AT&T Inc (T) 2003 Q4 法說會逐字稿

Welcome to the Dobson Communications fourth-quarter 2003 earnings results conference call.

Today's conference is being recorded.

At this time, I would like to turn the conference over to the Vice President of Investor Relations, Mr. Warren Henry.

Thank you and good morning.

Today's investor conference and conference call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These include but are not limited to statements regarding the company's plans, intentions and expectations for 2004 and beyond.

Such statements are inherently subject to a variety of risks and uncertainties.

Actual results are likely to differ materially from those projected.

We discuss the risk factors that could impact the company's overall business and performance in more detail in our reports filed with the Securities and Exchange Commission.

Given these concerns investors and analysts should not place undue reliance on forward-looking statements.

Once again this quarter our financial presentation is affected by property swaps and acquisitions.

As we discuss Dobson's results please note that GAAP requires us to use discontinued accounting for the California and Maryland 2 properties for the fourth quarter and for historical comparisons; to include the two new Alaska properties only since their acquisition on June 17, 2003; and to include American Cellular only since its acquisition on August 19, 2003.

This makes apples-to-apples comparisons difficult.

As we discuss the financial and operating results for the fourth quarter of 2003 we will almost exclusively be referring to GAAP numbers as published in our earnings press release last night.

The exception, we will discuss all Dobson and American Cellular nonfinancial metrics such as subscriber additions, however, after the fourth quarter discussion to make our business more understandable on a going forward basis, we will discuss our business with additional data that reflect our current structure and operations as well as our projected operations for the near future.

Consequently, where we have reliable data or estimates we will discuss American Cellular, the new Alaska markets and planned acquisitions, Michigan RSA 5 which we completed last night, and NPI on the basis of their full year results.

The California properties and Maryland 2 are consistently discontinued.

Thus, and except where expressly noted the financial and operating data and other metrics that we present following the discussion of the fourth quarter of 2003 beginning with slide number 14, will include our financial position, results of operations and operating metrics as if we had acquired and conducted the operations of American Cellular, the new Alaska markets, Michigan RSA 5 and NPI as of January 1, 2002.

The financial information and other data included in such presentation and related to American Cellular, the Alaska markets, Michigan RSA 5 and NPI will not have been prepared in accordance with GAAP, and will have been compiled by us using estimates and other data obtained from sources that we consider reliable.

We can provide no assurance that such estimates and other data are accurate or complete, although we have no reason to believe that such estimates and other data are not reasonable, accurate and complete.

In addition, we cannot assure that our future results of operations will be the same as or substantially similar to our projected results of operations.

Our future operations will be subject to a number of variables including general economic conditions, economic conditions affecting the telecommunications industry generally and the wireless communications industry in particular, competitive conditions in the wireless communications industry generally and in our markets in particular, the minutes of use by our customers and by customers at our roaming partners in our market areas, our average revenue per unit and average cost per MOU, acceptance by our customers of our new marketing plans, our churn rate, technological advances, our access to capital markets and our cost of capital and other variables over which we have little if any control.

We will also make industry comparisons based on published industry research.

To supplement these discussions we have included an appendix at the end of the presentation that portrays individual assumptions of each of these properties except American Cellular, which has already been reported standalone in our earnings press releases.

Our goal is greater transparency and in response to numerous shareholder requests, to provide data that will better facilitate investors understanding of our business today.

We do not intend in the future to update all of the information in this presentation in the same level of detail, but will do so to the extent that we believe is necessary for investors to understand the key variables in our business.

We do not plan for this investor's conference on this scale to be an annual event.

Finally, our agenda for today, Everett Dobson and Bruce Knooihuizen will present a brief overview of the company's fourth quarter 2003 results, afterwards Everett will present an overview of Dobson's business today and key trends impacting it, especially roaming and the impact of possible consolidation.

After a short break at approximately 10:30 CTO Tim Duffy will discuss our GSM GPRS overlay followed by COO Doug Stephens discussing our local service strategy and retail push in 2004.

At approximately 11:30 CFO Bruce Knooihuizen will conclude with an overview of capital needs and a review of our guidance for 2004 and beyond.

Then from noon until one p.m. we plan to have Q&A.

With that I will turn the conference over to Everett Dobson, President, CEO and Chairman of Dobson Communications.

Thank you, Warren.

That was a long Safe Harbor statement.

I think that may be the longest one I have ever experienced anyway, but it was certainly necessary.

As Warren said I'm going to give a very brief overview of the fourth quarter; frankly I think as we go through the next couple of hours in presenting our company we're going to bring out a lot of the information that you would need to know or perhaps want to know concerning the fourth quarter; about our strategy, about our thoughts on various fundamentals and matrix of the business.

With that let me go through some of the highlights of the fourth quarter, briefly we had 250 million in revenue, EBITDA was 94.2 million and as we released a couple of weeks ago, our net subscriber additions for the quarter were 14,400; gross subscriber additions 89,000.

Sales continue to be in line with what they had been for the last few quarters.

In the fourth quarter were virtually all TDMA, Post pay, contract subscribers.

We do have a bit of a reseller department but essentially we didn't change anything and as such sales continued as they had been, despite that we in fact did continue to grow in the fourth quarter a little bit.

Churn we continue to hold down 1.9 percent, under 2 percent which is certainly our objective and we did have a slight adjustment as a result of the Alaska transaction and we assumed those customers from AT&T Wireless.

Speaking of, we did convert the billing system in Anchorage and Alaska 2 from AT&T Wireless.

We did experience a bit of trouble in that conversion from AT&T Wireless.

We are going to experience a slight modest increase in churn in December and January and it looks like in February it settled back down, and hopefully March will be going forward.

What we experienced specifically is that certain or many call records from AT&T were not accurate quite frankly and as a result we had a very difficult time balancing some of the customer billing records and conveying to the customers the accurate bill that they needed.

But again as I said I think in March I think we are back to normal in the State of Alaska, and hopefully all issues surrounding that transition are behind us.

We did soft launch a GSM network in primarily in New York in the fourth quarter.

I say soft launch, we did not have our automated activation up and running.

In part of the quarter we did not have GPRS up and running and as a result we really took it very slow with respect to GSM.

We are going to talk at length about how we are not going to take it slow in the future, but clearly in the fourth quarter it was testing the water so to speak.

Sixty-five percent of our subscribers are under contract at the end of the year; an average length of those contracts were 12.3 months.

One of the things that we continue to harp on, continue to talk about is the net profit per subscriber.

We continue to make improvement in that.

We believe that to be a very important fundamental of this business, of our business and as you can see total ARPU increased $39.50 to $40.00 on a year-over-year basis but net profit per subscriber with CCPU coming in the same as the previous year, net profit per sub in fact went up from 17 to 17.50.

LNP;

I wanted to touch briefly on it.

We were not affected too much in the quarter; only 14 percent of our POPs had the November 24th deadline.

The remainder will come on in the May 24th deadline.

The markets that we had affected or that came online in November 24, were in fact markets that were relatively high penetrated, relatively high market share.

Youngstown, Ohio, being far and away the largest.

Maryland 3 and PA 6 were also principal markets in that area.

But in the fourth quarter we did experience negative net subscribers of a whopping 765 subscribers or very small in that area.

Ported in only 5 percent of the postpaid growth adds.

In other words of the gross adds that we had, only 5 percent did we in fact transfer the number or port the number.

Of those, of the disconnects we received or experienced, 15 percent were applicable in this case.

Clearly we did not have a strong initiative to have porting from the subscriber base or porting from the gross subscriber adds in the quarter as an initiative.

In fact, when we talked to consumers and potential subscribers about the prospects of waiting two, three, four hours to have their number ported, in many cases the customer that was thinking about porting their numbers said, you know what?

I think I will take my phone, my new number right now and go on down the road.

So we really didn't push the issue.

When we get into May, we will talk at length about how that strategy is likely to change, but the good news is porting in and of itself is a relatively nominal issue.

With that, I'm going to have Bruce Knooihuizen come up and give you some specifics on balance sheet activities in the quarter.

Thank you, Everett.

As Everett said I am just going to cover a couple of points on the fourth quarter specifically.

You have got the press release; obviously if there are any specific questions on items in there we have got the experts either here or on the phone who can address those at the end of the session.

First of all, I would like to talk about the balance sheet.

For all of 2003 we did have a very successful year in managing our balance sheet.

Through the American Cellular restructuring, as well as a lot of the transactions that we did at Dobson Communications we reduced our overall debt and deferred stock by close to $845 million, bringing our balance to $2.8 million at the end of the year.

In particular, in the fourth quarter, we refinanced $183 million of the 12.25 Dobson senior notes as well as $247 million of the 12.25 preferred stock.

We replaced that with a new credit facility that has a rate of approximately 4.5 percent.

Likewise towards the end of the quarter we purchased an additional $46 million of the 12.25 preferred stock for cash.

Also for the year we had given guidance of capital expenditures for both American Cellular and Dobson of $225 to $235 million.

We actually spent $205 million.

The remaining 20 to 30 million is for GSM equipment that didn't quite make it into '03, but we will see it in '04, so our new guidance in '04 will incorporate that as well.

On the income statement, one of the areas I would like to address, and talk a little bit about, back on October 8, we gave guidance for the second half of '03 on EBITDA for Dobson Communications.

At that time we thought we would do between $237 and $253 million of EBITDA.

We knew basically what the third quarter was, so if you back out the third quarter actual of 131, that left us with a range for the fourth quarter of $106 to $122 million in expectations.

That also include MD 2, and obviously as we said, we are using discontinued operations.

So if I back out what we had forecasted for MD 2, it would have left our target for the fourth quarter at just under $104 million.

We actually did 94 million, so a shortfall of 9.5 million.

What happened in the fourth quarter that we didn't expect?

There are really three primary areas, one in particular, and that is roaming revenue decline of about 6 to $7 million.

Now I will come back to that in just a second.

We did have a couple of other smaller items.

We had the Kentucky tax assessment that was finalized in December that caused our taxes to go up by more than $1 million.

Likewise we have seen an increase in our uncollectible revenue as our receivables have lengthened, so we accrued an additional $1.1 million for that as well.

Now talking about roaming, what happened in roaming?

We knew with the contracts what our yield would be and the yield was in line with expectations.

Where we saw a significant difference was in MOUs and actually it was a surprising difference.

Just to give you some examples in 2002 our roaming declined by 14 percent between third quarter and the fourth quarter.

Now we expect declines in the fourth quarter because of seasonality, less people drive in the snow, less people go out and travel in the cold weather.

But yet in 2003 that decline increased to 22 percent.

It went from 417 minutes in the third quarter to 327 minutes in the fourth quarter, significantly larger than what we had experienced at anytime in the past.

Another way of looking at it is looking at month over month comparisons, and what we have got here for instance, in April you see a total year-over-year increase of 36 percent.

April 2003 our minutes of use were 36 percent higher than they were in April of '02.

If you look through the months and the trending, you see that it seems to settle around 18, 19, 20 percent over the last few months, yet when we got to October our decline, we actually saw decline year-over-year of 2 percent, a significant change in what we had seen in the seasonal patterns.

We talked a little bit about those and Everett is going to talk in more detail.

Basically what we are seeing here is the impact of AT&T Wireless, taking customers off plans that had high roaming; we have also seen a movement from Verizon taking minutes off of our network.

Now we are going to get into the portion of our presentation where we are talking about the growth opportunities, where we are going forward, what is going to occur with Dobson Communications, where will we see our growth coming from.

One of the things that Warren mentioned, one of the things that we have heard from folks on the phone quite often and quite honestly we have seen as well, we have got a very difficult company to really go through the GAAP financials.

We have purchased a lot of properties, we have sold a lot of properties and we have discontinued operations, it does make it difficult to try to do comparable numbers.

So what we put together was sort of a same-store basis, Warren gave you all of the specifics on it.

There is an appendix at the end if you wanted to look at the specifics but basically on the same-store basis our local revenue went up from 721 million to 768 million in '03.

But our roaming revenue actually went down quite a bit from 325 million to 297 and our EBITDA went up slightly from 427 to 478.

Again, all of these numbers assume that we had American Cellular as of January 1, assume that we had Anchorage, Michigan 5 and NPI all as of January 1, 2002, and that any property we sold is out of the numbers completely.

As we go through the presentation, unless otherwise noted, this will be the representation that we are showing in terms of minutes, in terms of revenue, in terms of cost.

With that I am going to turn it back over to Everett.

Thank you, Bruce.

I hope everybody is clear on that.

Frankly we struggled a little bit with how to make this presentation meaningful, because we really want you to see an in-depth look at the company in a historical perspective; and clearly we want to give you our insights perspectively (ph), but it is very difficult to do without some reference.

Given that we have had such a change in the company with American Cellular and Alaska, California swap, we wanted to go back and look at those markets as if we had owned them since 2002.

In the case of American we were managing the company since 2002, so the bulk of these operations were ours; on a GAAP basis clearly you don't see them.

So we took a lot of advice from a lot of shareholders, many of which are in this room, that said we want to look at your company on this kind of basis.

We are not going to ignore GAAP, nor should we, but we think in this particular case it is appropriate to look at the company in this manner.

