the definitive proxy statement/prospectus regarding the proposed merger transaction. SureWest urges investors and security holders to read the proxy statement/prospectus (including all amendments and supplements to it) and other documents relating to the merger transaction, because they contain important information about SureWest, Consolidated and the proposed transactions. Investors and security holders may obtain a free copy of the proxy statement/prospectus and other documents relating to the merger transaction from the SEC's website at www.sec.gov, SureWest's website at www.surw.com and Consolidated's website at www.consolidated.com. In addition, copies of the definitive proxy statement/prospectus and such other documents may be obtained from SureWest free of charge by directing a request to SureWest Communications, P.O. Box 969, Roseville, CA 95661, Attn: Investor Relations, telephone: (916) 786-1831

Important Merger Information and Additional Information

This document does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

Participants in the Solicitation

SureWest and Consolidated, and certain of their respective directors and officers and other persons may be deemed to be participants in the solicitation of proxies from its shareholders in connection with the proposed acquisition transaction. Information regarding directors and executive officers of SureWest in the solicitation is set forth in the SureWest proxy statements and Annual Reports on Form 10-K, previously filed with the SEC. Information regarding directors and executive officers of Consolidated in the solicitation is set forth in the Consolidated proxy statements and Annual Reports on Form 10-K, previously filed with the SEC. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available. Investors should read the proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions.

About SureWest

SureWest Communications is a leading integrated communications provider and the bandwidth leader in the markets it serves. Headquartered in Northern California for more than 95 years, SureWest offers bundled residential and commercial services in the greater Sacramento and Kansas City regions 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. For up-to-date information on products and services, visit the company on Facebook and Twitter.

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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; Amounts in thousands, except per share amounts)

Quarters Ended
--------------
March 31, December 31, $ %
2012 2011 Change Change
---- ---- ------ ------
Operating revenues:
Broadband $49,987 $49,010 $977 2%
Telecom 12,771 14,529 (1,758) (12%)
------
Total operating revenues 62,758 63,539 (781) (1%)

Operating expenses:
Cost of services and products
(exclusive of depreciation and
amortization) 29,723 28,919 804 3%
Customer operations and selling 8,163 7,631 532 7%
General and administrative 11,120 6,496 4,624 71%
Depreciation and amortization 15,946 16,023 (77) (0%)

Total operating expenses 64,952 59,069 5,883 10%
------ ------ ----- ---

Income (loss) from operations (2,194) 4,470 (6,664) (149%)

Other income (expense):
Investment income 25 3 22 733%
Interest expense (2,213) (2,074) (139) (7%)
Other, net (154) 208 (362) (174%)
-----
Total other income (expense), net (2,342) (1,863) (479) (26%)
-------

Income (loss) from operations before income taxes (4,536) 2,607 (7,143) (274%)

Income tax expense (benefit) (622) 1,124 (1,746) (155%)
---- ----- ------ -----

Net income (loss) $(3,914) $1,483 $(5,397) (364%)
======= ====== ======= =====


Basic and diluted earnings (loss) per common share $(0.28) $0.11 $(0.39)
====== ===== ======

Shares of common stock used
to calculate earnings per share:
Basic 14,036 13,948 88
=====
Diluted 14,036 14,035 1
======

Dividends per share $0.10 $0.10 $ -
===== ===== ========



SUREWEST COMMUNICATIONS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; Amounts in thousands, except per share amounts)

Quarters Ended March 31, $ %
------------------------
2012 2011 Change Change
---- ---- ------ ------
Operating revenues:
Broadband $49,987 $45,379 $4,608 10%
Telecom 12,771 15,176 (2,405) (16%)
-------
Total operating revenues 62,758 60,555 2,203 4%

Operating expenses:
Cost of services and products
(exclusive of depreciation and
amortization) 29,723 27,261 2,462 9%
Customer operations and selling 8,163 6,983 1,180 17%
General and administrative 11,120 8,548 2,572 30%
Depreciation and amortization 15,946 15,775 171 1%

Total operating expenses 64,952 58,567 6,385 11%
------ ------ ----- ---

Income (loss) from operations (2,194) 1,988 (4,182) (210%)

Other income (expense):
Investment income 25 15 10 67%
Interest expense (2,213) (4,416) 2,203 50%
Other, net (154) 207 (361) (174%)
----------
(2,342) (4,194) 1,852 44%
Total other income (expense), net
----------

Loss from operations before income taxes (4,536) (2,206) (2,330) (106%)

Income tax benefit (622) (562) (60) (11%)
---- ---- --- ----

Net loss $(3,914) $(1,644) $(2,270) (138%)
======= ======= ======= =====

Basic and diluted loss per common share $(0.28) $(0.12) $(0.16)
====== ====== ======

Shares of common stock
used to calculate earnings per share:
Basic and diluted 14,036 13,784 252
==========

Dividends per share $0.10 $0.08 $0.02
===== ===== =====


SureWest Communications
Quarterly Selected Financial Results & Reconciliations of Non-GAAP Measures
(on a consolidated and a segment basis)
(Unaudited; Amounts in thousands)

