Verizon Communications (VZ)

Divestiture Markets and Exchange Agreement with AT&T

As part of its approval process for the Rural Cellular acquisition, regulatory authorities required the divestiture of six operating markets, including all of Rural Cellular’s operations in Vermont and New York as well as its operations in Okanogan and Ferry, WA (the Divestiture Markets). As a result of these divestiture requirements, Verizon Wireless has placed the licenses and assets of the Divestiture Markets in a management trust that will continue to operate the markets under the Unicel brand until they are sold. The Divestiture Markets will not be integrated into Verizon Wireless’s operations.

On August 29, 2008, Verizon Wireless signed an amendment to an existing exchange agreement and a license purchase agreement with AT&T. Under the terms of these agreements, AT&T will receive the assets relating to the Divestiture Markets and a cellular license for part of the Madison, KY market. In exchange, we will receive cellular operating markets in Madison and Mason, KY and 10 MHz PCS licenses in Las Vegas, NV, Buffalo, NY, Erie, PA, Sunbury-Shamokin, PA, Youngstown, OH, Franklin, NY (except Franklin county) and the entire state of Vermont. We will also receive AT&T’s minority interests in three entities in which we hold interests, plus a cash payment. The exchange with AT&T is subject to regulatory approvals and is expected to close by the end of the year.

The assets to be divested of $535 million are included in Prepaid expenses and other, and Other assets on the accompanying condensed consolidated balance sheet as of September 30, 2008 and are based on the consideration to be received from AT&T.

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