ASE Labs: News - SureWest Reports Fourth Quarter and Full Year 2011 Results

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SureWest Reports Fourth Quarter and Full Year 2011 Results

Strong Broadband Growth Drives 2% Year-over-Year Increases in Revenues and Adjusted EBITDA

- 2011 Broadband revenues grew 8% year-over-year with a 16% increase in business services revenues and a 6% increase in residential revenues

- 4% year-over-year growth in Broadband residential RGUs

- 2011 adjusted free cash flow increased 20% year-over-year

- Net income of $1.8 million; $0.13 earnings per share

ROSEVILLE, Calif., Feb. 29, 2012 /PRNewswire/ -- SureWest Communications (NASDAQ: SURW) today announced operating results for the fourth quarter and full year ended December 31, 2011.

(Logo: http://photos.prnewswire.com/prnh/20050908/SFSUREWESTLOGO)

Steve Oldham, SureWest's president and chief executive officer, said, "Our strong 2011 results were highlighted by top-line business and residential services revenue growth, driving an increase in adjusted EBITDA. Our core Broadband segment now accounts for 77% of the company's total revenues and 54% of total adjusted EBITDA. SureWest's business services revenues continue to be an important part of delivering long-term, sustainable growth due to positive trends in Kansas City and increased bandwidth demands for backhaul services to wireless carriers. We continue to increase the take rates of our residential products like Advanced Digital TV, high-speed Internet and Broadband Voice over IP. During the year, we also added 15,400 new fiber homes in Kansas City that we are aggressively targeting.

"The investments we've made over the last several years to expand our extensive fiber-to-the-home network and enhance our suite of services have delivered excellent returns and offer many opportunities for additional value creation. Our knowledge and innovation is what drives SureWest's strong continued growth and underscores the strategic benefits of the recently announced acquisition of our company by Consolidated Communications. The combination with Consolidated is highly accretive and brings together Consolidated's strong cash flow with SureWest's proven broadband growth strategy. Customers and shareholders alike will benefit from the combined company's greater scale, scope and financial resources."

The following table highlights financial results for continuing operations on a consolidated basis (dollars are in thousands):

Y-O-Y comparison Full Year comparison
---------------- --------------------
Consolidated Q4'11 Q4'10 Change % 2011 2010 Change %
----- ----- ------ --- ---- ---- ------ ---
Broadband
Revenue $49,010 $45,032 $3,978 9% $188,366 $174,546 $13,820 8%
Telecom
Revenue 14,529 16,614 (2,085) (13%) 59,687 68,953 (9,266) (13%)
Total
Revenue 63,539 61,646 1,893 3% 248,053 243,499 4,554 2%
Adjusted
EBITDA 21,602 21,780 (178) (1%) 84,431 82,511 1,920 2%
Net Income 1,483 1,951 (468) (24%) 1,802 3,355 (1,553) (46%)
Capital
Expenditures 21,747 13,289 8,458 64% 72,528 52,560 19,968 38%
Net Cash
Provided
by
Operating
Activities 20,259 17,044 3,215 19% 81,448 63,553 17,895 28%
Free Cash
Flow (4,241) 4,439 (8,680) (196%) (6,761) 12,620 (19,381) (154%)
Adjusted
Free Cash
Flow 3,281 4,465 (1,184) (27%) 16,651 13,931 2,720 20%
Net Debt 200,167 202,472 (2,305) (1%) 200,167 202,472 (2,305) (1%)
-------- ------- ------- ------ ---- ------- ------- ------ ----
See Non-GAAP measure notes near end of release, and Adjusted EBITDA, Free Cash
Flow, Adjusted Free Cash Flow and Net Debt reconciliations for adjustments.

Fourth Quarter Financial Results

Consolidated revenues increased 3% year-over-year to $63.5 million as Broadband revenues grew by $4 million, or 9%, more than offsetting Telecom revenue declines of $2.1 million, or 13%. Adjusted EBITDA declined 1% year-over-year to $21.6 million, with Broadband adjusted EBITDA increasing 8% to account for 54% of total adjusted EBITDA, offsetting most of the Telecom adjusted EBITDA decline of 10%. SureWest expects to continue increasing its Broadband revenues and adjusted EBITDA through expansion of both residential and business product offerings. The long-term strategy remains growing the Broadband segment while continuing to successfully offset industry-wide structural declines in the traditional Telecom segment.

Operating expenses, exclusive of depreciation and amortization, increased 5% year-over-year to $43.0 million due primarily to increases in residential video license fees and transport charges associated with commercial services growth and advertising expense offset slightly by office consolidation savings.

Net income for the quarter was $1.48 million compared to net income of $1.95 million in the same period last year. Earnings per share from continuing operations were $0.11 compared to $0.14 in the fourth quarter 2010 and $0.05 in the third quarter 2011.

Capital expenditures totaled $21.7 million for the fourth quarter and $72.5 million for the full year 2011, an increase from $52.6 million in 2010. During the quarter, SureWest added 5,800 new marketable homes on its fiber-to-the-home (FTTH) network in Kansas City and a total of 15,400 new fiber homes for the full year 2011. Also during the quarter, the company upgraded 2,800 ILEC territory copper homes with Advanced Digital TV service and completed 8,600 upgrades during 2011. These upgrades increased the percentage of fiber and copper triple-play marketable homes in the ILEC to 66%, up from 57% in the fourth quarter of 2010. The 2012 capital plan prioritizes spending where the company has experienced the greatest return on investment. This includes continued business sales growth opportunities, residential RGU growth and increased residential penetration. The company plans to pass 11,000 additional fiber homes during 2012 in Kansas City where it has experienced superior penetration levels. SureWest is reiterating projected capital expenditures of $60-70 million in 2012.

Free cash flow, defined as income from continuing operations plus depreciation and amortization less capital expenditures, was negative $4.2 million for the quarter and negative $6.8 million for the full year 2011, compared to positive $12.6 million in 2010. This decline was expected as a result of the $23.4 million investment in network expansion in 2011 compared to $1.3 million in 2010. Adjusted free cash flow, defined as free cash flow excluding capital investments in network expansion, increased 20% year-over-year to $16.7 million.

Cash and cash equivalents increased year-over-year to $4.2 million from $2.9 million. Total debt net of cash and cash equivalents (net debt) was $200.2 million, resulting in a net debt to adjusted EBITDA ratio of 2.37x.