Consolidated Results of Operations

For 2011 Quarters Ended: Twelve Months Quarter Ended Quarter Sequential
Ended December Year-over-Year Qtr-over-Qtr
--------------- -------------- ------------
March 31 June 30 September 30 December 31 31, 2011 March 31, 2012 $ chg % $ chg %
-------- ------- ------------ ----------- -------- -------------- ----- --- ----- ---
Operating revenues (1)
Broadband $45,379 $45,959 $48,018 $49,010 $188,366 $49,987 $4,608 10% $977 2%
Telecom 15,176 15,003 14,979 14,529 59,687 12,771 (2,405) (16%) (1,758) (12%)
---- ----
Total operating revenues 60,555 60,962 62,997 63,539 248,053 62,758 2,203 4% (781) (1%)
------ ------ ------ ------ ------- ------ ----- --- ---- ---

Operating expenses (1) 42,792 40,309 43,216 43,046 169,363 49,006 6,214 15% 5,960 14%
Depreciation and amortization 15,775 16,357 15,810 16,023 63,965 15,946 171 1% (77) (0%)
--- ---
Income from operations $1,988 $4,296 $3,971 $4,470 $14,725 $(2,194) $(4,182) (210%) $(6,664) (149%)
====== ====== ====== ====== ======= ======= ======= ===== ======= =====


Consolidated Reconciliation of Adjusted EBITDA to Net Income (Loss)

For 2011 Quarters Ended: Twelve Months Ended December Quarter Ended Quarter Sequential
Year-over-Year Qtr-over-Qtr
-------------- ------------
March 31 June 30 September 30 December 31 31, 2011 March 31, 2012 $ chg % $ chg %
-------- ------- ------------ ----------- -------- -------------- ----- --- ----- ---
Net income (loss) $(1,644) $1,320 $643 $1,483 $1,802 $(3,914) $(2,270) (138%) $(5,397) (364%)
Add: income tax expense (benefit) (562) 484 289 1,124 1,335 (622) (60) (11%) (1,746) (155%)
Less: other (income)/expense 4,194 2,492 3,039 1,863 11,588 2,342 (1,852) (44%) 479 26%
----- ----- ----- ----- ------ ----- ------ ---- --- ---
Income from operations 1,988 4,296 3,971 4,470 14,725 (2,194) (4,182) (210%) (6,664) (149%)
Add (subtract):
Depreciation and amortization 15,775 16,357 15,810 16,023 63,965 15,946 171 1% (77) (0%)
Non-cash pension expense 313 394 351 346 1,404 1,048 735 235% 702 203%
Non-cash stock compensation expense 1,645 1,182 747 763 4,337 1,359 (286) (17%) 596 78%
Transaction costs - - - - - 3,292 3,292 100% 3,292 100%
Adjusted EBITDA (2) $19,721 $22,229 $20,879 $21,602 $84,431 $19,451 $(270) (1%) $(2,151) (10%)
======= ======= ======= ======= ======= ======= ===== === ======= ====

Adjusted EBITDA margin 33% 36% 33% 34% 34% 31%


Consolidated Free Cash Flow and Adjusted Free Cash Flow

For 2011 Quarters Ended: Twelve Months Ended December Quarter Ended Quarter Sequential
Year-over-Year Qtr-over-Qtr
-------------- ------------
March 31 June 30 September 30 December 31 31, 2011 March 31, 2012 $ chg % $ chg %
-------- ------- ------------ ----------- -------- -------------- ----- --- ----- ---
Net income (loss) $(1,644) $1,320 $643 $1,483 $1,802 $(3,914) $(2,270) (138%) $(5,397) (364%)
Add: Depreciation and amortization 15,775 16,357 15,810 16,023 63,965 15,946 171 1% (77) (0%)
Less: Capital expenditures (11,452) (20,671) (18,658) (21,747) (72,528) (16,100) (4,648) (41%) 5,647 26%
------- ------- ------- ------- ------- ------- ------ ---- ----- ---
Free cash flow (3) 2,679 (2,994) (2,205) (4,241) (6,761) (4,068) (6,747) (252%) 173 4%
Add: Capital expenditures for network
expansion 1,415 7,020 7,455 7,522 23,412 3,536 2,121 150% (3,986) (53%)
---
Adjusted free cash flow(3) $4,094 $4,026 $5,250 $3,281 $16,651 $(532) $(4,626) (113%) $(3,813) (116%)
====== ====== ====== ====== ======= ===== ======= ===== ======= =====


Consolidated Net Debt Ratio

For 2011 Quarters Ended: Quarter Ended Quarter Sequential
Year-over-Year Qtr-over-Qtr
-------------- ------------
March 31 June 30 September 30 December 31 March 31, 2012 $ chg % $ chg %
-------- ------- ------------ ----------- -------------- ----- --- ----- ---
Net Debt:
Long-term debt, including current
maturities $210,000 $210,000 $206,250 $204,375 $207,500 $(2,500) (1%) $3,125 2%
Less: Cash and cash equivalents (12,881) (11,047) (8,932) (4,208) (5,446) 7,435 58% (1,238) (29%)
Net Debt (4) $197,119 $198,953 $197,318 $200,167 $202,054 $4,935 3% $1,887 1%
======== ======== ======== ======== ======== ====== === ====== ===