In terms of what we are going to try to accomplish today, as I said, we did not want to leave anything out.

We wanted to cover everything that we felt like was meaningful about the company, inevitably we're not going to get everything, we are going to try to leave plenty of time for questioning, but this is a very in-depth presentation about the company, the business, its operations, we focus on the things that you wanted to focus on and hopefully we have addressed all of these issues.

I am going to give an overview of the company.

I'm going to talk about roaming.

I'm going to talk about the possibilities or the impact on the Cingular AWE announcement of yesterday.

And I'm going to give you a little look into the future as to what our thinking is beyond '04 even.

Tim Duffy is going to follow me; he is going to talk about our GSM initiatives, some of the network parameters, some of the things that he focuses on.

Doug Stephens our COO, will follow him.

And hopefully give you a clear outlook as to what our product development has been, what we are going to be doing in the GSM world and what our expectations are going to be as we roll out some of these new and exciting products.

And then Bruce will follow last and give you some pointers on guidance for the year and talk about some other balance sheet initiatives that in fact we do have.

So the first few slides are frankly just positioning Dobson -- who are we?

What is our ranking in the business?

In the case of size, we have 1.6 million subscribers and again this is on a purely pro forma basis, on all of the markets we have acquired and frankly own today.

Eleven and a half, just short of 11.5 million POPs, we divide the company up into four regions.

We operate them as these regions so if you hear us refer to the North region or the Northwest region, East region, this is what it represents in terms of size and the space in which they come from.

The map, you can see we are spread around in operations in sixteen states from Alaska to New York, Poughkeepsie, New York, Orange County.

For the benefit of everyone hopefully, we presented our footprint in comparison with the six, seven, six national carriers plus ALLTEL.

The method here or the attempt here is to show you on a competitive basis and this is not license footprint, this is not to-be-built footprint, this is actually what the carriers themselves are advertising as footprint in their collateral, and likewise that is what you see on our footprint.

What you see on this map frankly is the license footprint with the exception of Alaska and we do show essentially the coverage there.

But it shows how we rank with Cingular, AT&T -- when you start to look at what is the overlap on this transition, or the AT&T and Cingular transition or transaction, you can clearly see that AT&T and Cingular do have some overlap but we have a very large part of our company is we don't overlap with those two anyway.

Penetration, we are 14.1 percent penetrated of the total POPs today, 11.4 million.

We have 8.6 million RSA POPs and 2.8 million MSA POPs.

I think it is interesting to note that our penetration in the MSAs where we actually the markets themselves whether we have owned them or our predecessors have owned them, they have been in existence, they have been licensed, they have been operating for in many cases six, seven or more years.

And that I think is the primary contributor.

There’s others, but that is the primary contributor to the reason that the MSAs are more penetrated.

Subscribers.

At the end of the year 93 percent were post pay.

We do have a small reseller base and even a smaller prepaid base to comprise our subscriber count.

ARPU is something that we are going to focus on.

We are going to improve ARPU.

In '02, $41 in '03 (technical difficulty) a slight fall, but I think more importantly for us anyway is what we do in terms of our cost element, real ARPU is one angle to that, real ARPU as we call it is total ARPU less incollect expense.

In net profit per subscriber for the year '02 to '03 thus increased pretty significantly from 17 to 18.50 and as I said earlier that is a key initiative, a key focus of our business.

Churn.

Postpaid on an annual basis continued to bring it down 1.9 to 1.7.

Under contract, there is no change there; but the average life of the contract went from 10.1 to 12.3 months for those subscribers who were under contract.

That is a clear indication of our two-year contract strategy which we believe right now certainly is very important.

Network minutes and revenue from the categories of local versus roaming, 1.4 billion, almost 1.5 billion outcollect or roaming minutes came into our network in '03.

We produced customer minutes of 8.2 billion so you see on a network basis a large majority of our minutes are produced from our local subscribers.

The yield we collect from outcollect in '03 was 20 cents per minute.

That obviously pursuant to new contracts is going to come down significantly in '04.

Local revenue yield if you will on a per minute basis was 9 cents, it fell from 11 cents in the prior year.

It will come down a little bit in '04 as well.

But we don't expect a dramatic decrease in that area.

Minutes per subscriber, probably pretty close to the industry trend average usage went up from 390 minutes to 433 minutes.

Good for us is that our subscribers decreased their usage on a per subscriber basis, off network, so that helped us control our costs and improve our profitability.

Where do we rank?

We have the next four or five slides that show where we rank as compared to virtually every one that reports in the United States.

These are domestic operations only.

As you can see ranking in both revenue and subscribers, we are the ninth largest provider in the United States with 1.1 billion in revenue and 1.6 million in subscribers.

Pretty big gap between U.S.

Cellular and ourselves, 8 and 9 but that is where we are.

That is the size of us.

We are larger on domestic operations, larger than Nextel Partners or Western Wireless and everyone else down below.

Where we don't rank so good quite frankly is in ARPU.

We have acquired a lot of markets over the years that frankly did not have very good ARPU.

If you look at some of the core markets the core holdings of markets we have held for more than seven or eight or ten years, you see those markets with frankly much higher ARPU but the markets we have acquired, particularly in American Cellular the ARPU we inherited in many cases were quite a bit lower.

We have not done a lot to improve that ARPU over the last couple of years, but I think over the next few years that is clearly going to be our initiative.

I would like to point out it is a lot easier frankly to create a business model that suggests a growing ARPU from $40 up to $45, $46 in the next few years.

It is a lot easier to improve your financials if that is your initiative versus someone that has a high, in a competitive world, somebody that has a high $50, $60 ARPU trying to maintain that ARPU, very difficult to maintain the higher levels of ARPU in a hyper-competitive or very competitive market.

That is one of the reasons I think that the combination and the consolidation in this industry makes much sense is that pricing stabilization should certainly follow.

We focus over the last few years on satisfying our subscribers, addressing their needs and I think they have paid us well.

Clearly when you have one of the lower ARPUs in the business you would expect to have lower churn and that is what we have experienced.

But we do focus on those subscribers; we focus on retention efforts and you see something very consistent over the last two or three years and that is our churn has remained under two percent.

I think if you look at this you note some interesting things and that is there is a lot more consistency among the wireless providers than one might assume.

Those that have higher churn get the clean trends and continue to have higher churn and vice versa in our case.

So we believe long-term that speaks well to our franchise and speaks well to our management team.

Incremental penetration;

I think this is a slide that depicts among other things some uniqueness in the business in '03, and by the way these rankings are on the last column in the '03 rankings.

If you look at '03 we came in right in the middle in terms of our incremental growth from our potential subscribers or POPs as we call it, for the year.

If you look at our business this year we came in again right in the middle of the pack.

If you look at our business in '02 and '01, we were in the top third of the industry.

In fact, frankly if you go back before 2001, I would suggest we were always maintained what I would call the top third of the industry and one or two years we might have even led the industry in incremental penetration gains.

In other words what is the potential?

What is the market opportunity?

And how well have we done at growing that potential market?

If you would recategorize '01, we would be in the top third; if you would recategorize '02, we would be in the top third, in '03 we came in in the middle of the pack but again I think that is driven more because of the lack of a GSM product particularly in the latter half of the year.

We are going to talk a lot more about what we think we can do in the marketplace but rest assured we believe we have the capabilities and the product to put us back in the top third of this very important slide.

Who are we?

The we is the 24, almost 2500 employees of Dobson Communication; sales and marketing and call center customer retention efforts comprised a vast majority of Dobson Communications.

You can see we have a sizable sales team, sales and marketing 916 employees and over 1000 call center employees.

You see down below where our call centers are and how many employees rest in those places plus how many subs they serve.

They do a great job.

Again our call centers, I will stack up to anyone in the business.

They have been fabulous this year in a very difficult year.

We went through a billing conversion, we are operating in a very competitive environment, so they just did a fabulous job.

Cell sites, currently 1727 TDMA cell sites, 786 have GSM to date, that will dramatically change over the next few months as Tim Duffy will talk about.

With the NPI transaction there are an additional 378 sites that will come on board of which NPI as you see at the very bottom NPI owns 102, so we are going to take a bit of an exception to our completely pro forma analysis today and break out NPI which is not expected to close for a few more months and give you, in this case, the cell site metal.

We do have 239 third-party colocation agreements on our company-owned sites, they produce 1.6 million in revenue in '03.

We expect that to continue to grow as the industry grows.

Tim will give a much more in-depth review but where we stand today on GSM, as I said we did a soft launch in the fourth quarter.

We continue to add a few subscribers in GSM.

But our full launch, the hard-core launch, is expected to occur on March 1, right around the corner in certain markets including Poughkeepsie, Youngstown area, and the markets in Minnesota, Wisconsin and Maryland.

The rest of the markets will come in the form of April 15, for the remainder of the lower 48 markets, and on July 1, for the Alaskan markets and we do not expect to miss any of these deadlines, and frankly we expect to be a full GSM company in the respective markets on the respected dates.

Who are our significant suppliers and vendors?

I think it is important to briefly note who we do business with.

Nortel, Ericcson our primary network suppliers with Alcatel as well.

We have Tower agreements with Build American Tower and Crown Castle; we do own a lot of towers to date but we have not put in any company-owned towers in the last few years.

Quite frankly we do primarily our tower business is done with American Tower and secondarily with Crown Castle.

Handset accessories, the typical names here Nokia, Motorola, we are expanding that and as Doug will talk about later, new advertising agency that came on late last year or sometime late year, mid last year I guess, Barkley Evergreen.

We buy services from AT&T Corp, SBC, CSI and EDS our two primary settlement providers, services GCI is a very important supplier of us.

They are the cable operator and competitive local exchange operator in Alaska.

They are a very important reseller for Dobson Communications and a network provider for us as well.

Convergys is our billing vendor, BCGI is prepay platform for us.

How do we distribute our product?

We have 935 different points of distribution shown by the retail locations, agent dealers and direct sales.

As we were compiling the information over the last few months I thought this was one of the most interesting slides in that it shows that we have the market covered.

If you look at the other three competitors, the combined other three competitors that we have in our market, they comprise only 1932 distribution points, and we went and counted them all, by the way.

This is not an estimate.

I should not say that it is an estimate but it is a fairly close estimate, because we asked ourselves, we asked our market managers to go out and physically count every distribution point that our competitors have and this is what they came up with.

So we have on average three competitors or four total service providers per market and collectively combined they have slightly more than I guess double the number of distribution points.

So there really isn't any excuses.

We talk to our sales and management team, we have no excuses.

We do need a good product.

We do need a good network.

We need a good product.

But we have got the distribution we believe in the market that is necessary.

Speaking of competitors and this is for someone who looks at it for the first time they say, holy cow, look at all those competitors.

We don't have this many competitors in every market.

We have his many competitors spread around all of the markets.

In fact, Sprint, if you look at it in this basis, we have more competition with Sprint than we do anyone else, in that we have competition from Sprint in almost half of our POPs, 5.5 of the 11.5 million POPs, followed by Nextel, T-Mobile;

Verizon, who is probably what I would consider our closest competitor in number of customers that they have in the markets where we serve.

In other words, on a market share basis, Verizon is probably number two.

But on where they have distribution, where they have a competitive overlap, this is how it stacks up.

You can see AT&T and Cingular both around 20 percent -- 18, 20 percent of our current footprint.

And we do have some information later to show how the combination between the two looks.

As I said, we have three competitors on an average basis, but we don't have three in newer (ph) markets.

In fact, in 700,000 of our 11.5 million POPs, we have a duopoly structure, ourselves and one other.

In 800,000 POPs, we have a very competitive structure in that we have five full competitors or a total of six market competitors.

But interesting, roughly two-thirds of our company we have four or under competitors.

So if you look at our -- particularly if you look at the national competitors, it would be roughly 6.5 for the national competitors versus our 4.

I think that long-term -- I don't think this changes dramatically.

In fact, as a result of the Cingular AT&T transaction, there is a modest reduction in this.

Our total weighted average of competitors will come down as a result of that transaction, and frankly I don't see any additional competitors.

I think we're moving in the other direction, so I think this only gets better over time.

As a footnote, 89 percent of our footprint, we do have a CDMA competitor.

In 54 percent of our footprint, we have a GSM competitor which obviously is T-Mobile, Cingular, AT&T in this case.

I'm going to spend the next two slides talking about roaming and I'm going to give you the facts.

I'm going to talk about the contracts we have with AT&T and Cingular, and talk a little bit about our strategy.

Our strategy has always been to enter into long-term contracts, to take as much of the risk out of the equation as possible.

We can lock in the service provider, the contract with the AT&Ts and the Cingulars and so forth.

We can agree on rates.

We can agree on the technology that will be deployed.

We can take as many variables as we can out of the equation.

The one variable that we have a hard time with and that we experienced in the fourth quarter is the one variable we can't control, and that is the number of minutes that will come into our network from the third parties.

In this case, AT&T did stumble a little bit.

I shouldn't say stumble.

I'm sure they made a conscious decision to reduce the number of incollect minutes that their customers use.

They also appear to have made a decision to not focus on market share as a result of their activities, and typically you would expect that they might go together and it looks, in fact, that in the fourth quarter and perhaps even in the first quarter, that is exactly what happened.