Broadband Segment Results

Broadband revenues increased 9% year-over-year and accounted for 77% of the company's total revenues, compared to 73% in the fourth quarter 2010. Broadband adjusted EBITDA increased 8% year-over-year and now represents 54% of the company's total adjusted EBITDA. Broadband adjusted EBITDA will be impacted in the first quarter when the company incurs increases in video license fees that do not coincide with a customer price increase, which in 2012, is scheduled for the second quarter.

Broadband Residential:

Broadband Residential revenues increased 7% year-over-year to $34 million as a result of 5% growth in average revenue per user (ARPU) and a 4% increase in RGUs. To illustrate growth trends, Broadband RGUs, subscriber counts and ARPU are detailed both year-over-year and sequentially in the table and text below:

Q4 '11 vs. Q4 '10 Change Q4 '11 vs. Q3 '11 Change
------------------------ ------------------------
Kansas Kansas
Sacramento City Sacramento City
Market Market Total Market Market Total
----------- ------ ----- ----------- ------ -----
Broadband
Residential RGUs 3% 5% 4% 1% 2% 1%
Data RGUs 0% 8% 3% 0% 3% 1%
Video RGUs 9% 7% 7% 2% 3% 2%
Voice RGUs 4% (1%) 2% 0% 0% 0%
Total Residential
Subscribers 0% 7% 3% 0% 3% 1%

The Sacramento region's Advanced Digital TV product continued to drive growth, helping to increase net video RGUs by 2,230 year-over-year and 530 sequentially. SureWest had 21,662 Advanced Digital TV subscribers through the fourth quarter, representing 78% of the company's overall video RGUs in the Sacramento market. Approximately 98% of the Advanced Digital TV subscribers bundle Internet and 79% subscribe to a triple-play with ARPU of $148.

ARPU for customers on SureWest's FTTH and hybrid fiber coaxial (HFC) networks increased 2% year-over-year to $117 due to video and data price increases in July 2011.

Residential customer churn improved year-over-year and sequentially in the fourth quarter from 1.6% to 1.4% as a result of churn reduction programs such as Advanced Digital TV video upgrades on the copper network, as well as ongoing superior customer service and value-added features like additional HD channels and increased Internet speeds.

Broadband Business:

Broadband Business revenues increased by $1.8 million, or 15%, year-over-year to $14.2 million. Business customers increased 3% year-over-year to 8,000 and ARPU grew 11% from the prior year to $592. The Kansas City market grew ARPU by 11% year-over-year while increasing customer counts by 3%. The Sacramento market grew customers by 4% while ARPU increased by 11% driven by wireless carrier backhaul and existing customers taking additional products. Broadband Business growth expectations remain high in both Sacramento and Kansas City.

As of December 31, 2011, SureWest was billing for 322 wireless backhaul access points at annualized revenues of $3.6 million. The company is now scheduled to bill for over 398 backhaul connections by third quarter 2012 with over $4.5 million in annualized revenues when those sites become active. Opportunities continue to be pursued to serve additional connections in both the Sacramento and Kansas City markets.

Telecom Segment Results

Telecom revenues declined $2.1 million, or 12.5%, year-over-year to $14.5 million, consistent with the industry-wide trend of declines in access lines, minutes of use and access revenues. This was partially due to the decrease of $1 million in regulatory support revenues that were reduced as scheduled in the first quarter 2011. The company's scheduled state regulatory support declines began in 2006 and will be fully phased out in the first quarter 2012.

The Telecom segment has consistently generated adjusted EBITDA margins over 40% and continues to generate significant free cash flow, which is utilized to reduce debt and fund Broadband segment expansion. As the company focuses on growing its Broadband segment, the Telecom segment will continue to account for a smaller percentage of total revenues. For the fourth quarter 2011, Telecom revenues were 23% of total company revenues compared to 27% in the fourth quarter of 2010.

Additionally, voice line loss is declining and is having less of an impact on overall financial performance. Fourth quarter 2011 year-over-year consolidated ILEC voice RGU loss was 3,800, compared to a loss of 4,800 in the fourth quarter 2010. In addition, fourth quarter 2011 consolidated year-over-year loss in ILEC and CLEC voice RGUs combined was 4,400, compared to a loss of 6,000 in the fourth quarter 2010.

Telecom Residential:

Telecom Residential revenues declined 21% year-over-year to $3.1 million resulting from a 20% decline in Telecom voice RGUs. However, of the 5,900 year-over-year Telecom Residential voice RGU losses, 2,600, or 44%, migrated to the SureWest Broadband Voice over IP service. The migration of existing Telecom ILEC access lines to Broadband VoIP enables the continued preservation of voice revenues on a consolidated basis.

Telecom Business:

Telecom Business revenues declined 2% year-over-year to $8.4 million as a result of a 3% decrease in business customers in the ILEC territory. The company is experiencing competitive pressure in the very small business customer segments; however medium and large ILEC business customers remain stable.

Telecom Access:

Telecom Access revenues decreased $1.1 million year-over-year to $3.0 million primarily due to the scheduled reduction in the California High Cost Fund (CHCF) subsidy, the elimination of the transport interconnection charge (TIC) and the decline in switched access revenues related to access line loss and declining minutes of use. The combined annual regulatory support related to CHCF and TIC declined roughly $4.0 million in 2011 from $6.1 million in 2010 to $2.0 million in 2011 - and will be zero in 2012. In the first quarter of 2012, the company will have an expected quarterly revenue decline of $500 thousand related to the final phase out of the CHCF.

Merger Update

As previously announced on February 6, 2012, SureWest entered into a definitive merger agreement under which Consolidated Communications (Nasdaq: CNSL) will acquire all the outstanding shares of SureWest in a cash and stock transaction valued at $23.00 per share, or a total of approximately $340.9 million, exclusive of debt. The consideration represents a 47% premium to SureWest's stock price as of the close on February 3, 2012. Subject to the satisfaction of customary closing conditions, including federal and state regulatory approvals and the approval by both Consolidated and SureWest shareholders, the transaction is expected to close in the second half of 2012. The transaction was unanimously approved by the boards of directors of both companies.

The merger agreement is attached as Exhibit 2.1 to the Current Report on Form 8-K that SureWest filed with the Securities and Exchange Commission on February 8, 2012.