Ratio of Net Debt to Adjusted EBITDA:
Net Debt $197,119 $198,953 $197,318 $200,167 $202,054

Divided by: Adjusted EBITDA (TTM) $82,764 $85,065 $84,609 $84,431 $84,161

Ratio of net debt to Adjusted EBITDA
(5) 2.38 2.34 2.33 2.37 2.40


Broadband Results of Operations

For 2011 Quarters Ended: Twelve Months Ended December Quarter Ended Quarter Sequential
Year-over-Year Qtr-over-Qtr
-------------- ------------
March 31 June 30 September 30 December 31 31, 2011 March 31, 2012 $ chg % $ chg %
-------- ------- ------------ ----------- -------- -------------- ----- --- ----- ---
Data $12,184 $12,281 $13,260 $13,480 $51,205 $13,665 $1,481 12% $185 1%
Video 13,312 13,466 14,039 14,178 54,995 14,549 1,237 9% 371 3%
Voice 6,335 6,341 6,361 6,331 25,368 6,367 32 1% 36 1%
----- ----- ----- ----- ------ ----- --- --- --- ---
Total residential revenues 31,831 32,088 33,660 33,989 131,568 34,581 2,750 9% 592 2%
Business 12,614 12,999 13,557 14,223 53,393 14,655 2,041 16% 432 3%
Access 556 504 509 476 2,045 485 (71) (13%) 9 2%
Other 378 368 292 322 1,360 266 (112) (30%) (56) (17%)
--- --- --- --- ----- --- ---- ---- --- ----
Total operating revenues from
external customers 45,379 45,959 48,018 49,010 188,366 49,987 4,608 10% 977 2%
Intersegment revenues 160 155 152 177 644 191 31 19% 14 8%
Total operating revenues 45,539 46,114 48,170 49,187 189,010 50,178 4,639 10% 991 2%
------ ------ ------ ------ ------- ------ ----- --- --- ---

Operating expenses without
depreciation 36,337 35,624 37,179 38,062 147,202 42,171 5,834 16% 4,109 11%
Depreciation and amortization 12,688 13,098 12,574 12,759 51,119 12,772 84 1% 13 0%
Loss from operations $(3,486) $(2,608) $(1,583) $(1,634) $(9,311) $(4,765) $(1,279) (37%) $(3,131) (192%)
======= ======= ======= ======= ======= ======= ======= ==== ======= =====


Broadband Reconciliation of Adjusted EBITDA to Net Loss

For 2011 Quarters Ended: Twelve Months Ended December Quarter Ended Quarter Sequential
Year-over-Year Qtr-over-Qtr
-------------- ------------
March 31 June 30 September 30 December 31 31, 2011 March 31, 2012 $ chg % $ chg %
-------- ------- ------------ ----------- -------- -------------- ----- --- ----- ---
Net loss $(4,405) $(3,006) $(2,801) $(3,654) $(13,866) $(5,022) $(617) (14%) $(1,368) (37%)
Add: income tax benefits (2,928) (1,998) (1,867) (36) (6,829) (1,989) 939 32% (1,953) (5425%)
Less: other (income)/expense 3,847 2,396 3,085 2,056 11,384 2,246 (1,601) (42%) 190 9%
----- ----- ----- ----- ------ ----- ------ ---- --- ---
Loss from operations (3,486) (2,608) (1,583) (1,634) (9,311) (4,765) (1,279) (37%) (3,131) (192%)
Add (subtract):
Depreciation and amortization 12,688 13,098 12,574 12,759 51,119 12,772 84 1% 13 0%
Non-cash pension expense 153 187 173 167 680 496 343 224% 329 197%
Non-cash stock compensation expense 978 720 457 469 2,624 916 (62) (6%) 447 95%
Transaction costs - - - - - 2,227 2,227 100% 2,227 100%
Adjusted EBITDA (2) $10,333 $11,397 $11,621 $11,761 $45,112 $11,646 $1,313 13% $(115) (1%)
======= ======= ======= ======= ======= ======= ====== === ===== ===

Adjusted EBITDA margin 23% 25% 24% 24% 24% 23%


Broadband Free Cash Flow and Adjusted Free Cash Flow

For 2011 Quarters Ended: Twelve Months Ended December Quarter Ended Quarter Sequential
Year-over-Year Qtr-over-Qtr
-------------- ------------
March 31 June 30 September 30 December 31 31, 2011 March 31, 2012 $ chg % $ chg %
-------- ------- ------------ ----------- -------- -------------- ----- --- ----- ---
Net loss $(4,405) $(3,006) $(2,801) $(3,654) $(13,866) $(5,022) $(617) (14%) $(1,368) (37%)
Add: Depreciation and amortization 12,688 13,098 12,574 12,759 51,119 12,772 84 1% 13 0%
Less: Capital expenditures (9,574) (16,706) (16,677) (17,661) (60,618) (14,062) (4,488) (47%) 3,599 20%
------ ------- ------- ------- ------- ------- ------ ---- ----- ---
Free cash flow (3) (1,291) (6,614) (6,904) (8,556) (23,365) (6,312) (5,021) (389%) 2,244 26%
Add: Capital expenditures for network
expansion 1,013 6,492 6,500 7,044 21,049 3,062 2,049 202% (3,982) (57%)
---
Adjusted free cash flow (3) $(278) $(122) $(404) $(1,512) $(2,316) $(3,250) $(2,972) (1069%) $(1,738) (115%)
===== ===== ===== ======= ======= ======= ======= ====== ======= =====