But we take as much risk out of the equation as we possibly can, and that is the nature of the contract.

We also, and this has grown increasingly more important for us as we have grown our subscriber base, we want a low-cost network for our subscribers to roam.

In other words, we want the ability to be competitive, first and foremost.

We want our subscribers to have a place to roam that is the lowest cost that we can -- shouldn't say afford -- we want to balance between the need for and the desire for outcollect, but we also want you to recognize another part of the equation is the cost for our subscribers to roam.

So I'm going to go through in detail the AT&T contract plus the Cingular contract and allow you to hopefully draw some conclusions about this is good business strategy for the company, and then we are going to talk about the forecast for roaming minutes and roaming revenue over the next couple of years.

We negotiated or amended and extended the AT&T contract sometime last year, mid last year as part of the ACC restructuring, as part of our desire just frankly to address GSM and to look out over the next few years and this is what we came up with.

This is the results of those negotiations.

First of all, in AT&T the GSM TDMA agreement extends to June 30, probably need to back up a little bit.

We are going to get a lot of questions, I am sure.

Given Cingular as acquiring AT&T, does this contract survive?

What is the point of going through this?

Our belief is that this contract does survive.

We entered into a contract with AT&T Wireless, the company.

Cingular is buying AT&T Wireless, the company, that corporate entity, they are buying the stock of that company.

There is no provisions in the AT&T contract that a change of control would deem the contract to be no longer in effect and in force.

In fact there are a lot of requirements on our part in terms of maintaining a GSM network as an example and a network sufficient standards.

So they need our network, they need GSM, they need the importance of our network.

So the AT&T contract we believe to extend or to survive until 2008.

That is not to say and in fact there is a good chance that we will sit down with Cingular over the next couple of years, assuming the transaction goes through, and address perhaps even a longer-term relationship and a longer-term extension of it, but as it stands right now we believe this contract to remain in effect.

And so it is worth talking about.

GSM TDMA extended out to June of 2008.

We have a competitive overlap with AT&T that represents about 2 million of the 11.5 million POPs that we serve today.

Those are market areas that AT&T in the past has determined that they needed to own and operate in order to be competitive in their respective regions, Frederick, Maryland, is a good example, Youngstown, Ohio, is another good example.

Those are two large population bases.

And if you understand Frederick, Maryland, extension off the Baltimore-Washington area and so more of a bedroom area, and so it is more of a bedroom community out of that, and they felt like they needed to own it, and I can't really blame them for that.

I would offer that our 850 network is much more suitable for coverage in some of those suburban areas, but again they made a decision to build it and own it and that clearly their decision.

As a result of the negotiation of the new agreement though, the footprint that AT&T built is the footprint that is going to stay built.

In other words the agreement provides that there's no extension beyond that footprint.

We introduced it, I'm going to introduce a term now called "exclusivity."

In this case exclusivity means that we are the exclusive GSM roaming provider in all areas where obviously AT&T doesn't have a GSM agreement.

There are two parts to that, one is AT&T can't build nor can they buy a competitor, could they buy a competitor, I think it is probably a moot point now.

When I say limited merger protection the limited part means they could merge with a large cap carrier, Cingular of course in this example, but they could not, would not have been able to acquire one of our local competitors on a smaller basis.

We also have preference and that is in the case of markets where we compete against TDMA or markets where we have a TDMA network, we are the preferred provider above all else and that represents about 93 percent of our POPs, at 7 percent we are not the preferred provider, but at 93 percent we are.

In GSM we are the preferred provider over everyone except Cingular; they had a preference agreement, have a preference agreement in GSM with each other.

But as an example in markets where we compete against T-Mobile which is a fairly high percent of our population base, we are the preferred.

GSM (indiscernible) from AT&T or Cingular for that matter comes into our network where we have competition with T-Mobile it will seek roaming service on us first.

Lastly, we have nonreciprocal rates for GSM and TDMA in that the outcollect rate what we receive is higher than the incollect rate, what we pay.

AT&T by the way, I probably should point this out, AT&T is basically divided into two separate agreements.

We have two separate agreements with AT&T comprising of the DCS or Dobson Cellular markets versus the American Cellular markets.

The rates are a bit different, the terms are almost identical but there is a bit of differences and we discussed that.

When we get into Cingular we don't have to worry about that.

So with Dobson, two agreements we just discussed the one, the American agreement many similarities in that there is exclusivity and preference and in this case full merger protection in this example means that in the overlap areas where they were to merge with a large gap provider, Cingular is a good example, then in those specific areas where we have a competing network with Cingular, AT&T or the surviving company in this case is required to sell us at fair market value or offer to us at fair market value, the competing network.

There are a couple of examples relatively very minor examples where that applies, northeast Oklahoma a network in Oklahoma 4 market is the one that has any substance to it.

And that is one going to be a pretty attractive possibility for us because frankly being able to acquire that network in that market in that specific market, one we will have one less competitor and it is a very competitive market.

Probably one of our more competitive markets that we have but more importantly we will be able to recapture or capture in this case both AT&T and Cingular roaming minutes in that market.

I'm sure we will be entering into those discussions over the next year as they focus on their transaction.

The TDMA agreement runs through '07.

GSM agreement runs through '08.

Again this is American only, GSM agreement reciprocal rates, the TDMA agreement is nonreciprocal.

In other words, they pay us a little more than we pay them.

With American there is virtually no GSM overlap.

So in that case we receive virtually all of the GSM minutes from AT&T.

Talked about exclusivity in the merger protection; and in this case we have GSM and TDMA preference ahead of all carriers from AT&T.

Okay, Cingular.

I think this is probably a little more relevant needless to say.

The contract itself runs through 2011.

The rates are fixed through 2008 with Cingular.

We do not have exclusivity.

In other words, we do not have any prohibition or Cingular does not have any prohibition against building over any of our markets.

I think there is a practical implication here that I would love to talk about at length in that Cingular, unlike AT&T, has been very reluctant to build on their own, to build rural areas with 1900 spectrum, the only available spectrum for any future builds.

They did in some cases on high traffic interstate highways in partnership with AT&T, build some RoadRunner networks as they call them, none of which were over our territory.

But in that case I suppose it did make the economic justification and the decision that that did make sense.

But by and large, if you looked at any opportunities that Cingular would have to build into the Dobson network there are very few that would make economic sense, economic justification for 1900 builds.

We do have Cingular and AT&T, we have preference ahead of all carriers for Cingular.

In other words if Cingular's phone comes into our market with a TDMA technology, it will seek our network first.

And likewise in GSM it will seek our network ahead of everyone except AT&T.

That will become a moot point in the future.

But today those GSM phones will seek our network unless we have competition with AT&T.

I know this stuff is confusing;

I get confused when I go through it, too, and it is very complicated.

But, we are going to take some of the considerations from those contracts and I have attempted to list many of the other considerations that go into a forecast for roaming minutes, and thus a forecast for roaming revenue.

Over the last few months we listened; we heard what you wanted us to talk about, so we did a carrier-by-carrier usage trend analysis.

We did a cell site, we actually went down to the cell site level and talked about cell site volume.

The reason it is applicable is because AT&T in fact built over 2 million POPs of Dobson communications with GSM technology.

So we wanted to address what are the traffic level trends on a per cell site basis.

As we look into GSM knowing full well that AT&T had built some of our network or of our footprint, we took into account the pace of the transition that AT&T and Cingular both will make from TDMA to GSM.

We do have a new T-Mobile agreement in northern Michigan.

We are working on one in Alaska, and in the Alaska situation our plans are and Tim may talk about it a little bit later but in Alaska we have an 850 network, we receive all the 850 GSM roaming traffic that is available.

There is a substantial amount of 1900 phones that go into the state of Alaska every day that seek a network and don't find one, and thus are denied service.

So we are going to put up some 1900 sites in what we consider the core traffic areas of Fairbanks, Juneau, and Anchorage.

The airports, the central city areas in Anchorage, and that will allow us to capture what we believe to be is hopefully a fairly significant amount.

We don't really know how much 1900 business there is.

We do know that T-Mobile is almost exclusively 1900, and we do know that Cingular when they bought PacTel, they bought a 1900 company in California and they continued selling essentially single band 1900 phones for the most part until recently anyway in California.

So there is a lot of probably -- we expect a lot of California traffic to start hitting the Anchorage network when we start to have 1900 sites on.

Anyway, I thought I would throw that out.

We considered that, we considered the AT&T contract that talk about implications of this.

This is the hard one.

We think that Cingular was likely in terms of this analysis, we think that Cingular is likely to maintain its market share.

We had noted, I'd simply say we had noted that AT&T has not maintained its market share over the last few quarters.

It is going to be hard, it is going to be interesting to see and it is going to be hard to predict how they are going to do for '04 but I suspect that they will do everything they can to make sure that their subscribers they have today stay with them, and more importantly that they continue to have at least modest growth in '04.

I would be surprised if they would allow any great erosion of that subscriber base.

We also considered a decline in analog minutes.

Verizon obviously in the past sent us a lot of analog minutes.

Those minutes have rapidly and sharply declined, and we expect that trend to continue as well.

We did consider the consequences of a Cingular and AT&T merger.

I do have a slide later that talks about an amount of revenue a small amount of revenue that we will likely lose as a result of that merger.

There is some addbacks, and I want to talk about those at length as well.

But we certainly considered that as part of this exercise.

And then in the last couple of weeks we have actually received I think some very good news, and news that frankly we felt like was inevitable.

That is that both AT&T and Cingular have recently included our GSM footprint in the vast majority of their rate plans.

So if you go to both the AT&T site and the Cingular site today, recognizing of course that we only have under 50 percent of our cell sites today have GSM capabilities, so you need to understand that.

But if you look at and you know where we have GSM cell sites, you will see our cell sites in our coverage area included in both the AT&T and Cingular footprints.

In the vast majority.

AT&T has got a "still continues to market a single network, preferred network, AT&T only plan."

I do not think it is very popular.

I think our view is that it’s not selling well.

But they have just recently reintroduced and expanded local plan, in the case of New York City, this is a perfect example, before I think it happened a couple of weeks ago but before the date when they sent out the notices that they were going to expand their local footprint, if you bought a phone in New York City and took it to Poughkeepsie, you had to pay roaming charges.

The new plan if you buy a phone and take it to Poughkeepsie it is not only reduced-rate roaming, it is included in your local minutes.

The minutes you buy from AT&T, our network is included.

So whether it is a 400-minute plan, 600-minute or 1000-minute plan Poughkeepsie and Orange County is included in those GSM plans.

The same is true with Cingular on their new "national plan."

They rolled in what appeared to be, they rolled in all of our network and many other carriers networks as well including AT&T's for that matter.

So that in itself is a very positive development.

The hard part is going to be trying to predict what minutes come from that, but I think as we look at our minute projections I think we are cautiously optimistic that there is going to be some positive trends.

We did not consider data to be much of a roaming impact this year although by 2007 we think it will grow to some 6 percent of the total.

This is something that the last (indiscernible) point is a huge indicator of our roaming minutes and that is the usage of AT&T talk about market share, the usage of those subscribers is a big indicator.

We project or in this exercise we are projecting that both AT&T and Cingular minutes will grow 7 to 10 percent in '04.

As Blake and I were talking earlier AT&T actually decreased minutes in the fourth quarter which is and again, usage per subscriber, which is a very unusual trend.

So I don't see how AT&T can remain competitive, and I think you have to remain competitive right now, but I don't see how they can remain competitive while this transaction is pending unless they offer plans consistent with the rest of the industry, the rest of the industry would suggest that usage per subscriber will grow 7 to 10 percent.

Wow, that is a lot to get through one slide, or actually the next two slides.

As I said, we take a lot of the variables out of roaming.

In this case, this is our actual yield in '03 and our expected yield from '04 to '07.

I say expected again, we ought to be pretty close because 90 plus percent of our minutes are under long-term contracts between AT&T and Cingular.

So again eliminating as many of the variables as we can, these are the yields, 14, 13, 12 and 11.

There are some variables to it.

It could change.

But I don't expect to see any dramatic change to these numbers whatsoever.

I think we are going to be pretty close on this.

Another big unknown that affects minutes but doesn't affect the yield as much as you might think, in fact the yield won't shift much based upon the minutes, but it does represent another part of the equation and that is the transition that AT&T and Cingular will make from TDMA to GSM.

Based upon what we expect to receive we think it is a trend that starts at 16 percent of the minutes in '04 growing to 83 percent in 2007 from GSM.

Obviously this is an interesting debate, but I think if anything it may happen a little bit quicker particularly given that now we have an AT&T Cingular transaction, and now I think Cingular will probably push it a little quicker than AT&T was on plan to do.

But again, it doesn't really make a lot of difference in terms of the revenue impact because the rates are relatively close.

So, anyway.

What does all of that mean?

And again starting from a base in '03 of 1.48 billion minutes at 20 cents a minute that produced $297 million in revenue.

In '04 we know the rate, the yield is actually 13.9 when you break it down into the decimal point.

I apologize for the wide range, but we think there is a chance that rates, again largely dependent upon how effective AT&T is this year, we think rates or minutes could decline as much as 2 percent, but we frankly think they could grow as much as 10 percent.