Non-GAAP Measures

In addition to the results presented in accordance with generally accepted accounting principles (GAAP) throughout this press release, the company has presented non-GAAP financial measures such as adjusted EBITDA, free cash flow, adjusted free cash flow and net debt. Adjusted EBITDA represents net income (loss) excluding amounts for income taxes, depreciation and amortization, non-cash pension and certain post-retirement benefits, non-cash stock compensation, severance and other related termination costs, and all other non-operating income/expenses. Free cash flow represents net income (loss) plus depreciation and amortization less capital expenditures. Adjusted free cash flow represents free cash flow as defined above, excluding the network expansion capital investments. Free cash flow and adjusted free cash flow are a measure of operating cash flows available for corporate purposes after providing sufficient fixed asset additions to maintain current productive capacity. Net debt represents total long-term debt (including current maturities) less cash and cash equivalents. Net debt can be used as a component in measuring leverage. The company believes these non-GAAP measures, viewed in addition to but not in lieu of its reported GAAP results, provide useful information to investors as they are an integral part of the internal evaluation of operating performance. In addition, they are measures that the company uses to evaluate management's effectiveness. Reconciliations to the comparable GAAP measures are provided in the accompanying financial and operating summaries. SureWest's non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies.

Conference Call and Webcast

SureWest Communications will not host an investor call with respect to the financial results.

Additional Information and Where to Find It

In connection with the proposed transaction, Consolidated will file a registration statement on Form S-4 with the SEC, which will include the proxy statement and also constitute a prospectus with respect to the Consolidated common stock. SureWest will mail the proxy statement/prospectus to its shareholders once the Form S-4 has been declared effective. INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS) BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Once filed with the SEC, investors may obtain free copies of the registration statement and proxy statement/prospectus, as well as other filings containing information about Consolidated and SureWest, without charge, at the SEC's website (http://www.sec.gov). These documents may also be obtained free of charge from SureWest's Investor Relations website (http://www.surw.com) or by directing a request to: SureWest Investor Relations, P.O. Box 969, Roseville, CA 95678 or by calling 916.786.1831. Copies of Consolidated's filings may be obtained free of charge from Consolidated's Investor Relations website (http://ir.consolidated.com) or by directing a request to: Consolidated Investor Relations, 121 South 17th Street, Mattoon, IL 61938.

SureWest, Consolidated and their respective officers and directors may be deemed, under SEC rules, to be participants in the solicitation of proxies from shareholders with respect to the proposed Merger. Information regarding the officers and directors of SureWest is included in its definitive proxy statement for its 2011 annual meeting filed with the SEC on April 7, 2011. Information regarding the officers and directors of Consolidated is included in its definitive proxy statement for its 2011 annual meeting filed with the SEC on March 30, 2011. More detailed information regarding the identity of potential participants in the solicitation, and their direct or indirect interests, by securities, holdings or otherwise, which interests may be different from those of the company's shareholders generally, will be set forth in the proxy statement/prospectus and other materials to be filed with the SEC in connection with the proposed transaction.

About SureWest

SureWest Communications is a leading integrated communications provider and the bandwidth leader in the markets it serves. Headquartered in Northern California for more than 95 years, SureWest offers bundled residential and commercial services in the greater Sacramento and Kansas City regions that include IP-based digital and high-definition television, high-speed Internet, Voice over IP, and local and long distance telephone. SureWest was the nation's first provider to launch residential HDTV over an IP network and offers one of the nation's fastest symmetrical Internet services with speeds of up to 50 Mbps in each direction on its fiber-to-the-home network. For up-to-date information on products and services, visit the company on Facebook and Twitter.

Safe Harbor Statement

Statements made in this news release that are not historical facts are forward-looking statements and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. In some cases, these forward-looking statements may be identified by the use of words such as "may," "will," "should," "expect," "plan," "anticipate" or "project," or the negative of those words or other comparable words. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Such forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause the company's actual results to differ from those projected in such forward-looking statements. Important factors that could cause actual results to differ from those set forth in the forward-looking statements include, but are not limited to, advances in telecommunications technology, changes in the telecommunications regulatory environment, changes in the financial stability of other telecommunications providers who are customers of the company, changes in competition in markets in which the company operates, adverse circumstances affecting the economy in California, Kansas and Missouri in general, and in the greater Sacramento, California and greater Kansas City, Kansas and Missouri areas in particular, the availability of future financing, changes in the demand for services and products, new product and service development and introductions, and pending and future litigation.

Contacts:
Ron Rogers
Corporate Communications
916-746-3123
r.rogers@surewest.com

Misty Wells
Investor Relations
916-786-1799
m.wells@surewest.com

SUREWEST COMMUNICATIONS
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; Amounts in thousands, except per share amounts)

Quarters Ended
--------------
December 31, September 30, $ %
2011 2011 Change Change
---- ---- ------ ------
Operating
revenues:
Broadband $49,010 $48,018 $992 2%
Telecom 14,529 14,979 (450) (3%)
------ ------ ---- ----
Total
operating
revenues 63,539 62,997 542 1%

Operating
expenses:
Cost of
services and
products
(exclusive
of
depreciation
and
amortization) 28,919 28,566 353 1%
Customer
operations
and selling 7,631 7,771 (140) (2%)
General and
administrative 6,496 6,879 (383) (6%)
Depreciation
and
amortization 16,023 15,810 213 1%
------ ------ --- ---
Total
operating
expenses 59,069 59,026 43 0%
------ ------ --- ---

Income from
operations 4,470 3,971 499 13%

Other income
(expense):
Investment
income 3 4 (1) (25%)
Interest
expense (2,074) (2,497) 423 17%
Other, net 208 (546) 754 138%
--- ---- --- ---
Total other
income
(expense),
net (1,863) (3,039) 1,176 39%
------ ------ ----- ---

Income from
operations
before
income taxes 2,607 932 1,675 180%

Income tax
expense 1,124 289 835 289%
----- --- --- ---

Net income $1,483 $643 $840 131%
====== ==== ==== ===

Basic and
diluted
earnings per
share $0.11 $0.05 $0.06
===== ===== =====

Shares of
common stock
used to
calculate
earnings per
share:
Basic 13,948 13,918 30
====== ====== ===
Diluted 14,035 14,023 12
====== ====== ===

Dividends per
share $0.10 $0.08 $0.02
===== ===== =====

SUREWEST COMMUNICATIONS
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; Amounts in thousands, except per share
amounts)

Quarters Ended
December 31, $ %
---------------
2011 2010 Change Change
---- ---- ------ ------
Operating
revenues:
Broadband $49,010 $45,032 $3,978 9%
Telecom 14,529 16,614 (2,085) (13%)
------ ------ ------ -----
Total operating
revenues 63,539 61,646 1,893 3%