Telecom Results of Operations

For 2011 Quarters Ended: Twelve Months Ended December Quarter Ended Quarter Sequential
Year-over-Year Qtr-over-Qtr
-------------- ------------
March 31 June 30 September 30 December 31 31, 2011 March 31, 2012 $ chg % $ chg %
-------- ------- ------------ ----------- -------- -------------- ----- --- ----- ---
Residential $3,592 $3,393 $3,196 $3,048 $13,229 $2,819 $(773) (22%) $(229) (8%)
Business 8,394 8,294 8,122 8,390 33,200 7,932 (462) (6%) (458) (5%)
Access 3,054 3,148 3,559 2,999 12,760 1,901 (1,153) (38%) (1,098) (37%)
Other 136 168 102 92 498 119 (17) (13%) 27 29%
--- --- --- --- --- --- --- ---- --- ---
Total operating revenues from
external customers 15,176 15,003 14,979 14,529 59,687 12,771 (2,405) (16%) (1,758) (12%)
Intersegment revenues 5,296 5,052 5,231 5,373 20,952 5,484 188 4% 111 2%
----- ----- ----- ----- ------ ----- --- --- --- ---
Total operating revenues 20,472 20,055 20,210 19,902 80,639 18,255 (2,217) (11%) (1,647) (8%)
------ ------ ------ ------ ------ ------ ------ ---- ------ ---

Operating expenses without
depreciation 11,911 9,892 11,420 10,534 43,757 12,510 599 5% 1,976 19%
Depreciation and amortization 3,087 3,259 3,236 3,264 12,846 3,174 87 3% (90) (3%)
----- ----- ----- ----- ------ ----- ---
Income from operations $5,474 $6,904 $5,554 $6,104 $24,036 $2,571 $(2,903) (53%) $(3,533) (58%)
====== ====== ====== ====== ======= ====== ======= ==== ======= ====


Telecom Reconciliation of Adjusted EBITDA to Net Income

For 2011 Quarters Ended: Twelve Months Ended December Quarter Ended Quarter Sequential
Year-over-Year Qtr-over-Qtr
-------------- ------------
March 31 June 30 September 30 December 31 31, 2011 March 31, 2012 $ chg % $ chg %
-------- ------- ------------ ----------- -------- -------------- ----- --- ----- ---
Net income $2,761 $4,326 $3,444 $5,137 $15,668 $1,108 $(1,653) (60%) $(4,029) (78%)
Add: income tax expense 2,366 2,482 2,156 1,160 8,164 1,367 (999) (42%) 207 18%
Less: other (income)/expense 347 96 (46) (193) 204 96 (251) (72%) 289 150%
--- --- --- ---- --- --- ---- ---- --- ---
Income from operations 5,474 6,904 5,554 6,104 24,036 2,571 (2,903) (53%) (3,533) (58%)
Add (subtract):
Depreciation and amortization 3,087 3,259 3,236 3,264 12,846 3,174 87 3% (90) (3%)
Non-cash pension expense 160 207 178 179 724 552 392 245% 373 208%
Non-cash stock compensation expense 667 462 290 294 1,713 443 (224) (34%) 149 51%
Transaction costs - - - - - 1,065 1,065 100% 1,065 100%
Adjusted EBITDA (2) $9,388 $10,832 $9,258 $9,841 $39,319 $7,805 $(1,583) (17%) $(2,036) (21%)
====== ======= ====== ====== ======= ====== ======= ==== ======= ====

Adjusted EBITDA margin 46% 54% 46% 49% 49% 43%


Telecom Free Cash Flow and Adjusted Free Cash Flow

For 2011 Quarters Ended: Twelve Months Ended December Quarter Ended Quarter Sequential
Year-over-Year Qtr-over-Qtr
-------------- ------------
March 31 June 30 September 30 December 31 31, 2011 March 31, 2012 $ chg % $ chg %
-------- ------- ------------ ----------- -------- -------------- ----- --- ----- ---
Net income $2,761 $4,326 $3,444 $5,137 $15,668 $1,108 $(1,653) (60%) $(4,029) (78%)
Add: Depreciation and amortization 3,087 3,259 3,236 3,264 12,846 3,174 87 3% (90) (3%)
Less: Capital expenditures (1,704) (2,598) (1,971) (3,394) (9,667) (1,928) (224) (13%) 1,466 43%
------ ------ ------ ------ ------ ------ ---- ---- ----- ---
Free cash flow (3) 4,144 4,987 4,709 5,007 18,847 2,354 (1,790) (43%) (2,653) (53%)
Add: Capital expenditures for network
expansion 402 528 955 478 2,363 474 72 18% (4) (1%)
--- --- --- --- ---
Adjusted free cash flow (3) $4,546 $5,515 $5,664 $5,485 $21,210 $2,828 $(1,718) (38%) $(2,657) (48%)
====== ====== ====== ====== ======= ====== ======= ==== ======= ====






