CommNet Cellular Q3 Cash Flow Growth of 31%, Driven by 48% Roaming Revenue Growth - 3rd qtr 1999 - Company Financial Information

Cambridge Telcom Report, August 16, 1999

CommNet Cellular Inc. (Nasdaq: CELS) has announced continued impressive results for its third fiscal quarter. The Company reported proportionate cash flow of $27,867,000 during the three months ended June 30, 1999, an $8,346,000 or 43% increase over the same period one year prior. Included in the growth in proportionate EBITDA was $2,302,000 related to the effect of a change in accounting for loaner phones. Excluding the effect of the change, proportionate EBITDA increased $6,044,000 or 31% over the same period one year prior. Cited as a primary factor was the significant growth of foreign roaming revenues which, on a proportionate basis, were $16,244,000 during the three months ended June 30, 1999, a $5,282,000 or 48% increase as compared to the same period one year prior. For the nine months ended June 30, 1999, proportionate foreign roaming revenues were $41,656,000, a $12,074,000 or 41% increase over the same period in fiscal 1998.

"Once again roaming in rural America set the pace for another outstanding quarter," said Arnold C. Pohs, Chairman and CEO. "With our huge strategic footprint and the increase in subscribers nationwide along with the reduction in kindred charges, roaming revenues continue to surge," he added.

Consolidated Results Total service revenues in consolidated markets increased 26% during the three months ended June 30, 1999 to $52.9 million as compared to $41.9 million during the three months ended June 30, 1998. The most significant component of revenue growth was in-roaming which increased 45% to $16.0 million compared to $11.0 million during the same three month period in the prior fiscal year. A small group of the Company's markets experienced unusually high in-roaming traffic from new roaming partners. Consolidated operating cash flow increased to $28.1 million from $9.0 million during the three months ended June 30, 1998. Excluding a change in accounting relating to loaner phones (a $2.4 million benefit) and excluding the $10.3 million of merger expenses recorded in the same quarter one year prior, consolidated operating cash flow was $25.7 million, a $6.4 million or 33% increase over the three months ended June 30, 1998. The net income for the three months ended June 30, 1999 was $5.4 million, or $0.24 per share, compared to a $13.0 million loss, or $0.57 per share for the three months ended June 30, 1998. Excluding unusual activity, the net income would have been $3.1 million, or $0.14 per share, for the three months ended June 30, 1999. Excluding the $10.3 million of compensation expense related to the merger incurred in the three months ended June 30, 1998, the net loss would have been $2.7 million, or $0.12 per share.

Proportionate Results Proportionate subscribers in the Company's 56 managed and 27 nonmanaged markets increased to 344,261 at June 30, 1999, a 22% growth from the beginning of the fiscal year. Proportionate service revenues increased 28% to $52.9 million for the three months ended June 30, 1999 as compared to $41.2 million for the three months ended June 30, 1998. The Company's proportionate operating cash flow increased $8.6 million or 44% to $27.9 million, representing 52% of total revenue. Excluding the $2.3 million effect of a change in accounting related to capitalization of loaner phones that prior to the three months ended March 31, 1999 had been expensed to cost of equipment sold, cash flow increased $6.3 million or 33% to $25.6 million.

Managed Market Key Business Indicators During the three months ended June 30, 1999, the Company added 15,324 net new subscribers in managed markets representing an increase in penetration of 1.43% from 7.60% as of June 30, 1998 to 9.03% at June 30, 1999. Average revenues per subscriber decreased $2, or 4%, to $52. Acquisition cost per gross new subscriber added was $305 for the three months ended June 30, 1999, excluding the effect of the change in accounting, compared to $302 for the three months ended June 30, 1998.

Headquartered in Englewood, Colorado, CommNet Cellular Inc. operates, manages and finances cellular telephone systems in which its subsidiaries and affiliates hold ownership interests. The Company owns interests in 83 markets in 14 states with a proportionate interest in 3.9 million pops. CommNet is the manager in 56 of these markets with a total population of 4.3 million residing in nine contiguous states in the mountain and plains regions. These managed markets represent one of the largest geographic collections of contiguous wireless systems in the United States.