Operating
expenses:
Cost of services
and products
(exclusive of
depreciation and
amortization) 28,919 26,948 1,971 7%
Customer
operations and
selling 7,631 7,095 536 8%
General and
administrative 6,496 6,828 (332) (5%)
Depreciation and
amortization 16,023 15,777 246 2%
------ ------ --- ---
Total operating
expenses 59,069 56,648 2,421 4%
------ ------ ----- ---

Income from
operations 4,470 4,998 (528) (11%)

Other income
(expense):
Investment income 3 15 (12) (80%)
Interest expense (2,074) (2,157) 83 4%
Other, net 208 107 101 94%
--- --- --- ---
Total other income
(expense), net (1,863) (2,035) 172 8%
------ ------ --- ---

Income from
operations before
income taxes 2,607 2,963 (356) (12%)

Income tax expense 1,124 1,012 112 11%
----- ----- --- ---

Net income $1,483 $1,951 $(468) (24%)
====== ====== ===== =====

Basic and diluted
earnings per
share $0.11 $0.14 $(0.03)
===== ===== ======

Shares of common
stock used to
calculate
earnings per
share:
Basic 13,948 13,694 254
====== ====== ===
Diluted 14,035 13,694 341
====== ====== ===

Dividends per
share $0.10 $- $0.10
===== === =====

SUREWEST COMMUNICATIONS
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; Amounts in thousands, except per share amounts)

Years Ended December 31, $ %
------------------------
2011 2010 Change Change
---- ---- ------ ------
Operating
revenues:
Broadband $188,366 $174,546 $13,820 8%
Telecom 59,687 68,953 (9,266) (13%)
------ ------ ------ -----
Total
operating
revenues 248,053 243,499 4,554 2%

Operating
expenses:
Cost of
services
and
products
(exclusive
of
depreciation
and
amortization) 110,271 105,719 4,552 4%
Customer
operations
and selling 29,777 29,637 140 0%
General and
administrative 29,315 31,124 (1,809) (6%)
Depreciation
and
amortization 63,965 61,825 2,140 3%
------ ------ ----- ---
Total
operating
expenses 233,328 228,305 5,023 2%
------- ------- ----- ---

Income from
operations 14,725 15,194 (469) (3%)

Other income
(expense):
Investment
income 39 77 (38) (49%)
Interest
expense (11,586) (8,346) (3,240) (39%)
Other, net (41) (216) 175 81%
--- ---- --- ---
Total other
income
(expense),
net (11,588) (8,485) (3,103) (37%)
------- ------ ------ -----

Income from
operations
before
income
taxes 3,137 6,709 (3,572) (53%)

Income tax
expense 1,335 3,354 (2,019) (60%)
----- ----- ------ -----

Net income $1,802 $3,355 $(1,553) (46%)
====== ====== ======= =====

Basic and
diluted
earnings
per share $0.13 $0.24 $(0.11)
===== ===== ======

Shares of
common
stock used
to
calculate
earnings
per share:
Basic 13,876 13,836 40
====== ====== ===
Diluted 13,936 13,836 100
====== ====== ===

Dividends
per share $0.26 $- $0.26
===== === =====

SureWest Communications
Quarterly Selected Financial Results & Reconciliations of Non-GAAP Measures
(on a consolidated and a segment basis)
(Unaudited; Amounts in thousands)

Consolidated Results of Operations

Twelve Months Twelve Months
For 2010 Quarters Ended: Ended For 2011 Quarters Ended: Ended Twelve Months Quarter Sequential
------------------------ ------------------------ Year-over-Year Year-over-Year Qtr-over-Qtr
-------------- -------------- ------------
March 31 June 30 September 30 December 31 December 31, March 31 June 30 September 30 December 31 December 31, $chg % $chg % $chg %
-------- ------- ------------ ----------- ------------ -------- ------- ------------ ----------- ------------ ---- --- ---- --- ---- ---
2010 2011
---- ----
Operating revenues
(1)
Broadband $42,577 $43,076 $43,861 $45,032 $174,546 $45,379 $45,959 $48,018 $49,010 $188,366 $13,820 8% $3,978 9% $992 2%
Telecom 17,611 17,472 17,256 16,614 68,953 15,176 15,003 14,979 14,529 59,687 (9,266) (13%) (2,085) (13%) (450) (3%)
----- ----- ----
Total operating
revenues 60,188 60,548 61,117 61,646 243,499 60,555 60,962 62,997 63,539 248,053 4,554 2% 1,893 3% 542 1%
------ ------ ------ ------ ------- ------ ------ ------ ------ ------- ----- --- ----- --- --- ---

Operating expenses
(1) 41,940 43,249 40,420 40,871 166,480 42,792 40,309 43,216 43,046 169,363 2,883 2% 2,175 5% (170) (0%)
Depreciation and
amortization 15,106 15,262 15,680 15,777 61,825 15,775 16,357 15,810 16,023 63,965 2,140 3% 246 2% 213 1%
--- --- ---
Income from
operations $3,142 $2,037 $5,017 $4,998 $15,194 $1,988 $4,296 $3,971 $4,470 $14,725 $(469) (3%) $(528) (11%) $499 13%
====== ====== ====== ====== ======= ====== ====== ====== ====== ======= ===== ==== ===== ===== ==== ===

Consolidated Reconciliation of Adjusted EBITDA to Net Income (Loss)

Twelve Months Twelve Months
For 2010 Quarters Ended: Ended For 2011 Quarters Ended: Ended Twelve Months Quarter Sequential
------------------------ ------------------------ Year-over-Year Year-over-Year Qtr-over-Qtr
-------------- -------------- ------------
March 31 June 30 September 30 December 31 December 31, March 31 June 30 September 30 December 31 December 31, $chg % $chg % $chg %
-------- ------- ------------ ----------- ------------ -------- ------- ------------ ----------- ------------ ---- --- ---- --- ---- ---
2010 2011
---- ----
Net income (loss) $527 $(527) $1,404 $1,951 $3,355 $(1,644) $1,320 $643 $1,483 $1,802 $(1,553) (46%) $(468) (24%) $840 131%
Add: income tax
expense 824 190 1,328 1,012 3,354 (562) 484 289 1,124 1,335 (2,019) (60%) 112 11% 835 289%