(1) External customers only.
----------------------------

(2) Adjusted EBITDA represents net income
(loss) excluding amounts for income taxes;
depreciation and amortization; non-cash
pension and certain post-retirement
benefits; non-cash stock compensation;
transaction fees related to the merger with
Consolidated Communications; 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) 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. Consolidated free cash flow
includes capital expenditures for our
corporate operating unit. Adjusted free cash
flow represents free cash flow excluding
capital expenditures for network expansion.
Free cash flow and adjusted free cash flow
are not measures 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 and net cash provided
by operating activities as a measure of
liquidity.
---------------------------------------------

(4) Net debt represents total long-term debt
(including current maturities) less cash and
cash equivalents. Net debt can be 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.
---------------------------------------------

(5) The ratio of net debt to adjusted EBITDA
is calculated as net debt divided by adjusted
EBITDA based on a trailing twelve month (TTM)
period. 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
CONSOLIDATED BALANCE SHEETS
(Unaudited; Amounts in thousands)


March 31, December 31, $ %
2012 2011 Change Change
---- ---- ------ ------
ASSETS
Current assets:
Cash and cash
equivalents $5,446 $4,208 $1,238 29%
Accounts
receivable,
net 18,899 21,540 (2,641) (12%)
Income tax
receivable 123 280 (157) (56%)
Prepaid
expenses 2,974 2,912 62 2%
Deferred income
taxes 2,299 2,226 73 3%
Assets held for
sale 4,756 4,756 - -
----- ----- --- ---
Total current
assets 34,497 35,922 (1,425) (4%)

Property, plant and
equipment, net 523,012 522,790 222 0%

Intangible and
other assets:
Customer
relationships,
net 1,114 1,417 (303) (21%)
Goodwill 45,814 45,814 - -
Deferred
charges and
other assets 5,942 6,133 (191) (3%)
----- ----- ---- ---
52,870 53,364 (494) (1%)
$610,379 $612,076 $(1,697) (0%)
======== ======== ======= ===

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
liabilities:
Current portion
of long-term
debt $7,500 $7,500 $ - -
Accounts
payable 3,443 4,315 (872) (20%)
Other accrued
liabilities 16,699 16,783 (84) (1%)
Advance
billings and
deferred
revenues 8,170 8,051 119 1%
Accrued
compensation 7,679 7,593 86 1%
----- ----- --- ---
Total current
liabilities 43,491 44,242 (751) (2%)

Long-term debt 200,000 196,875 3,125 2%
Deferred income
taxes 48,569 49,126 (557) (1%)
Accrued pension and
other post-
retirement
benefits 54,957 54,354 603 1%
Other liabilities
and deferred
revenues 6,662 6,784 (122) (2%)

Commitments and
contingencies

Shareholders'
equity:
Common stock,
without par
value; 100,000
shares
authorized,
14,330 and
14,060 shares
issued and
outstanding at
March 31, 2012
and December
31, 2011,
respectively 147,904 146,498 1,406 1%
Accumulated
other
comprehensive
loss (27,777) (27,770) (7) (0%)
Retained
earnings 136,573 141,967 (5,394) (4%)
------ ---
Total shareholders'
equity 256,700 260,695 (3,995) (2%)
-----------
$610,379 $612,076 $(1,697) (0%)
======== ======== ======= ===


SUREWEST COMMUNICATIONS
SELECTED OPERATING METRICS
As of and for the Quarters Ended

BROADBAND 3/31/2012 (1) 3/31/2011 (1) Change % Change 12/31/2011 (1) Change % Change
--------- ------------- ------------- ------ -------- -------------- ------ --------
Residential
Video
Marketable Homes (2) 300,000 272,600 27,400 10% 296,700 3,300 1%
RGUs 66,700 63,100 3,600 6% 66,400 300 0%
Penetration (2) 22.2% 23.1% -0.9% (4%) 22.4% -0.1% (1%)
ARPU $73 $71 $2 3% $72 $1 1%
Voice
Marketable Homes 330,000 311,600 18,400 6% 327,700 2,300 1%
RGUs 75,600 75,600 0 0% 76,400 (800) (1%)
Penetration 22.9% 24.3% -1.4% (6%) 23.3% -0.4% (2%)
ARPU $28 $28 $0 (0%) $28 $0 1%
Data
Marketable Homes 330,000 311,600 18,400 6% 327,700 2,300 1%
RGUs 102,700 100,300 2,400 2% 102,600 100 0%
Penetration 31.1% 32.2% -1.1% (3%) 31.3% -0.2% (1%)
ARPU $44 $41 $3 9% $44 $0 1%
Total
RGUs 245,000 239,000 6,000 3% 245,400 (400) (0%)

