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Top 25 Wireless Carriers

The following Top 25 U.S. wireless carriers list was compiled from information supplied by the individual carriers, including subscriber numbers, web sites and each carrier's top 25 major markets. The information is based on carriers' results available as of Sept. 1, 1998. Wireless carriers were ranked according to number of total subscribers as of that date. Carriers with proprietary subscriber information were not included in this ranking. Julie Rietman, International Data Corporation (IDC) senior research analyst, and Callie Pottorf, IDC research analyst, offered their personal analysis of the top 10 carriers' strengths and weaknesses as well as what the future may hold for them.

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1. AT&T Wireless Services Subscribers: 9.1 million 2Q98 Revenue: $2.34 billion Major Markets: Atlanta; Baltimore; Boston; Charlotte, NC; Chicago; Cleveland; Dallas/Fort Worth; Denver; Detroit; Jacksonville, FL; Las Vegas; Miami; Minneapolis; New York; Oklahoma City; Orlando, FL; Philadelphia; Phoenix; Pittsburgh; Portland, OR; Salt Lake City; Seattle; St. Louis; Tampa, FL; Washington Technology: TDMA 1.9GHz and 800MHz Web Site: www.attws.com

Analyst Perspective AT&T Wireless has many advantages over other players, including its strong nationwide brand name, quick roll-out of PCS markets and digital cellular, a large coverage area and long-distance business, and rate plans with free roaming and long distance.

The carrier has opportunities to provide integrated services to high-end corporate users, and to use its vast service offerings (Internet, long distance, cellular/PCS, paging and satellite air-phones) to provide bundled offerings to high-end users.

AT&T will face challenges from the RBOCs because of their strong brand names and their ability to provide strong bundled products. AT&T will need to improve its bundling execution and improve voice quality on all handsets without the new vocoder.

2. AirTouch Subscribers: 7.3 million 2Q98 Revenue: $963 million Major Markets: Atlanta; Cincinnati; Cleveland; Colorado Springs, CO; Columbus, OH; Dayton, OH; Denver, Detroit; Los Angeles; Minneapolis; Phoenix; Portland, OR; Salt Lake City; San Diego; Seattle; St. Paul, MN; Toledo, OH Technology: CDMA 800MHz Web Site: www.airtouch.com

Analyst Perspective Although its brand name is not strong nationwide, AirTouch has the advantage of having a strong brand name in the PacTel region. Other strengths are its ownership in PrimeCo, acquisitions of US West's cellular properties and part ownership in Qualcomm.

The company's weaknesses are its slow roll-out of digital service, its average pricing, its voice quality -- because of the low percentage of subscribers that are digital -- the fact that it is a regional player and its limited ability to bundle.

AirTouch has the opportunity to provide a strong bundled service and use its strong brand name to target high-end users in its own region. It also could be acquired by the merged Bell Atlantic Mobile/GTE, which would consolidate BAM's and AirTouch's holdings in PrimeCo. AirTouch also could be a reseller for other companies wanting to offer bundled products.

The challenges facing AirTouch are competition from AT&T and Sprint, price competition from cheaper carriers, and competition from carriers who have rolled out digital services more extensively and who, therefore, provide better voice quality.

3. Southwestern Bell Mobile Systems Subscribers: 6 million 2Q98 Revenue: $911 million Major Markets: Baltimore; Boston; Buffalo, NY; Chicago; Dallas; Kansas City, MO; Rochester, NY; San Antonio; St. Louis; Washington Technology: TDMA 800MHz Web Site: www.sbc.com

Analyst Perspective Southwestern Bell Mobile Systems' (SBMS) strengths are a relatively strong brand name nationwide and an extremely strong brand name in the Southwestern Bell region. It also has a high percentage of digital cellular subscribers, has lean operations, makes strong margins and has considerably expanded its footprint with its acquisitions of Pac Bell, SNET and planned acquisition of Ameritech.

The company's weaknesses are its expensive pricing and the poor voice quality on all handsets without the new vocoder.

In the future, SBMS has the opportunity to provide a strong bundled service and use its strong brand name to target high-end users in its ever-expanding region. But the carrier will face challenges in competition from AT&T and Sprint as well as price competition from cheaper carriers.