Less: other
(income)/expense 1,791 2,374 2,285 2,035 8,485 4,194 2,492 3,039 1,863 11,588 3,103 37% (172) (8%) (1,176) (39%)
----- ----- ----- ----- ----- ----- ----- ----- ----- ------ ----- --- ---- ---- ------ -----
Income from
operations 3,142 2,037 5,017 4,998 15,194 1,988 4,296 3,971 4,470 14,725 (469) (3%) (528) (11%) 499 13%
Add (subtract):
Depreciation and
amortization 15,106 15,262 15,680 15,777 61,825 15,775 16,357 15,810 16,023 63,965 2,140 3% 246 2% 213 1%
Non-cash pension
expense 420 341 371 371 1,503 313 394 351 346 1,404 (99) (7%) (25) (7%) (5) (1%)
Non-cash stock
compensation
expense 800 1,144 267 634 2,845 1,645 1,182 747 763 4,337 1,492 52% 129 20% 16 2%
Severance and
other related
costs (3) - 1,144 - - 1,144 - - - - - (1,144) (100%) - - - -
------
Adjusted EBITDA
(2) $19,468 $19,928 $21,335 $21,780 $82,511 $19,721 $22,229 $20,879 $21,602 $84,431 $1,920 2% $(178) (1%) $723 3%
======= ======= ======= ======= ======= ======= ======= ======= ======= ======= ====== === ===== ==== ==== ===

Adjusted EBITDA
margin 32% 33% 35% 35% 34% 33% 36% 33% 34% 34%

Consolidated Free Cash Flow and Adjusted Free Cash Flow

Twelve Months Twelve Months
For 2010 Quarters Ended: Ended For 2011 Quarters Ended: Ended Twelve Months Quarter Sequential
------------------------ ------------------------ Year-over-Year Year-over-Year Qtr-over-Qtr
-------------- -------------- ------------
March 31 June 30 September 30 December 31 December 31, March 31 June 30 September 30 December 31 December 31, $chg % $chg % $chg %
-------- ------- ------------ ----------- ------------ -------- ------- ------------ ----------- ------------ ---- --- ---- --- ---- ---
2010 2011
---- ----
Net income (loss) $527 $(527) $1,404 $1,951 $3,355 $(1,644) $1,320 $643 $1,483 $1,802 $(1,553) (46%) $(468) (24%) $840 131%
Add: Depreciation
and amortization 15,106 15,262 15,680 15,777 61,825 15,775 16,357 15,810 16,023 63,965 2,140 3% 246 2% 213 1%
Less: Capital
expenditures (12,536) (13,878) (12,857) (13,289) (52,560) (11,452) (20,671) (18,658) (21,747) (72,528) (19,968) (38%) (8,458) (64%) (3,089) (17%)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ----- ------ ----- ------ -----
Free cash flow (4) 3,097 857 4,227 4,439 12,620 2,679 (2,994) (2,205) (4,241) (6,761) (19,381) (154%) (8,680) (196%) (2,036) (92%)
Add: Capital
expenditures for
network expansion 368 588 329 26 1,311 1,415 7,020 7,455 7,522 23,412 22,101 1686% 7,496 na 67 1%
Adjusted free cash
flow (4) $3,465 $1,445 $4,556 $4,465 $13,931 $4,094 $4,026 $5,250 $3,281 $16,651 $2,720 20% $(1,184) (27%) $(1,969) (38%)
====== ====== ====== ====== ======= ====== ====== ====== ====== ======= ====== === ======= ===== ======= =====

Consolidated Net Debt Ratio

For 2010 Quarters Ended: For 2011 Quarters Ended: Quarter Sequential
------------------------ ------------------------ Year-over-Year Qtr-over-Qtr
-------------- ------------
March 31 June 30 September 30 December 31 March 31 June 30 September 30 December 31 $chg % $chg %
-------- ------- ------------ ----------- -------- ------- ------------ ----------- ---- --- ---- ---
Net Debt:
Long-term debt,
including current
maturities $215,045 $219,045 $209,045 $205,409 $210,000 $210,000 $206,250 $204,375 $(1,034) (1%) $(1,875) (1%)
Less: Cash and
cash equivalents (6,982) (6,154) (3,215) (2,937) (12,881) (11,047) (8,932) (4,208) (1,271) (43%) 4,724 53%
Net Debt (5) $208,063 $212,891 $205,830 $202,472 $197,119 $198,953 $197,318 $200,167 $(2,305) (1%) $2,849 1%
======== ======== ======== ======== ======== ======== ======== ======== ======= ==== ====== ===

(1) External customers only.

(2) Adjusted EBITDA represents net income (loss) excluding amounts for income taxes; depreciation and amortization; non-cash pension and certain post-retirement benefits; non-cash stock compensation;
severance and other related termination costs; and all other non-operating income/expenses. Adjusted EBITDA is a common measure of operating performance in the telecommunications industry. Adjusted
EBITDA is not a measure of financial performance under United States generally accepted accounting principles and should not be considered in isolation or as a substitute for consolidated net income
(loss) as a measure of performance.

(3) Severance and other related termination costs related to the workforce reduction initiative implemented during the quarter ended June 30, 2010. Amounts exclude the termination costs related to stock
compensation expense, which are included in non-cash stock compensation expense of the adjusted EBITDA reconciliation.

(4) Free cash flow is a measure of operating cash flows available for corporate purposes after providing sufficient fixed asset additions to maintain current productive capacity. Consolidated free cash
flow includes capital expenditures for our corporate operating unit. Adjusted free cash flow represents free cash flow excluding capital expenditures for network expansion. Free cash flow and adjusted
free cash flow are not measures of financial performance under United States generally accepted accounting principles and should not be considered in isolation or as a substitute for consolidated net
income (loss) as a measure of performance and net cash provided by operating activities as a measure of liquidity.

(5) Net debt represents total long-term debt (including current maturities) less cash and cash equivalents. Net debt can be a component in measuring leverage. Net debt is not a measure determined in
accordance with United States generally accepted accounting principles and should not be considered as a substitute for total long-term debt.

(6) The ratio of net debt to adjusted EBITDA is calculated as net debt divided by adjusted EBITDA based on a trailing twelve month (TTM) period. This measure provides useful information to our investors
about our debt level relative to our performance and about our ability to meet our financial obligations.