Subscriber totals
Subscribers (3) 106,800 104,900 1,900 2% 107,100 (300) (0%)
Penetration 32.4% 33.7% -1.3% (4%) 32.7% -0.3% (1%)
ARPU (4) $108 $102 $6 6% $106 $2 1%
Triple Play ARPU (5) $118 $114 $4 3% $117 $1 1%
Triple Play RGUs per Subscriber (5) 2.48 2.52 (0.04) (2%) 2.49 (0.01) (0%)
Churn 1.4% 1.4% 0.0% 2% 1.4% 0.0% 2%

Business (6)
Customers 8,400 7,800 600 8% 8,000 400 5%
ARPU $584 $539 $45 8% $592 ($8) (1%)

TELECOM 3/31/2012 3/31/2011 Change % Change 12/31/2011 Change % Change
------- --------- --------- ------ -------- ---------- ------ --------
Residential
Voice
Marketable Homes 92,100 91,700 400 0% 91,900 200 0%
RGUs (7) 21,700 27,300 (5,600) (21%) 23,000 (1,300) (6%)
Cumulative Migration to Broadband Voice (8) 18,600 16,100 2,500 16% 18,000 600 3%
Penetration 23.6% 29.8% -6.2% (21%) 25.0% -1.5% (6%)
ARPU $42 $43 ($1) (1%) $43 ($1) (2%)
Churn (9) 1.7% 1.8% -0.1% (5%) 1.6% 0.1% 4%

Business (6)
Customers 7,500 7,800 (300) (4%) 7,700 (200) (3%)
ARPU $348 $356 ($8) (2%) $363 ($15) (4%)

CONSOLIDATED RESIDENTIAL VOICE RGUs 3/31/2012 3/31/2011 Change % Change 12/31/2011 Change % Change
----------------------------------- --------- --------- ------ -------- ---------- ------ --------
ILEC Voice RGUs
Broadband 23,100 21,500 1,600 7% 23,100 0 0%
Telecom 21,700 27,300 (5,600) (21%) 23,000 (1,300) (6%)
------ ------ ------ ---- ------ ------ ---
Total ILEC Voice RGUs (10) 44,800 48,800 (4,000) (8%) 46,100 (1,300) (3%)
CLEC Residential Voice RGUs (11) 52,500 54,100 (1,600) (3%) 53,300 (800) (2%)
------ ------ ------ --- ------ ---- ---
TOTAL Residential Voice RGUs (12) 97,300 102,900 (5,600) (5%) 99,400 (2,100) (2%)

TOTAL RESIDENTIAL BROADBAND & TELECOM RGUs 266,700 266,300 400 0% 268,400 (1,700) (1%)
------------------------------------------

NETWORK METRICS 3/31/2012 3/31/2011 Change % Change 12/31/2011 Change % Change
--------------- --------- --------- ------ -------- ---------- ------ --------
Marketable Homes - Fiber 166,500 148,700 17,800 12% 164,500 2,000 1%
Marketable Homes - HFC 94,300 93,700 600 1% 94,000 300 0%
Marketable Homes - Copper 2-Play 30,000 39,000 (9,000) (23%) 31,000 (1,000) (3%)
Marketable Homes - Copper 3-Play 39,200 30,200 9,000 30% 38,200 1,000 3%
------ ------ ----- --- ------ ----- ---
Total 330,000 311,600 18,400 6% 327,700 2,300 1%



Note: 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 percentages and dollars.

(1) During the first quarter of 2012, we reclassified approximately 400 small-office/home-office
Broadband customers from Residential subscribers to Business customers. They had previously been
counted as residential subscribers with primarily voice RGUs. Prior periods were not restated. During
the fourth quarter of 2011, we revised our methodology for allocating subscriber discounts to video,
voice and data revenue. The revised methodology facilitates the consistent application of discounts and
ARPU calculation between both our residential markets. Accordingly, the ARPU metrics previously
reported for 2009, 2010 and 2011 have been revised to conform to current practice.

(2) Marketable Homes -Prior to Q110, video marketable homes and penetration rate included serviceable
homes in Sacramento and Kansas City fiber and hybrid fiber coax (HFC) networks only. With launch of ADTV
in Q110, certain copper homes became video serviceable and 3-play capable and are included in marketable
home counts. Penetration rates prior to Q110 were not adjusted for small number of video customers on
copper network prior to ADTV.

(3) A residential subscriber is a customer who subscribes 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 subscribes to one or more voice access lines.

(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.