This is off the 1.48 billion, knowing the rate that produces a range of between 212 million to 226 million in revenue.

From the '04 base we think that minutes will grow 8 to 12 percent in '05.

We are not going to give full guidance for '05 but I thought this was such an important issue that I wanted to talk about not only '04, but '05.

Again we know what the yield is expected to be, likely to be.

If minutes grow off the midpoint of our expectations in '04 into '05, then you get a range of 216 to 224.

That is part of roaming.

It is from your perspective I am sure it is the most important part of it.

The other side of the equation that is important in the roaming dynamics and the roaming negotiations is the incollect, what it costs for our subscribers to roam off network.

Long-term this is much more important to us than the roaming revenue.

We have done what we can to stabilize that revenue; we have put in long-term contracts.

We have worked hard on negotiations, relationship with AT&T and Cingular.

We have adopted GSM technology.

We are building those cell sites, but long-term we think it is more important for us to have a profitable, healthy, attractive subscriber base.

One of the most important things we can do is to make sure we are quote, in some cases the low-cost provider or as low as we possibly can be.

Incollect expense has been a huge expense for us.

You see it was $6 in 2003, I think at one time it was in the $9 range.

Over $9.

We have been bringing it down as a result of these contract negotiations we did in '03 with both AT&T and Cingular, and primarily AT&T Cingular the prior year, we are able to bring down our incollect expense from $6 in '03 down to almost $4 in '04.

Significant improvements.

That flows right to the bottom line.

That is an expense item that comes out of cost of service.

In '05 with usage going up the minute continues to decline a little bit but with usage going up we expect that to trend back up.

Our challenge now, and we're going to talk at length about it, our challenge is to grow growth ARPU faster than our incollect expense might rise in '05.

We think we can do that.

But that is how our profitability, that is how our franchise, and that is how our shareholder value we believe will improve over the next few years.

Consolidation, we put this slide together thinking this is going to be a hot topic over the next month or so and needless to say, I got to tell you, this slide went in Monday and we left it.

We haven't changed it, we even have a slide for Vodafone.

But we wanted to consider the impact of the slide.

We did not expand on it but I want to point out this is our thinking on Monday, we read what you read and understand what you understand on Tuesday and the world has changed.

But, our assumptions in terms of the impact or in terms of the implications are first of all that the close was June of 2005, and I think Cingular is suggesting that it could close by the end of '04.

If it does it will have a bit more of an impact on us in terms of the financial implications.

We do have some competing networks with Cingular in TDMA, Texas 16 is a large market, large RSA central Texas where we compete against Cingular.

We receive AT&T roaming traffic today in TDMA.

Depending upon when they close and depending upon how aggressively they try to migrate the AT&T subscribers over to the business of the Cingular network and I say the business of the Cingular network, the processes, the roaming tables, everything that goes into transitioning or migrating a sub-base to another network for roaming purposes, takes in many cases a lot of effort.

I don't think they will do it very quickly.

In fact they may not do it much at all in TDMA.

I think they may focus on GSM.

Again, trying to give you the information you need.

We went through every market, every cell site, every area of the country and came up with what we believe to be a worst-case situation of the minutes that if they did do a flash cut of their TDMA networks, then we could lose assuming we were to close in the middle of '05, $7 million a year in roaming revenue, 2006 $10 million, again that is using the assumption we talked about earlier of TDMA minutes migrating to GSM.

If GSM migration happens faster this number comes down, the impact comes down because these are only TDMA minutes.

Clearly if it happens by 1/1/05, then the 7 million dollars, 7 million would likely be in probably the 12, $13 million, maybe $14 million range for all of '05.

But I think it is unlikely that this is the top end of the number or unlikely that it is as much as this.

I will also point out we have got hopefully a bit of an addback in that -- where Cingular uses the T-Mobile network in Poughkeepsie and Orange County today pursuant to their swap agreement they have with T-Mobile, the empire deal they call it.

So we don't receive any Cingular traffic in Poughkeepsie and Orange County.

When they start roaming on AT&T's network or utilizing AT&T's network and nonfeed T-Mobile network, we will start to receive that traffic.

For purposes of this analysis we didn't know frankly how long it would take them to transition off of that network so we didn't include any addback or revenue from that.

It will happen whether it happens in '05,'06,'07 I don't know.

But we believe particularly over time, it will be a fairly significant source of roaming revenue that will be fairly secure for us.

I do have a slide -- I thought it was right here actually.

In summary, the consolidation of AT&T and Cingular, I wanted to list the pros and the cons.

Many more pros.

I have talked about a few dollars we may lose as a result of a couple of competing networks, but frankly Dobson Communications and Cingular and their management have a very strong relationship and have had for many, many years, particularly at the top level.

It is a relationship that I think is basically built around the belief that 850 spectrum is the best spectrum for the kind of market that Dobson operates in and arguably the kind of market that anyone operates in, but if you look at the way they have designed and built their networks, the way they transition from TDMA to GSM, it is very similar to our way of thinking.

And frankly, I think that is the basis for that strong of a relationship.

Another pro is that we have about 1.6 million POPs where we have both AT&T and Cingular as competitors.

In this example we will have one less competitor over 1.6 million POPs, the industry consolidation is starting and it is affecting, it will affect Dobson Communications.

Consolidation is needed; it is absolutely needed.

Long-term I think you would argue it is somewhat critical.

It is not nearly as affecting where we have only three competitors as it is where they have 5 or 6, but industry consolidation brings momentum, brings excitement to the investment immunity and I think it is vital for this industry.

AWE/Cingular becomes the number one carrier in the United States, I think that speaks well to GSM.

And I think it speaks well for our strategic footprint as it relates to the combined company.

The cons that we talked about, the TDMA; smaller reduction in TDMA roaming revenues in the near term.

The other con probably is worth noting is that a large concentration of our roaming traffic will now be with one carrier instead of separate and so that has some impact.

I think it even puts more need on us to strengthen the relationships, talk about longer-term contracts, talk about how we can build a GSM family if you will, in the United States that will benefit everyone, including ourselves.

Now I'm probably going to screw up everybody on line, but I'm going to try to go back to this.

Let me show you this while I'm here.

We did this slide again Monday, not knowing what the results were going to be.

We left it in for you and I wanted to talk about and who knows, the deal is not done, it will not be done for a year so maybe at some point this does come back although I really think AT&T and Cingular have got the deal done.

I think it will get done and I certainly fully support it.

But, anyway if it would have been Vodafone no TDMA overlap impact on the pro side, clearly the largest GSM provider coming in the United States would have had a very impacting presence in the U.S. on GSM and Dobson Communications from that standpoint.

Our footprint would have remained strategic to three GSM providers in the U.S. instead of just the two, including T-Mobile as it stands today.

Maintain the roaming revenue diversification so I would have liked to have seen some of that I suppose.

And the deployment of quad band phones, and I say the acceleration, I think quad band phones which is the two U.S. standard and the two European standards is the only realistic way for this industry and GSM to evolve.

We need our phones.

If you buy a phone today it should work, there is no reason why it can't work in both the two U.S. technologies as well as the European technology simultaneously or interoperable.

I think Vodafone may have accelerated that.

I think it will still happen and I think T-Mobile and Cingular now will do their part to make it happen; perhaps it would have happened faster with Vodafone.

On the con side, industry consolidation, it wouldn't have happened at least in the immediate term and we still need it very much so.

We have got some new announcements today.

We have two new additions to the Board of Directors, a gentleman by the name of Mark Feighner who spent 28 years at GTE.

He spent the last few years at GTE as president of their wireless operations before their transaction with Bell Atlantic, I guess.

He served on the CTI Board, been in the venture capital business over the last couple of years, tremendous individual, tremendous insight in this industry, tremendous insight in terms of the operations of a company that frankly -- he operated a company that is larger than Dobson Communications but if you look at their wireless operations at some point in time GTE had 1.6 million subscribers.

So he saw a growth of a company from much smaller to much larger and frankly that insight is I think, going to be very helpful for us.

Rob Schriesheim, 17 years as a senior officer for as a private equity investor in communication information services.

Recently has been the managing partner for Arch Development technology (indiscernible)fund, worked in the corporate development of Global Telesystems, actually the CFO of Global Telesystems.

Again we are very pleased to have these two gentlemen come on our Board.

I think they will bring a lot of insight and a lot of help to this management team.

To remind everybody, in fact I have got a slide on the next one to help, with the American Cellular transaction last year we agreed to reshape our corporate governance and our corporate bylaws to allow that the class A directors of which I'm not a class A director, to allow the class A directors and the class A directors alone to have a right to appoint two directors.

The initial appointment was made by the American Cellular bondholders.

We did have a right to approve and we gladly approved the two names that I mentioned, but we were very pleased to see that the search went well.

They did a fairly exhaustive search using Heidrick & Struggles to assist us, and they did a tremendous job.

As a result today we have seven members; two members from the Dobson family, myself and my brother Stephen, plus five outside or independent directors.

And the independent directors will comprise all of the audit committee and all the compensation committee.

We are in compliance with all of the Sarbanes-Oxley requirements.

I am winding down and I will try to speed it up.

On the M&A front let me tell you what we think are some of the opportunities.

We do believe that we can create value by selectively looking at certain opportunities.

And our profile if you will, our markets that are clustered first of all certainly there is some benefit to that.

We would look to add two existing clusters or in some cases we might look to add a cluster.

We want them to be strategically important.

That also goes well with saying we would like to see markets that have a GSM network or the prospects to build a GSM network where we might capture, would capture the GSM roaming.

And frankly we like less urban, more rural environments, typically or for the most you are going to see less competition.

So we do like markets that have fewer competitors and we will explore those opportunities in the future over the next several years and we believe that there will be some and so that is our thoughts on M&A activity.

In terms of looking out beyond 2004, I'm probably more excited about obviously you can certainly hear some of my excitement, but as a result of the transaction yesterday with Cingular and AT&T, I'm more excited about our prospects and our business and the outlook beyond 2004 then I have been in quite some time.

I think everybody had suggested industry consolidation is inevitable but frankly until you start to see it, you start to question as to how sustainable is this business with six plus national competitors.

I think the trends are certainly improving along the lines of the total industry health and I fully embrace that and accept that.

With respect to our specific Dobson Communications specifically, as I said earlier we fully expect to grow our subscribers in the top third of the industry.

We have done it over the history of this company with the exception of part of, the latter part of 2003 when we were transitioning from TDMA to GSM.

This management team, Doug Stephens and his RVPs and the people that are running the regions are the same management team that has been with us for the extended period of time.

We have not lost an RVP, we have not lost anyone that we consider to be valuable, invaluable to us with respect to growing our subscriber base.

We fully expect to be able to do that.

We think GSM is critical as Doug will talk about.

As you start to look out over the next two or three or four years, we are not going to give guidance but clearly the industry should grow at a reasonable clip.

It has historically grown somewhere between 5 and 8 percent incrementally a year, I think.

We will see how that growth trends over the next four or five years; we think in our markets (indiscernible) will grow.

We will get our fair share.

We think that there is if you look at incremental growth of our business over the next four or five years, we have kicked around a number of 1 percent incremental growth to 1.3, maybe 1.4 percent incremental growth a year as a nice growth that fits the parameters we are talking about.

We're not doing anything artificial, we are not competing aggressively on price, we are offering a valuable product and the value proposition and subscriber is in that range.

Additionally we think we are going to continue to improve customer profitability.

We think we got some room for movement on that.

Most of the profitability we think is going to be driven by GSM which is a more attractive product, the value as a result of our incollect expense reductions, the value parameters I think are improved and we think that we can continue to improve in that area.

We will always continue to work on the roaming revenue balance and the risk associated with it.

We are not adverse to sitting down with Cingular and discussing the long-term relationship building, value-creating opportunities with Cingular and I'm sure you will see us do that.

We want to continue to improve our balance sheet.

We have made great strides over last year as Bruce talked about.

We're going to continue to address and look for opportunities in that area.

Lastly, perhaps most importantly we are going to continue to grow free cash flow in Dobson Communications.

I think I can turn it over to Warren who will bring up Mr. Duffy's slide.

We are going to take a break now.

We will resume at 10:15.

We will go ahead and get started and pick up the presentation here with a review of Dobson Communications network, my favorite topic and certainly break up a little bit of the numbers that you have been seeing here this morning.

Two thousand and three was an exciting year for us at Dobson Communications and network operations and engineering.

It is a year of technology transition where we started our GSM overlay project concluding with our soft launches in Poughkeepsie, Youngstown, Ohio and Erie, Pennsylvania and also we went and built almost 65 new cell sites in our TDMA network which augmented the capacity and coverage of the existing networks.

We finished the year with 1727 cell sites and at the end of the year, December 31, we had 625 of those cell sites overlaid with GSM.

It gives you a picture where we are now at 786 cell sites, overlaid with GSM here on February 18, that we are very rapidly completing our overlay of the GSM/GPRS/EDGE capable network, as we roll up to finishing the lower 48 states here by the end of March with our GSM overlay.

So in January of 2004, we have already seen a measurable amount of GSM traffic, mostly comprised of our roaming partners, Cingular and AT&T, so 3 percent of the traffic is already on our GSM network even with the limited number of cell sites.