(7) Operating revenues in the Broadband segment have been reclassified for a change during the fourth quarter of 2011 in the classification of promotional discounts between residential voice, video and
data revenue. Prior period revenues have been reclassified to conform to the current period presentation.
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

SUREWEST COMMUNICATIONS
CONSOLIDATED BALANCE SHEETS
(Unaudited; Amounts in thousands)

December December
31, 31, $ %
2011 2010 Change Change
---- ---- ------ ------
ASSETS
Current assets:
Cash and cash
equivalents $4,208 $2,937 $1,271 43%
Short-term
investments - 771 (771) (100%)
Accounts
receivable,
net 21,540 20,298 1,242 6%
Income tax
receivable 280 1,782 (1,502) (84%)
Prepaid
expenses 2,912 3,792 (880) (23%)
Deferred income
taxes 2,226 2,284 (58) (3%)
Assets held for
sale 4,756 6,009 (1,253) (21%)
----- ----- ------ -----
Total current
assets 35,922 37,873 (1,951) (5%)

Property, plant
and equipment,
net 522,790 514,639 8,151 2%

Intangible and
other assets:
Customer
relationships,
net 1,417 2,632 (1,215) (46%)
Goodwill 45,814 45,814 - -
Deferred
charges and
other assets 6,133 2,223 3,910 176%
----- ----- ----- ---
53,364 50,669 2,695 5%
------ ------ ----- ---
$612,076 $603,181 $8,895 1%
======== ======== ====== ===

LIABILITIES AND
SHAREHOLDERS'
EQUITY
Current
liabilities:
Current portion
of long-term
debt $7,500 $15,636 $(8,136) (52%)
Accounts
payable 4,315 2,885 1,430 50%
Other accrued
liabilities 16,783 12,847 3,936 31%
Advance
billings and
deferred
revenues 8,051 8,035 16 0%
Accrued
compensation 7,593 6,998 595 9%
----- ----- --- ---
Total current
liabilities 44,242 46,401 (2,159) (5%)

Long-term debt 196,875 189,773 7,102 4%
Deferred income
taxes 49,126 56,661 (7,535) (13%)
Accrued pension
and other
post-
retirement
benefits 54,354 33,815 20,539 61%
Other
liabilities
and deferred
revenues 6,784 4,473 2,311 52%

Commitments and
contingencies

Shareholders'
equity:
Common stock,
without par
value; 100,000
shares
authorized,
14,060 and
13,866 shares
issued and
outstanding at
December 31,
2011 and
December 31,
2010,
respectively 146,498 143,309 3,189 2%
Accumulated
other
comprehensive
loss (27,770) (15,081) (12,689) (84%)
Retained
earnings 141,967 143,830 (1,863) (1%)
------- ------- ------ ----
Total
shareholders'
equity 260,695 272,058 (11,363) (4%)
------- ------- ------- ----
$612,076 $603,181 $8,895 1%
======== ======== ====== ===

SUREWEST COMMUNICATIONS
SELECTED OPERATING METRICS
As of and for the Quarters Ended

12/31/2011 12/31/2010 9/30/2011
BROADBAND (1) (1) Change % Change (1) Change % Change
--------- ----------- ----------- ------ -------- ---------- ------ --------
Residential
Video
Marketable Homes (2) 296,700 271,800 24,900 9% 287,900 8,800 3%

RGUs 66,400 61,800 4,600 7% 64,900 1,500 2%
Penetration (2) 22.4% 22.7% -0.4% (2%) 22.5% -0.2% (1%)
ARPU $72 $70 $2 2% $73 ($1) (1%)
Voice
Marketable Homes 327,700 311,300 16,400 5% 321,700 6,000 2%
RGUs 76,400 74,900 1,500 2% 76,100 300 0%
Penetration 23.3% 24.1% -0.7% (3%) 23.7% -0.3% (1%)
ARPU $28 $29 ($1) (5%) $28 $0 (1%)
Data
Marketable Homes 327,700 311,300 16,400 5% 321,700 6,000 2%

RGUs 102,600 99,400 3,200 3% 101,300 1,300 1%

Penetration 31.3% 31.9% -0.6% (2%) 31.5% -0.2% (1%)
ARPU $44 $41 $3 8% $44 $0 0%
Total
RGUs 245,400 236,100 9,300 4% 242,300 3,100 1%

Subscriber totals
Subscribers (3) 107,100 104,100 3,000 3% 105,800 1,300 1%

Penetration 32.7% 33.4% -0.8% (2%) 32.9% -0.2% (1%)

ARPU (4) $106 $101 $5 5% $107 ($1) (0%)

Triple Play ARPU (5) $117 $115 $2 2% $118 ($1) (1%)

Triple Play RGUs per Subscriber
(5) 2.49 2.53 (0.04) (2%) 2.50 (0.01) (1%)

Churn 1.4% 1.6% -0.2% (10%) 1.6% -0.2% (11%)

Business (6)
Customers 8,000 7,800 200 3% 8,000 0 0%
ARPU $592 $535 $57 11% $570 $22 4%

TELECOM 12/31/2011 12/31/2010 Change % Change 9/30/2011 Change % Change
------- ---------- ---------- ------ -------- --------- ------ --------
Residential
Voice
Marketable Homes 91,900 91,500 400 0% 91,800 100 0%
RGUs (7) 23,000 28,900 (5,900) (20%) 24,200 (1,200) (5%)
Cumulative Migration to
Broadband Voice (8) 18,000 15,400 2,600 17% 17,500 500 3%
Penetration 25.0% 31.6% -6.6% (21%) 26.4% -1.3% (5%)
ARPU $43 $43 ($0) (0%) $43 $0 1%
Churn (9) 1.6% 2.0% -0.3% (18%) 1.8% -0.2% (10%)

Business (6)
Customers 7,700 7,900 (200) (3%) 7,700 0 0%
ARPU $363 $359 $4 1% $351 $12 3%

CONSOLIDATED RESIDENTIAL VOICE
RGUs 12/31/2011 12/31/2010 Change % Change 9/30/2011 Change % Change
------------------------------ ---------- ---------- ------ -------- --------- ------ --------
ILEC Voice RGUs
Broadband 23,100 21,000 2,100 10% 22,700 400 2%
Telecom 23,000 28,900 (5,900) (20%) 24,200 (1,200) (5%)
------ ------ ------ ----- ------ ------ ----
Total ILEC Voice RGUs (10) 46,100 49,900 (3,800) (8%) 46,900 (800) (2%)
CLEC Residential Voice RGUs (11) 53,300 53,900 (600) (1%) 53,400 (100) (0%)
------ ------ ---- ---- ------ ---- ----
TOTAL Residential Voice RGUs
(12) 99,400 103,800 (4,400) (4%) 100,300 (900) (1%)

TOTAL RESIDENTIAL BROADBAND &
TELECOM RGUs 268,400 265,000 3,400 1% 266,500 1,900 1%
-----------------------------

NETWORK METRICS 12/31/2011 12/31/2010 Change % Change 9/30/2011 Change % Change
--------------- ---------- ---------- ------ -------- --------- ------ --------
Marketable Homes - Fiber 164,500 148,500 16,000 11% 158,500 6,000 4%
Marketable Homes - HFC 94,000 93,600 400 0% 94,000 0 0%
Marketable Homes -Copper 2-Play 31,000 39,600 (8,600) (22%) 33,800 (2,800) (8%)

Marketable Homes -Copper 3-Play 38,200 29,600 8,600 29% 35,400 2,800 8%
------ ------ ----- --- ------ ----- ---
Total 327,700 310,400 17,300 6% 321,700 6,000 2%

Note: The calculation of certain metrics have been revised over time to reflect the current view of our
business. Where necessary prior period metric calculations have been revised to conform with current practice.
All amounts rounded to the nearest 100s, except percents and dollars.

