CTE Reports 2006 Fourth Quarter Results:

Business Wire, Feb 27, 2007

CTE Reports Fourth Quarter Diluted Earnings Per Share of $0.65

DSL Subscribers Increase 55% versus Year Ago Quarter

DALLAS, Pa. -- Commonwealth Telephone Enterprises, Inc. ("CTE") (Nasdaq: CTCO), today announced financial results for the 2006 fourth quarter.

CTE 2006 Fourth Quarter Consolidated Results

For the 2006 fourth quarter, CTE reported diluted earnings per share ("EPS") of $0.65, versus reported diluted EPS of $0.77 in the 2005 fourth quarter.

CTE's 2006 fourth quarter reported diluted EPS of $0.65 includes a $0.07 unfavorable effect related to advisory, legal and other fees in connection with the September 18, 2006, announcement of CTE's agreement to be acquired by Citizens Communications Company ("Citizens") (NYSE: CZN).

CTE's 2006 fourth quarter reported diluted EPS, versus last year's fourth quarter, also includes the effect of including additional shares in the diluted EPS calculation due to the conversion rate adjustments made under CTE's Convertible Notes in connection with CTE's dividend strategy. Specifically, the 2006 fourth quarter average fully diluted share count includes an additional 0.4 million shares in connection with the payment of our dividends and their effect on our convertible debt, versus the prior year's comparable period. The additional shares had a $0.01 unfavorable impact on CTE's 2006 fourth quarter reported diluted EPS.

Including the $0.08 unfavorable effect of the items discussed above, CTE's 2006 fourth quarter reported diluted EPS was above the high end of its previous guidance, and above the First Call mean of $0.64.

Included in CTE's 2005 fourth quarter reported diluted EPS was a $0.02 favorable effect resulting from certain non-cash access revenue settlements and non-cash network costs settlements included in the CTSI, LLC ("CTSI"), results; a $0.06 per share favorable effect resulting from a sales and use tax settlement in the Commonwealth Telephone Company ("CT") results; and, a $0.07 per share favorable effect resulting from a true-up of deferred income tax liability.

For the 2006 full year, CTE reported diluted EPS of $3.16, versus reported diluted EPS of $2.71 for the 2005 full year. A summary of certain items that are reflected in the 2006 full year and 2005 full year reported diluted EPS figures is detailed on an accompanying schedule.

CTE ended the 2006 fourth quarter with a total of 451,892 switched access lines in service, reflecting a reduction of 2% versus the end of the 2005 fourth quarter. Over the same period, CTE added a record 16,202 net new DSL subscribers, which reflected a growth rate of 55%. In the 2006 fourth quarter, CTE installed 4,365 net new DSL subscribers and ended the quarter with 45,464 consolidated DSL subscribers.

CTE's reported consolidated revenues in the 2006 fourth quarter were $83.2 million, versus 2005 fourth quarter reported revenues of $83.5 million. As noted above, CTE's 2005 fourth quarter revenues included a favorable effect of $0.9 million resulting from certain access revenue settlements reported in CTSI's results.

CTE's reported consolidated operating income in the 2006 fourth quarter was $30.4 million, versus reported consolidated operating income of $30.6 million in the 2005 fourth quarter. CTE's 2006 fourth quarter reported operating income includes $1.0 million of expenses related to advisory, legal and other fees in connection with CTE's agreement to be acquired by Citizens. Excluding the effect of these expenses, CTE's 2006 fourth quarter operating income would have been $31.4 million. CTE's 2005 fourth quarter reported operating income included a $1.2 million favorable effect resulting from the aforementioned $0.9 million of favorable access revenue settlements, and a favorable $0.3 million effect resulting from certain network costs settlements, both items reported in CTSI's results.

For the 2006 fourth quarter, CTE reported net income of $16.8 million, versus reported net income of $20.7 million in the 2005 fourth quarter. CTE's 2006 fourth quarter reported net income includes an unfavorable effect of $2.0 million related to the after-tax effect of the advisory, legal and other fees in connection with CTE's agreement to be acquired by Citizens, as well as the true-up of the non-deductible portion of these expenses incurred to date. Included in CTE's 2005 fourth quarter reported net income was a favorable $0.7 million effect resulting from certain non-cash access revenue settlements and non-cash network costs settlements included in the CTSI results; a favorable $1.7 million effect resulting from a sales and use tax settlement in the CT results; and, a favorable $1.9 million effect resulting from a true-up of deferred income tax liability.

Consolidated capital expenditures ("CAPEX") were $12.2 million in the 2006 fourth quarter, versus CAPEX of $14.0 million in the year ago quarter.

The table below sets forth highlights of CTE's 2006 fourth quarter reported consolidated results, versus the 2005 fourth quarter:

[TABLE OMITTED]

"We ended 2006 on a positive note with the completion of another solid quarter," said Michael J. Mahoney, CTE's president and chief executive officer. "I am particularly pleased with our continued strong DSL performance, where we added a record 16,202 net new subscribers since the end of last year's fourth quarter, reflecting a growth rate of 55%. CTSI continued its solid trend by growing its base of general business lines by 7% year-over-year. We ended the year with a continued strong balance sheet and cash position."