4. Bell Atlantic Mobile Subscribers: 5.7 million 2Q98 Revenue: $869.4 million Major Markets: Albany, NY; Baltimore; Boston; Charlotte, NC; Columbia, SC; Concord, NH; Gainesville, GA; Hartford, CT; Manchester, CT; New York; Philadelphia; Pittsburgh; Providence, RI; Stamford, CT; Washington Technology: CDMA 800MHz Web Site: www.bam.com

Analyst Perspective Bell Atlantic Mobile's key strengths are its relatively strong brand name nationwide and its extremely strong brand name in the Bell Atlantic region. It also has a high percentage of digital cellular subscribers, provides good voice quality, has ownership in PrimeCo and has announced plans to merge with GTE. Furthermore, it is a part owner in Qualcomm, which enables it to get good deals on handsets and ties the company to CDMA.

But the company has expensive pricing and is mainly a regional player.

Another weakness is the company's missed opportunity to acquire SNET, which allowed Southwestern Bell into its own region.

The opportunities ahead for the merged BAM/GTE are to possibly merge with AirTouch and consolidate holdings, including those in PrimeCo.

Like Southwestern Bell, BAM will find tough competition in AT&T and Sprint, with their strong brand names, and price competition from lower-priced players.

5. BellSouth Cellular Subscribers: 5.3 million 2Q98 Revenue: $814 million Major Markets: Atlanta; Baton Rouge, LA; Birmingham, AL; Charlotte, NC; Columbia, SC; Greensboro, NC; Honolulu; Houston; Indianapolis; Jackson, MS; Jacksonville, FL; Lexington, KY; Los Angeles; Louisville, KY; Memphis, TN; Miami; Mobile, AL; Nashville, TN; New Orleans; Orlando, FL; Raleigh, NC; Richmond, VA; Savannah, GA; Tampa, FL; Tupelo, MS Technology: TDMA 800MHz, GSM 1.9GHz Web Site: www.bscc.com or www.bellsouthmobility.com

Analyst Perspective BellSouth enjoys a relatively strong brand name nationwide and an extremely strong brand name in its region. BellSouth is improving voice quality for its TDMA markets and has strong voice quality for its GSM markets. The carrier has a high percentage of digital cellular customers but also has expensive pricing. Because most of BellSouth's markets use TDMA except for three that use GSM, roaming is impossible.

BellSouth's challenges include competition from AT&T Wireless and Sprint PCS, as well as from carriers with lower prices. In addition, BellSouth is not trying to be a national player, but it will have to compete with those who are.

Opportunities for the carrier include providing a strong bundled service and using its strong brand name to target high-end users in its region, establishing a TDMA overlay of GSM markets to tie all markets together and increase coverage, and meeting its goal of providing for all telecom services in its region.

6. GTE Wireless Subscribers: 4.631 million 2Q98 Revenue: $745 million Major Markets: Austin, TX; Birmingham, AL; Charleston, SC; Chattanooga, TN; Cincinnati; Dayton, OH; Durham, NC; Honolulu; Houston; Indianapolis; Knoxville, TN; Lexington, KY; Louisville, KY; Memphis, TN; Nashville, TN; Norfolk, VA; Raleigh, NC; Richmond, VA; San Diego; San Francisco; Seattle; Spokane, WA; Tampa, FL; Winston-Salem, NC Technology: CDMA 1.9GHz and 800MHz Web Site: www.gte.com

Analyst Perspective GTE has a widely recognized brand name, but it needs a nationwide presence -- currently its markets are disjointed and spread across the country. GTE has not followed the market yet by introducing a rate plan that includes roaming and/or long distance in the monthly price. This type of pricing plan could attract new customers and could lead to higher usage, resulting in higher ARPU and increased market share. GTE also needs to offer new value-added services to generate new income and attract new subscribers.