SUREWEST COMMUNICATIONS
SELECTED OPERATING METRICS
As of and for the Quarters Ended

BROADBAND 3/31/2009 (1) 6/30/2009 (1) 9/30/2009 (1) 12/31/2009 (1) 3/31/2010 (1) 6/30/2010 (1) 9/30/2010 (1) 12/31/2010( 1) 3/31/2011 (1) 6/30/2011 (1) 9/30/2011 (1) 12/31/2011 (1) 3/31/2012 (1)
--------- ------------- ------------- ------------- -------------- ------------- ------------- ------------- -------------- ------------- ------------- ------------- -------------- -------------
Residential
Video
Marketable Homes (2) 236,500 239,800 240,000 240,500 261,900 265,100 268,500 271,800 272,600 281,200 287,900 296,700 300,000
RGUs 59,900 59,000 59,000 58,900 58,500 60,200 61,200 61,800 63,100 64,100 64,900 66,400 66,700
Quarterly change (100) (900) 0 (100) (400) 1,700 1,000 600 1,300 1,000 800 1,500 300
Year-over-Year change 4,800 2,000 600 (1,100) (1,400) 1,200 2,200 2,900 4,600 3,900 3,700 4,600 3,600
Penetration (2) 24.4% 23.7% 23.8% 23.7% 22.3% 22.7% 22.8% 22.7% 23.1% 22.8% 22.5% 22.4% 22.2%
ARPU $66 $68 $67 $69 $71 $70 $69 $70 $71 $71 $73 $72 $73
Voice
Marketable Homes 308,200 309,300 309,400 309,700 309,900 310,400 311,200 311,300 311,600 317,400 321,700 327,700 330,000
RGUs 66,000 67,700 70,000 71,300 71,800 73,900 74,900 74,900 75,600 75,900 76,100 76,400 75,600
Quarterly change 2,800 1,700 2,300 1,300 500 2,100 1,000 0 700 300 200 300 (800)
Year-over-Year change 12,500 11,400 10,300 8,100 5,800 6,200 4,900 3,600 3,800 2,000 1,200 1,500 0
Penetration 21.5% 22.0% 22.7% 23.1% 23.2% 23.8% 24.1% 24.1% 24.3% 23.9% 23.7% 23.3% 22.9%
ARPU $32 $33 $31 $30 $30 $30 $30 $29 $28 $28 $28 $28 $28
Data
Marketable Homes 308,200 309,300 309,400 309,700 309,900 310,400 311,200 311,300 311,600 317,400 321,700 327,700 330,000
RGUs 97,800 97,400 97,600 98,300 97,500 98,900 99,200 99,400 100,300 100,600 101,300 102,600 102,700
Quarterly change 700 (400) 200 700 (800) 1,400 300 200 900 300 700 1,300 100
Year-over-Year change 6,300 3,700 2,200 1,200 (300) 1,500 1,600 1,100 2,800 1,700 2,100 3,200 2,400
Penetration 31.8% 31.6% 31.6% 31.8% 31.5% 31.9% 31.9% 31.9% 32.2% 31.7% 31.5% 31.3% 31.1%
ARPU $36 $38 $38 $40 $41 $40 $40 $41 $41 $41 $44 $44 $44
Total
RGUs 223,700 224,100 226,600 228,500 227,800 233,000 235,300 236,100 239,000 240,600 242,300 245,400 245,000
Quarterly change 3,400 400 2,500 1,900 (700) 5,200 2,300 800 2,900 1,600 1,700 3,100 (400)
Year-over-Year change 23,600 17,100 13,100 8,200 4,100 8,900 8,700 7,600 11,200 7,600 7,000 9,300 6,000

Subscriber totals
Subscribers (3) 103,300 102,400 103,000 103,100 102,500 103,600 104,000 104,100 104,900 105,100 105,800 107,100 106,800
Quarterly change 300 (900) 600 100 (600) 1,100 400 100 800 200 700 1,300 (300)
Year-over-Year change 5,800 2,900 1,900 100 (800) 1,200 1,000 1,000 2,400 1,500 1,800 3,000 1,900
Penetration 33.5% 33.1% 33.3% 33.3% 33.1% 33.4% 33.4% 33.4% 33.7% 33.1% 32.9% 32.7% 32.4%
ARPU (4) $93 $97 $95 $99 $101 $100 $99 $101 $102 $102 $107 $106 $108
Triple Play ARPU (5) $111 $114 $111 $114 $116 $115 $113 $115 $114 $114 $118 $117 $118
Triple Play RGUs per Subscriber (5) 2.56 2.55 2.54 2.54 2.53 2.54 2.53 2.53 2.52 2.51 2.50 2.49 2.48
Churn 1.4% 1.7% 1.8% 1.5% 1.6% 1.6% 1.7% 1.6% 1.4% 1.5% 1.6% 1.4% 1.4%

Business (6)
Customers 6,900 7,000 7,200 7,300 7,400 7,500 7,700 7,800 7,800 7,900 8,000 8,000 8,400
ARPU $467 $459 $467 $476 $479 $502 $526 $535 $539 $551 $570 $592 $584

TELECOM 3/31/2009 6/30/2009 9/30/2009 12/31/2009 3/31/2010 6/30/2010 9/30/2010 12/31/2010 3/31/2011 6/30/2011 9/30/2011 12/31/2011 3/31/2012
------- --------- --------- --------- ---------- --------- --------- --------- ---------- --------- --------- --------- ---------- ---------
Residential
Voice
Marketable Homes 90,800 90,900 90,900 91,000 91,100 91,200 91,400 91,500 91,700 91,800 91,800 91,900 92,100
RGUs (7) 49,500 45,100 41,300 38,500 35,500 32,800 30,700 28,900 27,300 25,600 24,200 23,000 21,700
Cumulative Migration to Broadband Voice (8) 6,900 9,000 10,700 11,800 12,900 14,000 14,900 15,400 16,100 16,900 17,500 18,000 18,600
Penetration 54.5% 49.6% 45.4% 42.3% 39.0% 36.0% 33.6% 31.6% 29.8% 27.9% 26.4% 25.0% 23.6%
ARPU $44 $45 $45 $45 $44 $44 $43 $43 $43 $43 $43 $43 $42
Churn (9) 2.1% 2.3% 2.3% 2.0% 2.3% 2.1% 2.1% 2.0% 1.8% 1.8% 1.8% 1.6% 1.7%