On July 18, 1999 the Company entered into an Agreement and Plan of Merger with Vodafone AirTouch PLC whereby Vodafone AirTouch would acquire 100% of the shares of the Company as set forth in the agreement which has been filed with the Securities and Exchange Commission under form 8-K on July 21, 1999.

           Statement of Proportionate Cash Flow
                  (Amounts in thousands)

              For the three months ended  For the nine months ended
                   June 30,      June 30,    June 30,      June 30,
                     1999          1998        1999          1998

Revenues:
Cellular service   $36,699       $30,082     $101,928      $83,553
In-roaming          16,244        11,104       41,656       30,262
Cellular equipment
 sales               1,030           912        3,522        2,332
                    53,973        42,098      147,106      116,147

Costs and expenses:
Cost of sales:
Cellular service     5,768         5,219       18,030       16,302
Cellular equipment
 sales               1,353         2,768        8,246       10,296
General and
 administrative     10,768         8,239       34,892       26,011
Marketing and selling8,218         6,542       25,812       20,020
Total costs and
 expenses           26,107        22,768       86,980       72,629

Operating cash flow$27,866       $19,330      $60,126      $43,518

       Consolidated Condensed Statements of Operations
          (Amounts in thousands, except share data)

              For the three months ended  For the nine months ended
                June 30,       June 30,    June 30,      June 30,
                  1999         1998          1999          1998
Revenues:
  Service          $36,888       $30,822     $101,383      $84,850
  In-roaming        15,994        11,040       40,061       29,598
  Equipment sales    1,048           918        3,491        2,175
                    53,930       $42,780      144,935      116,623
Costs and expenses:
  Operations:
Cost of service      6,373         5,621       19,401       17,412
    Cost of equipment
 sales               1,370         2,979        8,706       10,917
    General and
 administrative     10,011         8,238       29,624       25,448
    Marketing and
 selling             8,263         6,787       26,241       20,460
    Depreciation and
 amortization        7,136         6,839       19,935       18,710
  Corporate:
    General and
 administrative      1,546        12,477        8,253       29,812
Depreciation           361            10        1,411        1,474
    Less amounts
     allocated to
     nonconsolidated
 affiliates         (1,710)       (2,312)      (5,234)      (6,810)
                    33,350        40,639      108,337      117,423

Operating income
 (loss)             20,580         2,141       36,598         (800)

Equity in net loss
 of affiliates       1,443           897        4,629        2,700
Minority interest   (1,632)       (1,178)      (3,025)      (3,149)
Amortization of
 deferred costs       (752)       (1,019)      (2,465)      (2,043)
Interest expense   (14,822)      (15,121)     (43,896)     (33,858)
Interest income        628         1,322        2,148        3,888
Income (loss) before
 income tax expense
 and extraordinary
 charge              5,445       (12,958)      (6,011)     (33,262)
Income tax expense      72             -          597            -
Income (loss) before
 extraordinary charge5,373       (12,958)      (6,608)     (33,262)

Extraordinary charge
 related to early
 extinguishment of
 long-term debt          -             -            -      (33,500)

Net income (loss)   $5,373      $(12,958)     $(6,608)    $(66,762)

Basic and diluted
 income (loss) per
 common share:
  Income (loss) before
 extraordinary charge$0.24    $(0.57)           $(0.29)     $(0.74)
  Extraordinary charge   -             -            -        (0.74)
  Basic and diluted
   income (loss) per
   common share      $0.24       $(0.57)       $(0.29)      $(1.48)

Weighted average
 shares
  outstanding    22,662,985    22,642,928   22,662,985   45,041,049

             Consolidated Condensed Balance Sheet
                    (Amounts in thousands)

                                       06/30/99           09/30/98

Assets
  Cash and short-term investments        $1,905            $26,153
  Other current assets                   40,108             37,735
  Investment in affiliates and
   cellular system equipment             38,292             37,453
  Property and equipment (net)          168,062            154,598
  Other assets (net)                    183,970            128,813

                                       $432,337           $384,752

Liabilities and stockholders' equity
  Current liabilities                   $38,813            $25,823
  Long-term debt and other obligations  727,536            682,999
  Minority interests                      7,673             11,378
  Stockholders' equity (deficit)       (341,685)          (335,448)

                                       $432,337           $384,752