One of what I think is a very impressive statistic for Dobson when you look at other carriers around the country our TDMA network currently has less than 2 percent of its cell sites blocking at greater than 1.5 percent.

The industry number is 2 percent for blocking but less than 2 percent of our cell sites block at 1.5 percent on a typical week during our bouncing, busy hours and that is a tribute to the way our engineering operations and strategy sessions and capacity projections worked out within our historical projections which have really, really assisted in providing a very quality experience for our subscribers and our roaming partners.

The 74,000 voice pass that we have, that is the total capacity of our TDMA network, these are the circuits that are available to process traffic and we have currently build 28,000 voice pass worth of GSM capacity and we will finish the year with almost 40 percent more voice pass than we had in 2003.

More and more as the technology gets better and better, and more of us get into the test functions of phones and so forth and just get away from just bars for signal strength but actually seeing some of the numbers, and the more in depth you look at some of the telecommunications companies, there is this term DBM, and how it equates to actual coverage.

We thought it might be helpful to walk through just a few minutes here on what coverage is.

Here is a map of our Kentucky RSA, RSA number 8, it is a very rural community, there is very terrain, some mountains that provide blockage for some of the signals.

This really illustrates the difference in coverage levels of what is good to poor coverage.

The green area is minus ABDBM or better and that is an area which we would call very good coverage and as we head towards a more of, being more of a data provider it is important to have very high levels of RF.

In this case this level of RF will provide the best experience or the best speed for GPRS and EDGE.

Minus 95 is somewhat of the industry standard for what is coverage; and that primarily is what you see on these charts on the wall, is a -95 DBM depiction, so that that is an acceptable voice coverage, it is not going to be absolutely quiet experience or static free, if you happen to be on some of the remaining analog networks but -95 is kind of the industry point of entry for coverage.

Minus 110 is the area where there is a lot of opportunity to lose calls, to drop calls and have a bad experience and it also gives you kind of an indicator of what the worst-case speed you would have in a data session whether it be GPRS or EDGE.

So my mission statement is to deliver the highest quality network that we can given a fixed amount of capital that we can spend on these networks.

We would always like to put in more cell sites, more Voice pass but we have over the last five years that I have worked for this company we have been very solid in our TDMA performance and how we have aggressively build out our networks.

So we are on schedule and on budget to complete our GSM overlay by March 31 everywhere but in the state of Alaska.

We have gone through exhaustive testing with our two vendors, Ericsson and Nortel Networks as well as our in-house teams and then a third party that is come in and actually driving our networks to make sure that the GSM experience will be as good if not better than our current TDMA network that serves our 1.6 million subscribers.

GPRS is going in with every cell site that we construct so that we have a very good, stable data product that we are able to offer, with our own data static deck and Doug is going to talk more about that in a few minutes.

For 2004 very exciting that we're going to build somewhere between 200 and 250 new GSM only cell sites, we are done building TDMA.

The goal this year is not to spend a dime in TDMA.

We got a very solid network in TDMA that I feel will take care of our traffic needs well into the future 2007, 2008, whatever the needs are of our existing subscriber base and our roaming partners.

So we are going to concentrate on GSM/GPRS/EDGE and put in additional coverage, capacity and quality cell sites this year.

Our Alaska overlay we will complete by the end of June and that will be in 100 percent of the cell site so that for the first time in a lot of areas where we are the only carrier that offers coverage they will have a data product that could be considered broadband when you look at EDGE.

We are currently installing the hardware for EDGE and we will have EDGE on in May in Minnesota, Wisconsin and Michigan 1.

Then the rest of our cell sites will have the EDGE software loaded into them by the end of June.

One of the great things about GSM is the economics that are involved with providing this network, and we are already starting to see the benefits of the economics involved with the purchase of equipment that is the world standard.

There are more GSM handsets and GSM base stations in the world than any other digital technology and we are now poised to benefit from that.

A lot of things have happened in the technology world that has reduced the size of the footprint of the cell sites and we have also been very aggressive with our partners, Crown Castle and with American Tower in negotiating what I think are very favorable tower lease contracts going forward that allow us to control our costs and to deliver on our promise for new cell sites.

The operating expense for GSM as we go forward in the year 2004 and into 2005 will be less than TDMA due to technology increases in the way that we are able to leverage our back haul facilities, leverage new technologies that will allow us to trim the number of DS 3s and T 1s that we need and also the efficiencies that are gained by the GSM technology itself.

How does the new cell site breakdown look?

Sixty percent of the new cell sites will be targeted in areas of opportunity that will improve that -95 DVM coverage rate.

It will also be targeted in areas where we have customers that have been either dissatisfied or areas that they have identified that would provide better service.

Also from our drive tests and all of the GSM TDMA drive testing that we are doing now we will, sixty percent of these new cell sites will go in and attack coverage.

Twenty-seven percent of the cell sites will be about quality and in areas where there might be a dropped call here or there or might the data experiences is not quite as good as we would like, we are going to target that as an initiative here in 2004.

And 13 percent of them will be capacity driven as we get forward in the year and GSM takes off and our local launches kick in and more and more 850 capable handsets are in the hands of our roaming partners, subscribers will go and target 13 percent of these cell sites for capacity upgrades.

But all of this adds to the fact that 850 technology, 850 MHz spectrum is the single best way for us in rural America to go out and with capital expenses in line and provide the best quality coverage and the best network for our subscribers.

So just to recap the cell site counts, 1727 TDMA cell sites, they stay put.

We are overlaying 100 percent of those cell sites with GSM, 200 to 250 new cell sites come on this year.

There are 378 cell sites to come on in the NPI acquisition that we expect to close here in the next few months.

So TDMA stays stable;

GSM cell sites get up somewhere north around 2300 and along with the NPI acquisition we will attain another 102 towers that will go into our Tower ownership portfolio which is also a very -- that is a growth part of our business the ability to go out and attract other wireless carriers under our facilities as well as it is a very stable environment for a number of our cell sites that are key to our operations.

So here is my 2004 capital expense budget which targets the new cell sites.

We are finishing the GSM overlay here in the first half of the year.

Our network capacity switching costs, our EDGE expense, E911 phase two, as we are rolling that out across our PSAP payable counties and also paying for some of the installation expenses are the guidance that we have is 83 to $108 million will be spent in the network side of this.

We are targeting $12 million to spend on the NPI upgrades, again assuming that closes.

Non-engineering will be 15 to 20 million so our CAPEX guidance for 2004 is 110 to 140 million.

The real promise of GSM is the data experience for us because we added a very solid network.

Certainly our key roaming partners, AT&T Wireless and Cingular have been aggressive with their transitions to GSM, but the real reason is the data network.

And GPRS we are already seeing speeds of 32 kilobits on an average basis which we think is a very good user experience.

People are able to access their email, able to access Web services so that is playing very, very well.

We are starting to see some take in the area of gains.

We will be a participant in Push-to-Talk which is carried over the GPRS network as VoIP and we are looking at Blackberry or a similar type of Blackberry product to allow for an e-mail dedicated type product in our suite as well and Doug will talk more about that here in a few minutes.

Our EDGE average speed tests are in the range of 100 kilobits.

More RF dictates that it will go faster, less RF means it will go a little slower, so there is a range but our average has been 100 kilobits and we see lots of opportunities for wireless Internet at that speed level.

In rural America today there is still a lot of dial-up that is going on if they can get to the Internet.

And quite frankly it could be a long distance call so we believe there is a huge opportunity with EDGE in rural America to bring 100 kilobits or better worth of EDGE data deed that will allow for a fixed broadband product offering from Dobson Communications.

Complete with music downloads and video clips, we are very excited about EDGE coming into our networks here this year.

We have been very aggressive at working with our key roaming partners AT&T and Cingular, and others like Cincinnati Bell Wireless, EDGE Wireless on GSM and GPRS roaming.

And of course EDGE will become a part of that so this is our scorecard currently.

We have GPRS roaming working with AT&T, and Cingular is in testing now so we expect them to come online very soon.

The roaming experience, the roaming promise from the network side is a seamless subscriber experience that when a Cingular subscriber comes into the Dobson markets or a Dobson subscriber goes to Cingular and AT&T, that they get all of their features and functionality just as if they were in their home networks.

That is the goal, that is the promise and that has been our engineering credo going forward.

We also are working very diligently where we butt up against AT&T and Cingular and are able to leverage our systems to do intersystem handoff, so that the call does not drop or the data session does not drop when you go across borders.

We have many towns that sit up against the borders of our coverage area or towns that sit up against the borders of our neighboring networks, and it is extremely important that these intersystem handoffs be aggressively approached and engineered well so that the user experience is seamless.

Alaska provides for us unique challenges that we do not see anywhere else and currently we are building our GSM switch in Anchorage, Alaska.

We have started the process of installing the GSM hardware at the 145 cell sites that we have in Alaska.

Even though Alaska is a huge state we are covering it very well with this cell site complement and we are getting to 91 percent of the population.

We will have our GSM network overlaid and operational by the end of June, on budget and on time.

The NPI, northern Michigan acquisition again assuming that it closes here in the next few months we will go in and out in a substantial upgrade to that network.

It is currently not able to support GPRS, it is a GSM Nortel based network but we are going in and really going through every cell site, upgrading the switching facilities, putting in a brand-new GSM switch that will also switch our Michigan 3, Michigan 5 and Michigan 10 properties.

We are very excited about the opportunity to bring new methods of optimizing the way we operate rural networks to making sure that the NPI network is efficient and that the user experience is much better than it is currently.

We are committed to Push-to-Talk that is certainly the buzzword of what is next and what is a very key area that we feel for growth.

It is also a way for us to leverage our GPRS and EDGE networks by utilizing VoIP technology.

We are currently partnering with Ericcson to bring this the (indiscernible) solution.

This is what we will use to bring PTT to our subscribers.

So far the experience versus what you would see on Nextel has been quite exciting; it matches up almost exactly with the setup time of three to four seconds and a session running delay time of 1 second.

Several people often wondered why the tones were involved back and forth with Nextel so that you could tell when to talk.

It also covers those session delays and startup times.

In the real world we feel that this is going to be an extremely competitive product in our markets and we are also committed to intercarrier Push-to-Talk so that Push-to-Talk subscriber on Dobson will be able to PTT to other carriers whether they be Verizon or AT&T or Cingular.

The hope is Nextel but you never know, they have their own technology path and whether or not they will be integrated in this remains to be seen.

But we will be very aggressive to bringing PTT to our subscribers this year.

Verizon is certainly continued to push the bar from the standpoint of data speeds and with their announcement of EVDO here a few weeks ago, so we are monitoring that situation.

We have got our sight set to keep a watch on it in rural America, I think in a lot of cases we are bringing GPRS and EDGE to areas that won't even have that from a competitive side for some time to come.

We will see how the rest of the big guys do and if we need to we will get after it in fast fashion.

But right now we may participate in trials, we certainly our key vendors of Ericsson and Nortel will keep us advised of their technology growth and as we see competitive issues in our markets or our roaming partners decide that they need to have a 3G type data speeds, we will take a look at that and we will react accordingly.

The good news is we have planned for an eventual 3G migration in that a lot of our data and switching systems are 3G ready, 3G capable and so we feel very good at some future time whenever it might arrive, that we will leverage our existing infrastructure as we head forward.

With that, we will turn it over to Doug Stephens.

(This transcript ends in progress)

Thank you, Tim.

I want to say that at Dobson we are pretty excited about what is going.

A lot of good things have happened in the past, and we are even more excited about what is going to happen in 2004.

I guess I would say of all things I am excited about, there is a couple of things that we have not stacked up real well on.

Certainly one of those over the last few quarters has been subscriber growth.

The top-line gross adds have not been as high as we have strived for; and certainly that is one of the initiatives we will be looking hard at in 2004.

That is what I want to talk about as we look forward.

Secondly is our ARPU.

Everett talked about that.

We believe there is an opportunity, an upside in ARPU.

Those are the two things that, as the operations team looks out into 2004, those two categories stand top of mind as things that we expect to see pretty good improvement on.

So what are we going to do?

In 2004 we expect there is about 15 million subscribers that we are going to grow by in the United States incrementally.

That is about a little over 5 percent increased penetration.

As Everett talked briefly about, our markets are less penetrated than the industry.

We are somewhere in the range of 35 to 40 percent penetrated, compared to 55 percent for the industry.

So certainly we know there is an upside opportunity for us.

Likewise there is less competition.

We have a total of about on average three competitors per market where they are actually selling in our markets against us.

So we feel that with the right product suite, the right pricing, the right technology we in fact can grow our business faster than we have seen over the past few quarters.

And we obviously believe that with the right product suite we are positioned to get more than our fair share, certainly our fair share.

Some things that we have done in the year 2003 to prepare ourselves for 2004?

The billing conversion was a big -- it took a lot of time, it takes a lot of effort.

They are not things that you enjoy doing, but they are certainly from a positioning standpoint operationally things that you need to do.

In fact we've got that behind us.

We put in a brand-new point-of-sale system, so every one of our retail stores across the country has a new state-of-the-art point-of-sale network, so that we can activate as quickly as anybody in the industry.

We hired a new advertising agency.