7. ALLTEL Subscribers: 3.7 million 2Q98 Revenue: $1.3 billion Major Markets: Albany, GA; Augusta, GA; Charleston, SC; Charlotte, NC; Columbia, SC; Dallas; Durham, NC; Gainesville, FL; Harrisburg, PA; Jacksonville, FL; Las Vegas; Little Rock, AR; Montgomery, AL; Raleigh, NC; Richmond, VA; Santa Fe, NM; Savannah, GA; Springfield, MO; Tallahassee, FL; Toledo, OH Technology: CDMA 800MHz Web Site: www.alltel.com Merged with 360 Communications July 1, 1998.

Analyst Perspective ALLTEL's key strengths are that it can bundle local and wireless services in some markets and that it has recently expanded its footprint through its merger with 3600 Communications. This should enable the company to gain potential cost savings and increase negotiating ability with vendors.

Before ALLTEL can gain considerable market share and move up in the ranking, it needs to educate its prospects and customers about the ALLTEL brand. Initial moves are under way; for instance, it already has changed all of the 360 degrees signs and stores to ALLTEL.

ALLTEL also should revise some of its mediocre rate plans, and offer new and innovative value-added services, to be more competitive with other carriers in the market. AT&T, Sprint and low-rate carriers will continue to threaten ALLTEL's growth.

ALLTEL should continue to merge with other players and bundle services. It should use its new economies of scale to negotiate better deals with vendors and in turn reduce its prices.

8. Ameritech Cellular Services Subscribers: 3.5 million 2Q98 Revenue: proprietary Major Markets: Chicago; Cleveland; Detroit; Indianapolis; St. Louis Technology: CDMA 800MHz Web Site: www.ameritech.com

Analyst Perspective Once the merger with SBC is finalized, Ameritech will be part of one of the largest wireless footprints in the United States.

The carrier's brand equity is low in markets outside of the Ameritech region, and only mediocre within its region. But Ameritech should not spend money improving its brand equity because it is unknown what brand will be used to market services if the merger is completed.

9. Nextel Subscribers: 2.042 million 2Q98 Revenue: $421.4 million Major Markets: Albuquerque, NM; Atlanta; Baton Rouge, LA; Birmingham, AL; Boston; Charleston, SC; Charlotte, NC; Cheyenne, WY; Chicago; Cleveland; Dallas/Fort Worth; Denver; Detroit; Hartford, CT; Indianapolis; Las Vegas; Los Angeles; Memphis, TN; Miami; Milwaukee; Minneapolis; New York; Norfolk, VA; Oklahoma City; Orlando, FL; Philadelphia; Phoenix; Pittsburgh; Portland, OR; Salt Lake City; San Diego; San Francisco; Seattle; St. Louis; Washington/Baltimore Technology: iDEN, SMR Web Site: www.nextel.com

Analyst Perspective Most potential customers do not see the SMR features but instead see Nextel only as a cellular or PCS service. The marketing challenge for Nextel is to ensure that potential and current subscribers realize the value of its unique product offering. The carrier's target customer base is specific SIC codes within the business market. In order to appeal to consumers, it needs to expand its distribution channels, improve coverage, provide a variety of end-user devices and clearly articulate the value of an integrated service offering.

Until Nextel has built out its digital iDEN network sufficiently to meet coverage needs, it would be beneficial to offer a dual-mode handset. However, Nextel is not following this path. It offers only single-mode digital service. In the short term, this policy will limit the subscriber base. But in the long term, provided the digital network is built out quickly and with sufficient coverage, Nextel should be able to compete.

10. United States Cellular Subscribers: 1.922 million 2Q98 Revenue: $26.9 million Major Markets: Corpus Christi, TX; Des Moines, IA: Gainesville, FL; Knoxville, TN; Madison, WI; Manchester, NH; Milwaukee, WI; Tallahassee, FL; Tulsa, OK Technology: CDMA, TDMA 800MHz Web Site: www.uscc.com

Analyst Perspective Although United States Cellular rounds out the top 10 U.S. carriers, it does not have much brand equity and is a limited player. Because it serves a few markets in various states, it is a prime carrier to be acquired in order to fill in the missing markets of another, larger carrier.

Although it may not be a major player, United States Cellular is a leader. The carrier received the 1998 Bain Award for Strategy Excellence in the technology and information category, presented by global strategy consulting company Bain & Co.

