Rural Cellular Corporation Reports Record Revenue and EBITDA for Fiscal 1999

Business Wire, Feb 22, 2000

Business Editors

ALEXANDRIA, Minn.--(BUSINESS WIRE)--Feb. 22, 2000

Rural Cellular Corporation ("RCC") (Nasdaq/NMS: RCCC) today reported record consolidated revenues and earnings before interest, taxes, depreciation and amortization ("EBITDA") for fiscal year ended December 31, 1999.

Year Ended December 31, 1999 Consolidated Financial Highlights:

-- EBITDA rose 42.2% to $16.0 million from $11.3 million in 1998.

-- EBITDA margin increased to 40.7% from 35.1% in 1998.

-- Total revenues increased 22.5% to $39.3 million from $32.1 million in 1998.

-- Roaming revenue increased 51.4% to $10.0 million from $6.6 million over the
same period in 1998.

-- Net loss applicable to common shares, including preferred stock dividends of
$4.1 million, came to $6.6 million or $0.72 per share in 1999, compared to the
net loss of $6.5 million or $0.73 per share in 1998.

Fourth Quarter 1999 Consolidated Financial Highlights:

-- EBITDA rose 42.2% to $16.0 million from $11.3 million in 1998.

-- EBITDA margin increased to 40.7% from 35.1% in 1998.

-- Total revenues increased 22.5% to $39.3 million from $32.1 million in 1998.

-- Roaming revenue increased 51.4% to $10.0 million from $6.6 million over the
same period in 1998.

-- Net loss applicable to common shares, including preferred stock dividends of
$4.1 million, came to $6.6 million or $0.72 per share in 1999, compared to the
net loss of $6.5 million or $0.73 per share in 1998.

Richard P. Ekstrand, president and chief executive officer, commented: "1999 was another strong year for RCC. Our operations performed well resulting in excellent customer growth, controlled spending and strengthening in our key indicators. While managing our existing service areas, which included our Atlantic region for all of 1999, we also incorporated the operations of Glacial Lakes Cellular during the first quarter of 1999. In addition, Wireless Alliance, while in its first full year of PCS operations, nearly tripled its customer base positioning it for continued improvement in 2000."

Ekstrand added, "RCC's operating and financial successes set the stage for the pending acquisition by our subsidiary, RCC Holdings, Inc., of Triton Cellular Partners, L.P. ("Triton") announced in November 1999. The Triton acquisition, once again, gives us the opportunity to generate significantly stronger levels of EBITDA, expand our geographic footprint and effectively double the size of our company in terms of POPs and cellular customers."

RCC's consolidated operating results are generated by RCC Cellular and Wireless Alliance, LLC. RCC Cellular encompasses cellular operations in Minnesota, South Dakota, Maine, Vermont, New Hampshire, Massachusetts and New York. Wireless Alliance is a joint venture that is 70%-owned by RCC and 30%-owned by an affiliate of Aerial Communications, Inc. It commenced cellular reselling operations in November 1996 and launched PCS networks in Minnesota, Wisconsin, North Dakota and South Dakota in 1998.

Business Indicators and Trends

At the end of 1999, RCC's total wireless customers, including paging and prepaid customers, totaled approximately 258,000, up 20.3% from approximately 215,000 at year-end 1998. Of this total, RCC Cellular had nearly 228,000 customers at the end of 1999, up 21.8% from 187,000 at year-end 1998. As a result, cellular penetration increased to 9.4% at December 31, 1999 as compared to 8.0% at December 31, 1998. Cellular average monthly revenue per customer for the year ended December 31, 1999 increased to $54, as compared to $52 in 1998.

Reflecting an entire year of successful Wireless Alliance PCS marketing efforts, its customer base increased 176.8% during 1999 to more than 14,000 customers as compared to approximately 5,000 at the end of 1998. This increase resulted in PCS penetration increasing from 0.7% at December 31, 1998 to 2.0% at December 31, 1999. The Wireless Alliance PCS networks in Fargo-Moorhead, N.D., Duluth-Superior, WI and Virginia-Hibbing, MN became fully operational during the second quarter of 1998 followed by the Sioux Falls, SD and Grand Forks, ND networks in the fourth quarter of 1998. Wireless Alliance average monthly revenue per customer for the year ended December 31, 1999 decreased to $53, as compared to $64 in the comparable period of the prior year.

RCC expects a traditional seasonal slowing in wireless usage in its service areas to effect operations in the first quarter of 2000. First quarter revenues may also be affected by RCC's negotiation of roaming agreements with its major roaming partners. RCC is generally optimistic, however, about the combined effect on roaming revenue of these negotiations and the anticipated increase in roaming minutes over the comparable period of the prior year.

Offerings and Triton Update

On February 8, 2000, RCC completed its follow-on offering of 2,390,000 shares of its Class A Common Stock. These shares were sold to the public at $61 7/8 per share. RCC also completed the offering of 140,000 shares of its 12 1/4% Junior Exchangeable Preferred Stock and 25,000 shares of its 11 3/8% Senior Exchangeable Preferred Stock. The Junior Exchangeable Preferred Stock and Senior Exchangeable Preferred Stock were sold at a price of $1,000.00 and $988.88 per share, respectively, have a liquidation preference of $1,000.00 per share and are not convertible into common stock. On February 14, 2000, RCC's underwriters exercised their option to purchase 358,500 additional shares of Class A Common Stock to cover overallotments.