So we are positioned to get our marketing and our marketing statements out to the field and to the customers quickly and effectively.

So we think position-wise we are sitting very well as we step into 2004.

What are our key objectives?

I do not think there is any surprise that changing technologies gets us positioned to compete much better.

In the year 2003 the top eight carriers spent somewhere in the range of $2 billion on media advertising.

That is what our customers saw in our markets, of the latest and greatest state of the art phones, and quite honestly the TDMA handsets have not stacked up over the last few quarters.

So getting to GSM, GPRS, and EDGE is absolutely the threshold that will position us to stack up well against the competitors.

There is no surprise that we have been a leader in churn.

That focused initiative will not change one ounce in 2004.

We will continue with the programs, and I will talk more about that in a minute, to maintain that churn on postpaid at under 2 percent.

The growth on prepaid and postpaid adds on the gross side is expected to be in the 12 to 15 percent range over the approximately 400,000 2003 gross adds.

Lastly, as I said there is an upside opportunity in ARPU at we believe $1.25 to $1.75.

I am going to talk about how we expect to do that as we look into the next year.

First off there is no doubt -- let me back up just for a second.

I want to say that as far as initiatives, we told you about two years ago that our initiative was to go out and focus on local profitability.

We were going to focus our efforts on expanding our local rate plans.

How did we do in that initiative?

Well, in the fourth quarter of 2003 we saw the local rate plans be the most dominant rate plan of any rate plan on our network.

So we took what was probably closest to the bottom of our percentages on rate plans and moved it to the top over a two-year period.

How did we do that?

We did it through proper pricing, proper compensation, proper handsets, proper strategies.

And it worked.

I'm happy to say that we implemented that strategy because, for the time, local profit based on what our incollect rates were, what our roaming rates were with our partners, it was the right strategy for Dobson Communications.

It segmented a market that was most profitable for us; and that is what we ran to.

Not just the corporate strategy, but the strategy throughout the entire organization, to go out and focus on local customers.

And in fact it worked.

I'm happy to say that with the new roaming relationships that we have we can go out and expand our focus, not just on the local customer but now on the national customer; and not just on postpaid, but also on some other payment options.

We are going to talk about some prepaid and some pay-as-you-go type opportunities that we think will open the door for expanded opportunities for us, and broaden our opportunities for customers as we look out.

So, the GSM launch certainly is first and foremost in what positioned us well.

People have said that is great; others have tried to launch GSM and they haven't come up quite as quickly as they would have hoped to.

Why would Dobson believe they're going to be any different?

I think there is a handful of things that we are positioned quite differently than what others have been.

Number one, we are primarily an 850 MHz provider.

That allows us to have better coverage, fewer towers.

Secondarily, we are optimizing the network prior to launch.

Tim's group goes out; and before we will go out and commercially deploy, it is going to be at parity or better than what the customers experienced on their TDMA network.

So we have got a product coming out of the gate that works as well or better, with much better handsets and data opportunities than what we had in the past.

Thirdly, we have got a roaming opportunity.

The big cap carriers did not have rural America in their footprint.

So if they sold a GSM-only handset, you could not roam with that outside of the major metropolitan areas.

As rural fills in, and certainly we are helping that out by turning out network up over the next few months, we have got our footprint as well as all the metropolitan areas available to us from the start.

So we think that is a huge opportunity for us.

Our billing and point-of-sale platforms, as I talked about, our in place and tested and proven.

Certainly the 850 handsets from a performance standpoint we think are superior; but even more importantly is the selection that are available today in 850.

And they're coming up more and more all the time, to where we are going to have a dramatic increase in the volume of handsets available to us, so that we can compete in the marketplace.

What does the footprint look like?

This gives you an idea.

The dark orange is what is available today in GSM.

The light comes up by middle of June of this year.

The footprint for most customers is dramatic.

I think there's been a lot of people looking at GSM footprints; and a year ago and 18 months ago the map didn't look very good.

It looks dramatically different today, and even more so by the middle of this year than it has.

So I think our customers are positioned to enjoy it.

We can put out some offers and rate plans that are very competitive, and we will show you those in a moment.

So we talked about low churn, and it is not all about growth.

We will continue to focus on maintaining the 1.6 million customers that we service today.

We have had the initiatives throughout our organization on customer service being top line.

If we don't take care of the customers we have today it is pretty hard to add additional customers for tomorrow.

So we will stay strong throughout the call centers and throughout the sales force.

It is not just a call center issue.

It starts with sales and follows through to the call centers; and that will stand strong as we look out through the year.

Our network continues to be a strong suit for us.

We have always had and will continue to have -- Tim talked about the growth in GSM, but our TDMA network has been solid.

The GSM network with the incremental sales side will give us a product that will be rock solid as we look out through the year.

The competitive products certainly will allow those customers that want latest in technology to step up to the GSM product line and the data offerings that we are going to have.

The rate plans I will talk about in a moment.

Again, subs under contract; we continue to see the months remaining expand at a little over 12 months.

And 65 percent of our customers are in fact under contract today.

Our save campaigns continue, and the team works very well to maintain that churn number.

So as we talk about gross adds, the first thing we had to do, and our new advertising agency assisted us in doing this, we spend a lot of time, and quite honestly a fair amount of money, talking about who is our customer?

Who are we attracting today?

Who do we have?

And who do we not have?

Where is our opportunity segments as we look out?

This slide looks at the average age of the customer that we have.

Interesting enough, we have got twice as many customers on our network today over 70 years old than are under 30 years old.

You say, how could that be?

Well clearly some of the product -- we have not had the product suite for the youth.

If you look at the percent of credit checks that we run and the percent that actually get approve, we turn away today about 45 percent of our customers because they do not pass our credit standards.

So if we have got 45 percent of our customers that are walking away because they don't pass credit, we need to increase the suites.

We're doing that through a couple programs (inaudible).

One that we have got in place with prepaid, and the other being another opportunity I will talk about momentarily.

The other thing I would say is about 70 percent of our customers fall in the range of 36 years to 60 years old.

So what we look like are middle-aged and middle-class.

That is where our customer sits right now.

As we look at who we have today, this slide shows the areas that we have been focused on and that we own right now.

The middle-aged, no kids, the moderate majority which is the 35 to 54-year-olds, and the 25 to 44,000 household income category.

The mature moderates which are over 55 and the 25 to 60,000 household income.

And the family focused at 35 to 54.

That is where we have market share.

That is where we dominate.

And we certainly don't want to give that up.

We will continue to hang onto that, we will add some there.

But our growth is in these segments.

The successful movers, mature achievers, the young starters, young achievers, and peak earning years.

It is two basic categories.

One is the youth, under 35 years old; and the other is the high income.

So the product suite and the marketing that we will be doing in 2004 are there to address those two specific categories.

So looking at the young customers, what do they want?

Let me first start with that.

They are interested in new technology and they lead in the adoption of the data services.

Certainly we will have the data in the year 2004.

They are willing to pay new more for new handsets.

They are less cost-conscious than some of us in this room maybe.

They are leaders in wireline replacement.

The facts are the youth of today would rather go with a wireless phone only and not worry about a landline phone.

So we have got a product that we think will be very attractive to that segment of the population.

They want a big bucket of minutes and they certainly have a strong interest in other payment options than just long contract, postpaid opportunities.

The product suite, and again I'm going to talk in more detail about these, but GSM and camera phones, the camera phone rage is something that is catching on dramatically here in the United States.

It is there already in Europe, and we are certainly behind.

But the handsets that are coming out are coming out with very high-end cameras where you can zoom in; and those are a big piece of what we will be offering in 2004.

I'm going to talk about the Merge product.

When I talked about the landline replacement for the youth, this is a product that is rather interesting, and I will explain more in a minute.

But the ring tones are an opportunity that we have not had in the past, where you can download ring tones, and you can make your handset reflect your personality.

Certainly that is available and we will have those. (technical difficulty) We are launching ring tones on GSM this month.

Higher minute plans.

Our EVO product which I will talk about momentarily.

Our Wildseed which is a phone targeted specifically for the youth and our prepaid platform.

What are some of the products?

I have got the good fortune to talk about a lot of new stuff.

And this year at Dobson we get to take to market more new products than we have in the last two or three years combined.

This product from Wildseed is one that Dobson will be the launch carrier on for this organization.

We are going to launch in the second quarter.

It is a phone that probably most of us in this room would not carry the phone.

It is targeted not for middle-aged; it is targeted specifically for very young.

And it has a couple of things that I would say about it.

It has got two microprocessors, so for those people that want to multitask, which you are looking at the youth today and the way that they do the gaming, they can go through and they can talk on the phone and they can sent text messages simultaneously.

They can listen to radio and they can talk simultaneously.

They can do a host of things through this phone.

They can also take the outer skin off, as they call it, and it changes the look and the personality and the flavor of the telephone.

So we believe that this phone is one way that we can attract the youth through a campaign in our market to drive some traffic into our stores.

Another large initiative for us this year is a product that we are calling the EVO phone.

It ties back to the next evolution in wireless.

It is a phone in a box offering that offers advanced pay solutions through recurring credit or debit card payments.

If you saw the AT&T Go Phone type product, that is what this is somewhat targeted after.

We believe that if we were only getting the postpaid business before, and that is basically where we were, that there is a huge group of customers that would like to come in, especially the younger crowd, that doesn't want to commit to a two-year program.

They come in with a credit card or debit card and we will give them two options.

We will either hit their credit card once every 30 days for the monthly access; if they run out early, the phone stops working.

Or every time they get down to a certain level then we will rehit their credit card again.

This is a product that will be easy to sell.

We are going to sell it through national retailers.

There is not any selling at all.

They buy it off the shelf; they take it home.

When they make a phone call in dumps into our call center where we will go ahead and activate it over the air.

It is no billing.

We just once a month, hit the credit card for the bill.

So we are excited about this product.

It comes out in the second quarter of this year, and it is displayed.

After the meeting I would encourage you to come up.

We have got a display of some of the new products up here on the front display.

Our prepaid Simply Speaking offering is not new.

We have had prepaid out for several years.

Our vendor is Boston Communication.

But I would say that we have downplayed prepaid fairly heavily.

It has been something that we have not focused a lot on.

We felt that there is plenty of growth in the postpaid business so that is where we have played.

The facts are, as we get into GSM and now we have got the products to go after it, we think that there is upside in the prepaid world.

This is for those people that don't have the debit card or the credit card.

They want to come in and pay cash every couple of months if they run out of minutes.

We will have it out there.

This gives you a rough idea of what pricing has been and kind of what we expect.

We think the biggest change for us this year is, number one, having handsets in the GSM world.

But secondarily, improving the value proposition in prepaid.

The pricing in the prepaid world has been dramatically higher in the past than postpaid.

Certainly it will continue to be higher, but not to the level that we have seen it.

I will give you a rough idea here in a minute on what we mean specifically.

But we are going to dramatically increase the value proposition, so that you come in and if you don't want to sign the long-term contract you have got to pay for the handset; there is no handset subsidy, or very little; but you get a per-minute rate that is not dramatically different than your postpaid rate.

Other products that the youth are interested in are the ring tones.

We will have those in GSM in February and in the TDMA world in April.

So again from an ARPU standpoint it is good for customer satisfaction; good for customer churn; it is also good for ARPU because in fact there is revenue associated with that.

This product called Merge is something that is displayed up here.

What this product will do for the youth is they can take this home, plug it into their phone jack in their house.

And when you drop your cellular telephone into the Merge product, somebody calls your cell phone, all of your phones within your house will ring, and you can answer the phone at home as you would off your standard regular telephones.

With the local pricing plans that we have in place, we believe that there is a lot of people who would rather not be chasing after their cell phone in there at home, but would rather answer their standard home telephone lines.

So this allows you to do it.

It also gives you the opportunity if you want to get rid of your landline phone number, you can port your landline number into your wireless number, drop this into your home, into the Merge product.

Now you purely do go to the one number, which is your wireless number that works through your home phones while you are at home; and then it works through your wireless phones obviously when you are away from the house.

Its approximate retail price is around $100, so it is not a dramatically expensive product; but it is one that has a lot of functionality.

What about the higher income customers?

What they want are they want to use the phone for business and personal.

They are going to travel more frequently.

They need a larger coverage area.

They are heavy users of high-technology products.

They are interested in new features especially in productivity-related features.

The products that we are delivering for this group of customers in 2004, again the GSM handsets.

There is an array of handsets out there and we are looking at a host of vendors.

We have been predominantly a Nokia and Motorola supplier of handsets.

We are continuing down that path.

They will be very strong suppliers for us, but there is also other GSM providers out there that we are evaluating right now and will bring a suite of handsets to us.

The data services, and we do have a data product today that I will talk about in just a second.

The EDGE PC cards and the push to talk.

The expanded network coverage tying back into our rate plans, as well as our own local coverage with the expanded buildout, and then the nationwide plan.

Our wireless offering right now is one that gives you this basic functionality.

The news, business and finance, sports, weather, travel, shopping, entertainment, and then a handful of portals.

This is a product that so far the customers are liking.

We are also evaluating some expanded data offerings.

I would expect that by the second half of this year we would be launching additional data platforms that will be even more robust than what we have right now.

But this is out there today in the marketplace and working well.