(1) During the fourth quarter of 2011, we revised our methodology for allocating subscriber discounts to video,
voice and data revenue. The revised methodology facilitates the consistent application of discounts and ARPU
calculation between both our residential markets. Accordingly, the ARPU metrics previously reported for 2009,
2010 and 2011 have been revised to conform to current practice.

(2) Marketable Homes -Prior to Q110, video marketable homes and penetration rate included serviceable homes in
Sacramento and Kansas City fiber and hybrid fiber coax (HFC) networks only. With launch of ADTV in Q110,
certain copper homes became video serviceable and 3-play capable and are included in marketable home counts.
Penetration rates prior to Q110 were not adjusted for small number of video customers on copper network prior
to ADTV.

(3) A residential subscriber is a customer who subscribes to one or more residential RGUs.

(4) ARPU is the total residential revenue per average subscriber.

(5) Triple play ARPU includes the total residential revenue per average subscriber and Triple play RGUs per
Subscriber includes ending RGUs per ending subscriber, for the triple play markets, excluding the ILEC market.

(6) A business customer is a customer who subscribes to business data, voice or video and represents a unique
customer account. ARPU is the total business revenue per average customer.

(7) A voice RGU is a residential customer who subscribes to one or more voice access lines.

(8) Telecom Voice RGU Migration to Broadband Voice are residential Telecom voice RGUs in Line (7) that have
ported their Telecom primary access line service to Broadband VoIP.

(9) Telecom Churn excludes disconnects in Line (8) that have ported their Telecom primary access line service to
Broadband VoIP.

(10) ILEC Voice RGUs are the total residential voice RGUs in the ILEC franchise market area that are either a
Telecom primary access line or Broadband VoIP subscriber.

(11) CLEC Voice RGUs are the total residential voice RGUs in the Kansas City and Sacramento markets, excluding
the ILEC market.

(12) Total Voice RGUs are the total of ILEC and CLEC residential voice RGUs, and represent the total company
residential voice RGUs of both the Broadband and Telecom Segments.

SUREWEST COMMUNICATIONS
SELECTED OPERATING METRICS
As of and for the Quarters Ended

3/31/2009 6/30/2009 9/30/2009 12/31/2009 3/31/2010 6/30/2010 9/30/2010 12/31/2010 3/31/2011 6/30/2011 9/30/2011 12/31/2011
BROADBAND (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1)
--------- ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
Residential
Video
Marketable Homes (2) 236,500 239,800 240,000 240,500 261,900 265,100 268,500 271,800 272,600 281,200 287,900 296,700

RGUs 59,900 59,000 59,000 58,900 58,500 60,200 61,200 61,800 63,100 64,100 64,900 66,400
Quarterly change (100) (900) 0 (100) (400) 1,700 1,000 600 1,300 1,000 800 1,500
Year-over-Year change 4,800 2,000 600 (1,100) (1,400) 1,200 2,200 2,900 4,600 3,900 3,700 4,600
Penetration (2) 24.4% 23.7% 23.8% 23.7% 22.3% 22.7% 22.8% 22.7% 23.1% 22.8% 22.5% 22.4%
ARPU $66 $68 $67 $69 $71 $70 $69 $70 $71 $71 $73 $72
Voice
Marketable Homes 308,200 309,300 309,400 309,700 309,900 310,400 311,200 311,300 311,600 317,400 321,700 327,700
RGUs 66,000 67,700 70,000 71,300 71,800 73,900 74,900 74,900 75,600 75,900 76,100 76,400
Quarterly change 2,800 1,700 2,300 1,300 500 2,100 1,000 0 700 300 200 300
Year-over-Year change 12,500 11,400 10,300 8,100 5,800 6,200 4,900 3,600 3,800 2,000 1,200 1,500
Penetration 21.5% 22.0% 22.7% 23.1% 23.2% 23.8% 24.1% 24.1% 24.3% 23.9% 23.7% 23.3%
ARPU $32 $33 $31 $30 $30 $30 $30 $29 $28 $28 $28 $28
Data
Marketable Homes 308,200 309,300 309,400 309,700 309,900 310,400 311,200 311,300 311,600 317,400 321,700 327,700

RGUs 97,800 97,400 97,600 98,300 97,500 98,900 99,200 99,400 100,300 100,600 101,300 102,600

Quarterly change 700 (400) 200 700 (800) 1,400 300 200 900 300 700 1,300
Year-over-Year change 6,300 3,700 2,200 1,200 (300) 1,500 1,600 1,100 2,800 1,700 2,100 3,200
Penetration 31.8% 31.6% 31.6% 31.8% 31.5% 31.9% 31.9% 31.9% 32.2% 31.7% 31.5% 31.3%
ARPU $36 $38 $38 $40 $41 $40 $40 $41 $41 $41 $44 $44
Total
RGUs 223,700 224,100 226,600 228,500 227,800 233,000 235,300 236,100 239,000 240,600 242,300 245,400

Quarterly change 3,400 400 2,500 1,900 (700) 5,200 2,300 800 2,900 1,600 1,700 3,100
Year-over-Year change 23,600 17,100 13,100 8,200 4,100 8,900 8,700 7,600 11,200 7,600 7,000 9,300

Subscriber totals
Subscribers (3) 103,300 102,400 103,000 103,100 102,500 103,600 104,000 104,100 104,900 105,100 105,800 107,100

Quarterly change 300 (900) 600 100 (600) 1,100 400 100 800 200 700 1,300

Year-over-Year change 5,800 2,900 1,900 100 (800) 1,200 1,000 1,000 2,400 1,500 1,800 3,000

Penetration 33.5% 33.1% 33.3% 33.3% 33.1% 33.4% 33.4% 33.4% 33.7% 33.1% 32.9% 32.7%