11. Sprint PCS Subscribers: 1.37 million 2Q98 Revenue: proprietary Major Markets: Birmingham, AL; Dallas/Fort Worth; Denver; Des Moines, IA; Detroit; Fargo, ND; Indianapolis; Kansas City, MO; Little Rock, AR; Louisville, KY; Manchester, NH; Miami; Milwaukee; Minneapolis/St. Paul; Nashville, TN; New Orleans; New York; Oklahoma City; Philadelphia; Phoenix; Pittsburgh; Portland, ME; Portland, OR; Providence, RI; Salt Lake City; San Diego; San Francisco; Seattle; St. Louis; Toledo, OH; Tucson, AZ Technology: CDMA 1.9GHz Web Site: www.sprintpcs.com

12. Comcast Cellular Communications Subscribers: 799,000 2Q98 Revenue: $115.9 million Major Markets: Dover, DE; New Brunswick, NJ; Newark, NJ; Philadelphia Technology: TDMA 800MHz Web Site: www.comcastcellular.com

13. Western Wireless Subscribers: 795,900 2Q98 Revenue: $134.9 million Major Markets: Albuquerque, NM; Boise, ID; Denver; Des Moines, IA; El Paso, TX; Honolulu; Las Cruces, NM; Oklahoma City; Portland, OR; Salt Lake City; Tulsa, OK; Wichita, KS Technology: GSM 1.9GHz Web Site: www.wwireless.com

14. PrimeCo Personal Communications Subscribers: 700,000 2Q98 Revenue: proprietary Major Markets: Austin, TX; Baton Rouge, LA; Chicago; Dallas/Fort Worth; Fort Lauderdale, FL; Green Bay/Appleton, WI; Houston; Jacksonville, FL; Janesville/Beloit, WI; Madison, WI; Melbourne, FL; Miami; Milwaukee; Mobile, AL; Technology: CDMA 1.9GHz Web Site: www.primeco.com Joint venture of AirTouch and Bell Atlantic

15. Pacific Bell Wireless Subscribers: 640,000 2Q Revenue: proprietary Major Markets: Las Vegas; Los Angeles, Sacramento, CA; San Diego; San Francisco/Oakland Technology: GSM 1.9GHz Web Site: www.pacbell.com/pcs

16. Vanguard Cellular Subscribers: 625,000 2Q98 Revenue: $101.4 million Major Markets: Allentown, PA; Binghamton, NY; Brunswick, ME; Elmira, NY; Harrisburg, PA; Lancaster, PA; Pittsburgh; Portland, ME; Reading, PA; Rochester, ME; Scranton, PA Technology: TDMA 800MHz Web Site: www.vcela.com Acquired by AT&T Oct. 5, 1998.

17. CenturyTel (formerly CelluNet) Subscribers: 583,929 2Q98 Revenue: $104.9 million Major Markets: Brownsville, TX; Eau Claire, WI; Grand Rapids, MI; Gulfport, MS; Harlingen, TX; Jackson, MS; Lansing, MI; Monroe, LA; Oshkosh, WI; Pine Bluff, AR; Shreveport, LA; Texarkana, AR Technology: TDMA 800MHz Web Site: www.centurytel.com

18. SNET Mobility Subscribers: 474,000 2Q98 Revenue: $66.1 million Major Markets: Bridgeport, CT; Greenfield, MA; Hartford, CT; New Haven, CT; Newport, RI; Pittsfield, MA; Providence, RI; Springfield, MA; Warwick, RI Technology: TDMA 800MHz Web Site: www.snet.com SBC merger finalized Oct. 26, 1998.