Tim talked a little bit about the EDGE PC cards.

For those people on the go that want high-speed Internet this EDGE card, when we get this midyear, is something that the business traveler we think is going to be very desirous of.

So we are excited to have this out there.

It has got speeds of 100 to 120 kilobits per second.

We will have that very soon.

Again the push to talk, there is a businessman segment that Nextel has found and it is a sweet spot.

Certainly we think it does two things for us.

It helps control our churn, because there are some customers that absolutely want it and need it, and they have gone to Nextel.

So it is going to help us reduce churn as well as top-line growth on gross adds.

The trial will occur in the second quarter.

Assuming it works as Tim has promised me it well, then we will be launching this product sometime in the second half of 2004.

That is a quick look at some of the products that we have, and we have got a team of people back in Oklahoma City that are working very hard to bring all of these to market for us and have them out there.

You can see most of them are happening before the end of the second quarter.

Most of them typically later in the second quarter, but nonetheless by midyear we have got most of those products in the marketplace.

But to increase gross adds 12 to 15 percent it is not just about products.

We also have to have the right pricing.

We have got to have the right distribution.

And we have got to have the right advertising campaign to get the message out to the marketplace.

So I want to talk about those for a minutes.

Our pricing strategy first.

Certainly postpaid will be the lion's share of our business in 2004, as it has been in the past.

We subsidize the handsets.

About 72 percent of our customers in the fourth quarter signed 24-month contracts.

We will deliver the low churn that we have enjoyed over the last several years.

Our average price per minute we expect to be in the 8 to 10-cents per-minute range.

Best value for the customer both on handset pricing and on per-minute pricing, because they are signing a two-year contract with us.

The second platforms is what we call our EVO phone.

That is where we are going to charge your credit card or your debit card every 30 days.

We expect that pricing to be somewhere in the range of 12 to 14 cents a minute.

So it is not dramatically higher, yet it is higher than the postpaid product.

There is not a contract on that; churn is a little bit higher.

They are going to pay for the phone, so limited if any subsidy on the handset.

Likewise on the prepaid product.

You can see that while our prepaid per-minute charge was well over 30 cents a minute in the year 2003, with the pricing changes we are putting in place right now we expect to be in the 20 to 22 cents a minute range on the prepaid product.

Again no contract and slightly higher churn on prepaid.

Looking at our postpaid plans, and again these are displayed up here; you can come up and look.

This is actual collateral that is off one of our markets right now.

When you look at 2003 and compare it to 2004 there is a couple of things that we believe make a big difference.

Certainly the GSM product stands on its own.

But what we are able to do with our new pricing on incollect with our roaming partners is put more buckets of minutes -- or more minutes into the bucket.

This shows that we have got a plan on our GSM local, for example, for $45.

We will give you unlimited minutes and 100 off-net minutes.

So we look at that as rate plan that anybody can step up to.

It is a $45, which is obviously accretive ARPU to us.

It is a very attractive plan for our markets.

On the national plans, the $40 450-minute plan.

We were in line in 2003 with our $35 360 or $44 460; but where we did not stack up very well was in the nights and weekends.

Our nights and weekends on our national plan in 2003 only worked on our network.

What we are changing and modifying in 2004 is allowing customers to have the off-net roaming.

We have trialed this in a handful of markets and it still works very well for us.

So from a growth standpoint this is what customers wanted.

It is what we are delivering in 2004, so a lot of them do not have to worry about their night and weekend minutes if they roam on weekends.

We are not launching the gate product as some carriers have done, which allows you to have a product that steps down to TDMA automatically.

Ours are going to be GSM-only handsets.

So for those customers that desire and need ubiquitous coverage as they have had in the TDMA world, we will continue to sell some TDMA product in 2004.

Specifically going to our national plans, what we call our Talk USA, and those rate plans will be ranging from $40 to $70 per month; and somewhere in the range, getting close to a dime a minute on the $70 rate plan.

Partner pricing, because of the value proposition goes up slightly in 2004.

But that it in line with some of the other national carriers also.

What do we expect the technology mix to look like?

We are starting the year obviously with very little GSM growth, but we expect to move very quickly by midyear.

We expect GSM to be sold more predominantly than TDMA.

By the end of the year we expect GSM to be at about 80 percent of our gross adds.

I will tell you that as I travel around talking to the sales force and talking to the regional vice presidents, they all believe that these numbers are absolutely attainable.

As Tim talked about our spend for TDMA being real close to zero, it is imperative that our sales force embraces the program, embraces GSM.

It is not hard to get them sold on it, because the facts are they have been selling against these high-end handsets, the color screens and all the data opportunities for the last year or two.

So the facts are, people are waiting to change technologies and want and desire to do it.

So I think that we can move very quickly.

Everything is aligned for the product to come out of the gate and work very well.

So that is our transition line.

It is pretty rapid, but I think it is very, very attainable.

Everett did talk about our distribution channels a little bit and the fact that of the 1900 that the competitor have, we have got about 935.

So I think we have done a pretty good job of going out and attaining retail stores.

We have a tremendous amount; we are adding more in 2004.

We have got about 10 percent growth in our retail stores planned for this year.

Our direct channel, which quite honestly has fallen off, our direct channel percentage in 2003 was less than 10 percent of our total gross adds.

A lot of people say, why would it be so low?

It used to be up close to 20 percent, so it has fallen down to south of 10 percent.

What caused that?

The facts are, with the product suite that we had in 2003, the enterprise customers did not -- we just didn't have the product suite that they needed and desired.

So we are moving this year with a host of new products that we think the direct sales force -- we are going to grow it, and we think there is opportunity both to grow the numbers that we have and the percentage of our gross adds that we expect out of that channel.

Likewise the agents are going to expand from about 599 to somewhere in the range, we expect about 40 additional agents this year, maybe more.

That is net incremental growth.

You lose some and you gain some.

Down in national distribution we have got about 74 retailers, 74 points of distribution in national retailers that will come up early this year.

And then the EVO phone gives us an opportunity to go in, where you are going to sell this as a retail item, and hang it on a shelf, to go into additional mid to large retail opportunities and distribute this product.

We are looking for somewhere in the range of in excess of 20 percent growth in our distribution channels in the year 2004.

Late in 2003 we did sign a contract with AT&T Wireless on their national account program.

They have been a consolidator for a long time on national accounts across the country.

We had not participated in that program, but made a decision late last year that it was the right time to step in.

What they do and what we can also do now is go into any account that has phones all across the country; they are tired of getting bills from 13 or 15 different carriers; they would prefer to have one phone bill from one carrier.

AT&T acts as the consolidator on that.

We go in and sell it, or they sell it on our behalf, it works both ways.

It is a way for us to again grow the enterprise business.

It is something that the large accounts, with the WLNP certainly being part of it, but just the large accounts want to take the confusion out of wireless.

So they go in, and it is less about pricing and more about simplicity; so that they can go through and look at billing in one format, coming out at the same time ever month.

We are part of the program as of fourth quarter of last year.

We have seen some growth already; expect that to continue to grow throughout the year 2004.

Those customers you would guess are typically higher ARPU and lower churn customers.

What is our acquisition cost going to do?

In 2004 we expect it to be in line with 2003 which was in the range of $328.

GSM phones, the very low end GSM phone is a little bit higher than the low end TDMA phone right now.

So we expect handset subsidies to go up a little bit.

But at the same time the incremental gross adds should help our fixed cost go down; so we expect to stay relatively flat on acquisition cost year-over-year.

Everett talked briefly about WLNP.

I want to add few things to that.

There was limited gross add and churn impact up to this point.

As we prepare for the 2004 deadline there's a couple of things that we are positioned on.

Certainly having the new technology, new products, new rates, increased distribution, and incremental advertising, we think we are positioned to get our fair share of new gross adds and do all we can to mitigate churn in the WLNP environment.

We will have and Everett talked about it, we didn't do a whole lot early on.

We only had 14 percent of our POPs available to port, so it was difficult for us to go out and really do aggressive advertising, because we had so much spill into other properties.

So we have not done a whole lot from an advertising standpoint on WLNP.

But we will have targeted advertising behind this, and ask customers to come in, bring their number to us, we will be happy to service their wireless account.

We also expect to see incremental gross adds through wireline to wireless ports.

That certainly is getting more traction as we go out into it.

So we will see, I think, increased opportunity from that as we look out into the year.

We are increasing our media spend by about 21 percent in the year 2004 for a couple of reasons.

One, we're launching a new technology.

We have got to tell the population that we are not the same company we were in 2003 from a product standpoint.

So we're going to go out with a message that is very clear about what we have got; and if you are in our store and you saw that we didn't have latest and greatest, well guess what?

Today we do.

Because we are targeting a different segment of the population we are also changing the mix of how we advertise.

We will dramatically shift over to where we will be doing a lot more television advertising.

When you're targeting the youth, you look at their demographics.

They watch more television, read less newspaper.

So TV will be a higher concentration.

Radio will be increased also.

The print, while the size of the ads will be larger and have more spot color, the frequency in print will be less than what we have done in the past.

So what do we talk about an internally?

When we talk to our people, kind of the two initiatives that we have looked at for 2004 is we want to be simple.

We want to keep it to where people can figure us out.

So we are going to be easy to understand.

We want to treat our customers with respect.

We want to send out honest, accurate bills and resolve issues quickly.

When the ad agency goes out and starts building campaigns, thematically that is what they are looking at, is that message.

Secondarily, we want the customers to perceive us as being innovative.

The best network in my area, innovative handsets, advanced data services, and the phone works where and when I need it.

So the sweet spot we think is right in between that.

So our tagline for 2004 is Simply Innovative.

When we run ads, it is going to be all about CellularOne being Simply Innovative.

Our messages are going to be fairly clear.

GSM, one; the new handsets that people desire, two; and the network that we have, the 250 cell sites, the strong network, mixed throughout our message.

The rate plans we want to talk about, as I've talked about.

The GSM rate plans we think are highly competitive in our markets.

We are not just going to be GSM; we will continue to have the Talk USA rate plans out there.

So if you need ubiquitous coverage we have got it.

If you prefer other payment options, we do have those also in prepaid and in the EVO solutions.

We are in the fifth year of our sponsorship of Joe Nemecheck in the Busch series NASCAR.

It has been a way for us to stay in the national spotlight.

So that the CellularOne name certainly was huge at one point, with all of the big cap carriers -- it was in every major market virtually, when AT&T used it and a host of others.

We wanted to keep it out there.

It has given us a lot of national exposure.

Happy to say that in 2003 Joe won three races, came in in the top five in two others.

He didn't fare very well at Daytona a couple weeks ago; got taken out in the 11th lap.

But he will be back in Las Vegas on March 6, I guess it is.

So we are excited about that relationship and I think we get a lot of value.

You can see that Joyce Julius said that we got about $4.5 million worth of advertising value out of the NASCAR sponsorship in 2003.

In 2004 the ARPU increase comes right in step with our gross add increase.

We think that we feel confident with the GSM gross adds targeted for 80 percent by December of this year, fourth quarter effectively.

Increased data sales; ring tones; some of the other features that we sell like roadside assistance, handset insurance, as well as text messaging and other products.

All those things combined add up to incremental ARPU for us and certainly incremental gross adds.

So why are we excited about GSM?

This slide kind of tells the whole story.

When we look at fourth-quarter TDMA ARPU, it was about, and this is for the entire base, about a little over $43.

When we go through and look at what our rate plan mix is expected to be, we're looking for an ARPU of in excess of $49 off of GSM.

We are excited about it.

We think the opportunity that the GSM product suite offers us is one that allows us to grow both in customers and in ARPU.

The sales force is ready to go and looking forward to the year 2004.

Thank you.

We are on the home stretch.

Just bear with us for a little bit longer.

I notice a couple of speakers are starting to lose their voice.

I don't plan on talking that long.

Really what I would like to do is a couple of things; summarize a lot of the things that we have talked about; fill in some of the holes, particularly for those of you who create models of our company and try to work out what the expenses are going to be and so forth.

But I think the number one message is that this company really is focused on creating shareholder value.

What we mean by that is creating a situation or environment where we can have long-term growth at sustainable rates.

Sometimes, does that mean that we take a step backwards in order to get long-term value?

Absolutely.

I think 2004 will be one of those years.

When we talk about creating value, we focus on a number of areas.

We look at managing our exposure to market risk.

This is really in reference primarily to roaming.

Everett talked a lot about the things that we have done in the roaming environment to reduce our risk.

There are a lot of things that are in our control in terms of the contracts, in terms of the rates.

Unfortunately there are some things that aren't in our control; the minutes of use that the other providers put on our market.

But our attempt is to try to create an environment where people will put more minutes on our network and that those revenues are more sustainable.

Likewise in managing that risk we look for opportunities to swap properties where we have high exposure to roaming.

We did that with our California swap last year; we've done that with the Maryland 2 swap this year.

We are also looking to accelerate the growth in our business and get back to the kinds of growth rates we experienced a few years ago.

Doug spent a lot of time talking about our initiatives in the products and the offerings that we're going to have this year.

I do encourage you to come up and look at the displays.

We also here look at making strategic investments.

We're buying the right properties, enhancing our local product, our local market capabilities works as well.

