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SureWest Reports First Quarter 2012 Results

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

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