19. Price Communications Subscribers: 384,000 Revenue: $100 million Major Markets: Augusta, GA; Columbus, GA; Montgomery, AL; Panama City, FL; Savannah, GA Technology: TDMA 800MHz Web Site: none

20. Frontier Cellular Subscribers: 375,000 2Q98 Revenue: proprietary Major Markets: Buffalo, NY; Rochester, NY; Syracuse, NY Technology: CDMA 800MHz Web Site: www.frontiercorp.com

21. Centennial Wireless Subscribers: 354,634 2Q98 Revenue: $143.8 million Major Markets: Battle Creek, MI; Beaumont, TX; Defiance, OH; Fort Wayne, IN; Kalamazoo, MI; Lafayette, LA; Portage, MI; Puerto Rico/U.S. Virgin Islands; South Bend, IN Technology: TDMA (domestic), CDMA (Puerto Rico) 800MHz, 1.9GHz Web Site: www.centennialcom.com

22. CommNet Cellular Subscribers: 320,476 2Q98 Revenue: $41.8 million Major Markets: Billings, MT; Bismarck, ND; Buffalo, WY; Burlington, CO; Cedar City, UT; Farmington, NM; Helena, MT; Missoula, MT; Montpelier, ID; Pueblo, CO; Sioux City, IA; Sioux Falls, SD Technology: AMPS 800MHz Web Site: www.commnetcellular.com

23. Omnipoint Communications Subscribers: 255,000 2Q98 Revenue: $42.2 million Major Markets: Albany; Allentown, PA; Bethlehem, PA; Boston; Detroit; Fort Lauderdale, FL; Indianapolis; Miami; New York; Palm Beach, FL; Philadelphia; Providence, RI; Scranton; Syracuse, NY; Wilkes-Barre, PA; Wilmington, DE Technology: GSM 1.9GHz Web Site: www.omnipoint.com

24. Aerial Communications Subscribers: 204,000 2Q98 Revenue: $36.7 million Major Markets: Columbus, OH; Duluth, MN; Houston; Kansas City, MO; Minneapolis; Orlando, FL; Pittsburgh; St. Paul, MN; St. Petersburg, FL; Tampa, FL Technology: GSM 1.9GHz Web site: www.aerial1.com

25. Powertel Subscribers: 200,000 2Q98 Revenue: $35.7 million Major Markets: Athens, GA; Atlanta, Augusta, GA; Birmingham, AL; Chattanooga, TN; Columbus, GA; Jackson, KY; Jacksonville, KY; Knoxville, TN; Lexington, KY; Louisville, KY; Macon, GA; Memphis, TN; Nashville, TN; Savannah, GA Technology: GSM 1.9GHz Web Site: www.powertel.com

The gap between the large and small cellular/PCS carriers is growing. One of the factors that may widen the gap even farther is the trend toward offering rate plans with no long-distance and no roaming charges. These plans include those recently introduced by AT&T Wireless, Bell Atlantic Mobile and Sprint PCS.

With these types of plans being offered, smaller carriers are at a competitive disadvantage because they offer service in fewer markets and therefore have to pay roaming fees more often than their larger competitors. Also, carriers that do not have long-distance networks are at a competitive disadvantage.

Ultimately, as competition continues to increase, IDC expects to see many of the smaller carriers driven out of the market or acquired, and many of the larger carriers increasing in size and in power.

Analysts' recommendations to buy, sell or hold the stock of a wireless company can have a dramatic effect on the company's market capitalization and shareholder value. Because analysts' decisions have this impact on the companies they follow, it is important to consider a company's reputation on Wall Street before evaluating its track record or prospects for the future.

A gap often exists between a company's performance and how it is perceived on Wall Street. Those wireless companies that successfully communicate their market vision and business strategy to analysts are most likely to reap the benefits of positive publicity later on. The net result? A greater chance of appearing on next year's top 10 list of wireless service providers.

Although financial information offers insight into a company's bottom line, many analysts want information beyond quarterly earning reports and company press releases when evaluating a company's long-term outlook. They urge wireless companies to send more material detailing their performance in non-financial areas -- criteria that often indicate a wireless company's ability to provide shareholder value.

CDB Research & Consulting conducted interviews with financial analysts and academics to identify the non-financial criteria they feel are critical to judging a company's ability to provide this value. Mentioned time and again were the ability to avoid regulatory problems; brandequity of the company and its products; customer satisfaction and loyalty; concern for and relations with employees; the ability to increase productivity; the ability to increase revenue; the ability to reduce costs; and R&D, intellectual capital and ability to innovate.

Most non-financial factors are not changed easily during a financial quarter. These factors can be altered, but only through a concerted effort by management to dedicate itself to real change on the things that matter the most to the long-term viability of the company.

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