Business (6)
Customers 9,000 8,900 8,700 8,500 8,300 8,200 8,000 7,900 7,800 7,700 7,700 7,700 7,500
ARPU $332 $339 $329 $334 $334 $340 $360 $359 $356 $357 $351 $363 $348

CONSOLIDATED RESIDENTIAL VOICE RGUs 3/31/2009 (1) 6/30/2009 (1) 9/30/2009( 1) 12/31/2009 (1) 3/31/2010 (1) 6/30/2010 (1) 9/30/2010 12/31/2010 3/31/2011 6/30/2011 9/30/2011 12/31/2011 3/31/2012
----------------------------------- ------------- ------------- ------------- -------------- ------------- ------------- --------- ---------- --------- --------- --------- ---------- ---------
ILEC Voice RGUs
Broadband 9,900 12,400 14,700 16,200 17,500 19,000 20,400 21,000 21,500 22,300 22,700 23,100 23,100
Telecom 49,500 45,100 41,300 38,500 35,500 32,800 30,700 28,900 27,300 25,600 24,200 23,000 21,700
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total ILEC Voice RGUs (10) 59,400 57,500 56,000 54,700 53,000 51,800 51,100 49,900 48,800 47,900 46,900 46,100 44,800
Quarterly change (1,700) (1,900) (1,500) (1,300) (1,700) (1,200) (700) (1,200) (1,100) (900) (1,000) (800) (1,300)
Year-over-Year change (7,500) (7,400) (6,900) (6,400) (6,400) (5,700) (4,900) (4,800) (4,200) (3,900) (4,200) (3,800) (4,000)

CLEC Residential Voice RGUs (11) 56,100 55,300 55,300 55,100 54,300 54,900 54,500 53,900 54,100 53,600 53,400 53,300 52,500
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Quarterly change 0 (800) 0 (200) (800) 600 (400) (600) 200 (500) (200) (100) (800)
Year-over-Year change 2,700 1,000 0 (1,000) (1,800) (400) (800) (1,200) (200) (1,300) (1,100) (600) (1,600)

TOTAL Residential Voice RGUs (12) 115,500 112,800 111,300 109,800 107,300 106,700 105,600 103,800 102,900 101,500 100,300 99,400 97,300
Quarterly change (1,700) (2,700) (1,500) (1,500) (2,500) (600) (1,100) (1,800) (900) (1,400) (1,200) (900) (2,100)
Year-over-Year change (4,800) (6,400) (6,900) (7,400) (8,200) (6,100) (5,700) (6,000) (4,400) (5,200) (5,300) (4,400) (5,600)

NETWORK METRICS 3/31/2009 6/30/2009 9/30/2009 12/31/2009 3/31/2010 6/30/2010 9/30/2010 12/31/2010 3/31/2011 6/30/2011 9/30/2011 12/31/2011 3/31/2012
--------------- --------- --------- --------- ---------- --------- --------- --------- ---------- --------- --------- --------- ---------- ---------
Marketable Homes - Fiber 142,900 146,900 147,100 147,600 147,700 147,900 148,300 148,500 148,700 154,300 158,500 164,500 166,500
Marketable Homes - HFC 93,600 92,900 92,900 92,900 93,000 93,200 93,600 93,600 93,700 93,900 94,000 94,000 94,300
Marketable Homes - Copper 2-Play 71,700 69,500 69,400 69,200 47,900 45,300 42,700 39,600 39,000 36,200 33,800 31,000 30,000
Marketable Homes - Copper 3-Play 0 0 0 0 21,300 24,000 26,600 29,600 30,200 33,000 35,400 38,200 39,200
--- --- --- --- ------ ------ ------ ------ ------ ------ ------ ------ ------
Total 308,200 309,300 309,400 309,700 309,900 310,400 311,200 311,300 311,600 317,400 321,700 327,700 330,000
Quarterly change 4,000 1,100 100 300 200 500 800 100 300 5,800 4,300 6,000 2,300
Year-over-Year change 21,600 17,100 12,800 5,500 1,700 1,100 1,800 1,600 1,700 7,000 10,500 16,400 18,400



(1-12) See all notes on
Selected Operating Metrics
Actuals Quarterly and Year-
over-Year comparison




SOURCE SureWest Communications

Photo:http://photos.prnewswire.com/prnh/20050908/SFSUREWESTLOGO
http://photoarchive.ap.org/
SureWest Communications

Web Site: http://www.surewest.com


-------
Profile: intent