ARPU (4) $93 $97 $95 $99 $101 $100 $99 $101 $102 $102 $107 $106

Triple Play ARPU (5) $111 $114 $111 $114 $116 $115 $113 $115 $114 $114 $118 $117

Triple Play RGUs per Subscriber
(5) 2.56 2.55 2.54 2.54 2.53 2.54 2.53 2.53 2.52 2.51 2.50 2.49

Churn 1.4% 1.7% 1.8% 1.5% 1.6% 1.6% 1.7% 1.6% 1.4% 1.5% 1.6% 1.4%

Business (6)
Customers 6,900 7,000 7,200 7,300 7,400 7,500 7,700 7,800 7,800 7,900 8,000 8,000
ARPU $467 $459 $467 $476 $479 $502 $526 $535 $539 $551 $570 $592

TELECOM 3/31/2009 6/30/2009 9/30/2009 12/31/2009 3/31/2010 6/30/2010 9/30/2010 12/31/2010 3/31/2011 6/30/2011 9/30/2011 12/31/2011
------- --------- --------- --------- ---------- --------- --------- --------- ---------- --------- --------- --------- ----------
Residential
Voice
Marketable Homes 90,800 90,900 90,900 91,000 91,100 91,200 91,400 91,500 91,700 91,800 91,800 91,900
RGUs (7) 49,500 45,100 41,300 38,500 35,500 32,800 30,700 28,900 27,300 25,600 24,200 23,000
Cumulative Migration to
Broadband Voice (8) 6,900 9,000 10,700 11,800 12,900 14,000 14,900 15,400 16,100 16,900 17,500 18,000
Penetration 54.5% 49.6% 45.4% 42.3% 39.0% 36.0% 33.6% 31.6% 29.8% 27.9% 26.4% 25.0%
ARPU $44 $45 $45 $45 $44 $44 $43 $43 $43 $43 $43 $43
Churn (9) 2.1% 2.3% 2.3% 2.0% 2.3% 2.1% 2.1% 2.0% 1.8% 1.8% 1.8% 1.6%

Business (6)
Customers 9,000 8,900 8,700 8,500 8,300 8,200 8,000 7,900 7,800 7,700 7,700 7,700
ARPU $332 $339 $329 $334 $334 $340 $360 $359 $356 $357 $351 $363

CONSOLIDATED RESIDENTIAL VOICE 3/31/2009 6/30/2009 9/30/2009 12/31/2009 3/31/2010 6/30/2010
RGUs (1) (1) (1) (1) (1) (1) 9/30/2010 12/31/2010 3/31/2011 6/30/2011 9/30/2011 12/31/2011
------------------------------ ---------- ---------- ---------- ----------- ---------- ---------- --------- ---------- --------- --------- --------- ----------
ILEC Voice RGUs
Broadband 9,900 12,400 14,700 16,200 17,500 19,000 20,400 21,000 21,500 22,300 22,700 23,100
Telecom 49,500 45,100 41,300 38,500 35,500 32,800 30,700 28,900 27,300 25,600 24,200 23,000
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total ILEC Voice RGUs (10) 59,400 57,500 56,000 54,700 53,000 51,800 51,100 49,900 48,800 47,900 46,900 46,100
Quarterly change (1,700) (1,900) (1,500) (1,300) (1,700) (1,200) (700) (1,200) (1,100) (900) (1,000) (800)
Year-over-Year change (7,500) (7,400) (6,900) (6,400) (6,400) (5,700) (4,900) (4,800) (4,200) (3,900) (4,200) (3,800)

CLEC Residential Voice RGUs (11) 56,100 55,300 55,300 55,100 54,300 54,900 54,500 53,900 54,100 53,600 53,400 53,300
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Quarterly change 0 (800) 0 (200) (800) 600 (400) (600) 200 (500) (200) (100)
Year-over-Year change 2,700 1,000 0 (1,000) (1,800) (400) (800) (1,200) (200) (1,300) (1,100) (600)

TOTAL Residential Voice RGUs
(12) 115,500 112,800 111,300 109,800 107,300 106,700 105,600 103,800 102,900 101,500 100,300 99,400
Quarterly change (1,700) (2,700) (1,500) (1,500) (2,500) (600) (1,100) (1,800) (900) (1,400) (1,200) (900)
Year-over-Year change (4,800) (6,400) (6,900) (7,400) (8,200) (6,100) (5,700) (6,000) (4,400) (5,200) (5,300) (4,400)

TOTAL RESIDENTIAL BROADBAND &
TELECOM RGUs 273,200 269,200 267,900 267,000 263,300 265,800 266,000 265,000 266,300 266,200 266,500 268,400
-----------------------------
Year-over-Year change 6,300 (700) (4,100) (7,300) (9,900) (3,400) (1,900) (2,000) 3,000 400 500 3,400

NETWORK METRICS 3/31/2009 6/30/2009 9/30/2009 12/31/2009 3/31/2010 6/30/2010 9/30/2010 12/31/2010 3/31/2011 6/30/2011 9/30/2011 12/31/2011
--------------- --------- --------- --------- ---------- --------- --------- --------- ---------- --------- --------- --------- ----------
Marketable Homes - Fiber 142,900 146,900 147,100 147,600 147,700 147,900 148,300 148,500 148,700 154,300 158,500 164,500
Marketable Homes - HFC 93,600 92,900 92,900 92,900 93,000 93,200 93,600 93,600 93,700 93,900 94,000 94,000
Marketable Homes -Copper 2-Play 71,700 69,500 69,400 69,200 47,900 45,300 42,700 39,600 39,000 36,200 33,800 31,000

Marketable Homes -Copper 3-Play 0 0 0 0 21,300 24,000 26,600 29,600 30,200 33,000 35,400 38,200
--- --- --- --- ------ ------ ------ ------ ------ ------ ------ ------
Total 308,200 309,300 309,400 309,700 309,900 310,400 311,200 311,300 311,600 317,400 321,700 327,700

Quarterly change 4,000 1,100 100 300 200 500 800 100 300 5,800 4,300 6,000
Year-over-Year change 21,600 17,100 12,800 5,500 1,700 1,100 1,800 1,600 1,700 7,000 10,500 16,400

(1-12) See all notes on Selected Operating Metrics Actuals Quarterly and Year-over-Year comparison

SOURCE SureWest Communications

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SureWest Communications

Web Site: http://www.surewest.com

SureWest Reports Fourth Quarter and Full Year 2011 Results

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