And again eliminating those markets where we can't sell viable local products.

An example of that was the Maryland 2 swap.

We got rid of a property where we had high roaming exposure, but likewise we had very little opportunity from a local basis.

Finally, we are going to continue to control costs and invest in margin-enhancing technologies.

This is particularly important as we go on through this migration or change from TDMA to GSM, GPRS, and EDGE.

One of the measures of value is free cash flow.

How are we measuring free cash flow?

It starts with operating income less depreciation and amortization, or as we commonly referred to it as EBITDA.

It also includes taking out CAPEX, interest dividends, taxes and others.

I'll talk about each of those components briefly.

What are we going to do with the free cash flow?

We have a lot of choices.

We are going to do the one that has the highest return for us.

That includes perhaps acquisitions or strategic investments in properties or licenses or spectrum.

It may mean reinvesting in the business.

If we see our business growing faster or we see products we want to introduce sooner, we may use some of that to bring those quicker to the marketplace.

And obviously it could mean reducing debt and preferred stock levels.

Our goal is to continue to delever the company.

One of the concerns that people have had over the years was, as our roaming has declined, what will happen to our margins.

Fortunately over the last four years we have been able to keep our margins relatively flat, as depicted by the top line, despite the fact that the percent of our total revenue derived from roaming has declined dramatically.

It was about 38 percent in 2000; dropping to 27 percent in 2003.

Now as we go into 2004 we do expect again to take a step back in margins.

The decline in our roaming revenue is just too great to sustain the same kinds of margins we have seen over the last few years.

From an expense standpoint we look at our expenses in three major categories.

Cost of service, which includes the incollect expense or off-network cost, tower cost circuits, Internet, all of the costs associated with our infrastructure.

We look at G&A which is customer service, billing cost, corporate cost and overheads.

Finally we look at marketing and selling costs which are the costs of equipment, advertising, promotion, and the cost of our sales force.

Speaking first about our cost of service, what are some of the key factors impacting 2004?

There are a lot of factors that influence it.

The major ones are the fact that we are going to add 200 to 250 new cell sites.

In addition we are going to see minutes of use on our system grow as our subscriber base grows.

We have the incremental costs associated with EDGE and the GSM/GPRS infrastructure.

And likewise we will have a shift in the mix of our price plans and the kinds of minutes people use off-network offset by a reduction in our expense per MOU.

What does this mean?

In 2003 if you look at the total year on a pro forma basis, we spent about $13.90 per month per subscriber on our cost of service.

Again, that is the cost of our network as well as the incollect cost.

We expect that to drop slightly in 2004.

Again, despite some of the incremental costs, overall the whole cost will drop in single digit percent declines next year.

CPGA;

Doug talked about our expected 2004 cost per gross add, and this is gross add on both the prepaid and postpaid sets, at $328 per subscriber.

Also included in this line item are our retention costs.

And if you put them on the same gross add basis, that adds about another $75 per gross add.

So all in we are looking at slightly over $400 per gross add last year or in 2004 for CPGA.

G&A, in 2003 we experienced about $8.60 cents per subscriber for G&A expenses.

Unfortunately in the second half of the year that increased to $9.50, particularly in the fourth quarter of '03.

What are some of those impacts that carry over into '04?

One is wireless local number portability.

Unfortunately for us the volume of the transactions has been a lot lower than many people anticipated; but there is still a substantial amount of cost associated with setting up the back offices that will occur next year.

Likewise our bad debt will be a little bit higher in '04 than it was in '03.

The new customer base that we are targeting is the younger subscriber base, and we just expect that the bad debt will be slightly higher with that segment.

Finally, the business really has changed.

It is not the same business we had in the last few years.

We had changed the price plan; put it out in the marketplace; and we saw what happened.

There is a lot of new products, new innovations.

It costs more to bring those to market.

It costs more to develop our marketing efforts for that.

So we will have higher cost associated with bringing markets to launch.

Thus we expect our cost per subscriber, as compared to the total year last year, to be 5 or 10 percent higher in '04 than it was in '03.

It will be down a little bit from what we saw in the fourth quarter, but overall higher than what we saw last year.

What are some of the other areas that affect free cash flow?

We talked a little bit about the balance sheet.

I mentioned earlier about the 850 million reduction that we have had to date.

By the way, that also reduced our fixed charges by 33 million on an annual basis.

Likewise, on our old capital structure we had $2.3 billion worth of scheduled payments over the next five years.

We have reduced that to 86 million.

Finally, the average life of our loans has increased from five years to almost eight years.

So a lot more flexibility over the next five years.

What do we hope to do in 2004?

Well, $61 million worth of 12.25 preferred stock is still outstanding.

It is currently callable.

Likewise, in May of this year, we have 196 million of our 13 percent preferred stock that will be callable.

Early next year we have 300 million of 10 7/8 senior notes that are callable.

And finally in the bank community, there seems to be some opportunities perhaps for repricing.

Again, our goals are to try to attack these high-cost components of our capital structure and reduce them.

From a tax standpoint, cash taxes.

Now that we have completed the restructuring of American Cellular, we have completed a lot of the restructuring of our capital structure at Dobson.

At the end of 12-31-03, we had approximately $770 million worth of NOLs.

So we don't expect to pay taxes anywhere in the near future.

Now we do have some limitations on that, but our 382 limitations still are about $200 million a year.

That means we can use up to $200 million a year to offset operating gains.

To the extent you don't use those in one year, that amount carries over and is additive to the next year.

Now, I like looking forward.

I think the things that Doug and Tim and Everett have talked about, talked about an exciting future.

So I'm going to talk about this slide one time.

This is a backwards looking slide and I'm going to cover it once and then put it to rest.

Again, back in October we had suggested that we could do a 480 to $515 million of EBITDA in '04.

There are a number of things that changed.

We have talked about a lot of them.

I have listed some of them here.

The biggest change by far was the roaming experience we have had with minutes of use.

That by itself we have estimated is worth 50 to 60 million reduction in EBITDA than what we had expected as late as October of last year.

A number of the other items are similar to what we saw in the fourth quarter and talked about; the swap between Michigan and Maryland, the fourth quarter shortfall and its impact on 2004, and some general operating costs that just will be higher in 2004 than in past years.

What does that mean in terms of our overall guidance for this year?

We are now guiding towards EBITDA of 390 to 425 million.

If you back out CAPEX in the mid portion of our guidance of 125 million, if you back out interest and dividends at a midpoint to what we think we can incur this year, that is about 233 million.

That leaves us with a free cash flow range of 32 to $67 million for the year.

And again, we hope that we've provided you with a lot of good information.

We hope we have clarified a lot of issues about Dobson Communications, so that you can do your analysis on our company.

We are excited about the future.

There is a lot of growth opportunity.

Now, I would like to open it up to Q&A.

Warren, are you going to run that?

Before we start the Q&A, I'd like to inform the people listening on the call, we're going to take questions here in the live meeting in New York first, and then afterwards -- and please, if you have a question, please wait until you get a microphone so that people on the call can hear it.

Jennifer, would you like to go ahead and give people instructions for the call that are listening to ask questions backwards?

Yes, thank you. (OPERATOR INSTRUCTIONS) Thank you, Mr. Henry.

You mentioned in your initial comments that sharing with respect to the new swapped entities with AT&T Wireless ticked up when you first got them to higher than you were expecting.

What was the issue exactly, relative to those particular properties and how you account for adds?

I could barely understand -- the issue with what again?

With churn as it ticked up when you swapped the properties with AT&T Wireless?

Oh, in Alaska.

Doug, why don't you give him kind of an eye-level view of that?

The customer file that we got from AT&T, they ran the last bill under their letterhead.

Unfortunately all of the features did not show up on the customer bill.

For example, night and weekends that were included in the plan should have been included in the plan; on an awful lot of customers it was not.

So instead of getting a $50 or $100 phone bill, customers got 4 and 5 and $600 phone bills on their very first bill out of the gate.

We went through and worked through, customer by customer, and credited that back off.

But it did was flooded the call center, so we wound up with a backlog at the call centers; and we had some customers that were confused and not very happy.

It took the second cycle then to work through that issue.

And now we are finally, I think, very close to getting it cleaned up.

But there certainly was some negative feelings from our customers when they got their bill and they said, my gosh.

So it was a transfer of information that didn't happen very well.

Just to first start off on roaming in the fourth quarter; based on our estimates it looks like American Cellular was actually up 11 percent year-over-year.

So that would imply that Dobson Cellular was down around 3 percent year-over-year.

Can you talk specifically just the trends that you saw in Dobson Cellular as compared to American Cellular?

Because American was relatively close to estimates there on the roaming front.

Are you talking about year-over-year change in minutes?

Yes, based on your numbers that you provided today pro forma, if you ran through the year-over-year changes in roaming at Dobson Cellular 4Q pro forma '02 to 4Q pro forma '03, you are down around 3 percent.

While AmCell we have, those are clean numbers, were up 11 percent year-over-year.

It is really hard to speculate other than you get the regional influences.

In this particular example apparently AT&T did better in proximity to the American markets than the Dobson markets.

There is no other, really any other explanation for it in the time frame you are talking about.

In the future American does not have GSM competition of any meaningful nature from AT&T.

So as AT&T hopefully, and Cingular for that matter, grows its GSM base, American might do slightly better.

Time will tell on that.

Do you view the situation in the quarter as really Dobson specific?

Or is the something that is the potentially endemic to the whole rural space?

Minutes were down significantly.

Or the change in minutes year-over-year was dramatically down, change, from what we have experience leading up to October.

The big mystery is, what happened in October?

I think it is a combination of a lot of things.

I think it is across the board.

I do not think it is just American specific or Dobson specific.

But across the board AT&T started to promote rate plans that were in total less usage, or they where less usage on those plans.

They were less roaming advantageous; and presumably, I think they have indicated this in their conference calls, presumably they had what we call a subscriber management program, where customers that were high roaming abusers if you will, that were unprofitable on an incremental basis, on an individual basis, they had a program in place to effectively churn those customers off or move them to new rate plans.

It is not uncommon in the industry.

It has been unusual for AT&T, given their digital one-rate plan focus, to go in and alter those subscribers.

Apparently that is what -- presumably that is what happened.

We don't have any intelligence for that, but just kind of reading between the lines that is what it looks like.

Just to add to that.

As you go forward, all other things being equal, you would expect to see a bigger impact on Dobson from AT&T because of some of the overbuild in GSM, where we have no overbuild on the American.

So that could affect us as we go forward a little bit, which was included in some of our minutes that we tried to project going out.

So as it relates to the guidance that you put out there, about that wide range of MOUs in '04, we should expect that AmCell would be higher than Dobson Cellular?

All other things being equal, yes.

There is a lot of other factors as well.

Each region is just so unique that even when you look within Dobson you will see certain markets that were hit significantly.

Other markets were not yet nearly as much.

Staying on the roaming MOU front, could you provide any specifics as to why we should expect MOUs to grow 8 to 12 percent in '05?

It seems to be kind of a number thrown out there.

You did not really specify as to why we would expect some growth there.

I kind of indirectly did.

I probably should have been more specific.

But if you assume that Cingular maintains its market share and -- I guess I am assuming that the AT&T sub base maintains its level as it is today, I don't expect them to grow a significant amount this year;

I wouldn't suggest -- I would not rule it out necessarily either.

When you get into '05 Cingular has maintained market share, which means they are going to grow this year.

AT&T has not lost substantial subscribers and in fact may have grown.

So you start with that increased base.

And we are also assuming that usage per subscriber will grow in the 7 to 10 percent range.

So between that you get to effectively an 8 to 12 percent growth.

And again, just to add on, if you want to add to that some specific events that will affect it, certainly things like the 1900 build up in Alaska; it will have a partial year effect this year and will have a full year effect next year.

The fact that AT&T and Cingular have stopped their practice of not including our rate plans; we will get the full effect of that next year.

We will start seeing some of it this year, but the full effect won't be till next year.

So those are all some of the factors that really you need to consider when looking at the 8 to 10 percent next year, or 8 to 12 percent.

As far as Cingular and American Cellular, do you have any comments towards Cingular's announcement last week that they're looking to overbuild?

They are going to overbuild Kentucky, and that looks to be specifically excluded in the prohibition of overbuilding the Kentucky markets.

I don't know if their message said they are overbuilding Kentucky.

They currently have systems over two of our markets in Kentucky.

Kentucky 8 and half of Kentucky 6.

I think what their message was, that they're going to enhance their service quality in those markets, which is more than just those two.

So we really applaud that because obviously our customers go into some of their territories outside of 8 and 6.

Their announcement also included Tennessee.

We don't know specifically where they are building their cell sites, but with our working relationship with them they don't have 850 over us anywhere except those two markets that I mentioned, and their preference is to build 850.

Okay, thanks.

I won't run this part of it; go ahead.

Bill?

Somebody.

I wonder if you could go into a little bit more on a possible renegotiation of the roaming rates once AWE and Cingular get together?

It would make sense that as a combined company you would need one negotiated rate.

Should we look at the rates that we were given today stepping down over time, as a blended rate given the contracts that are in place, while I would think that it would most likely go toward a lower of the two if it were renegotiated; and maybe that included some guaranty of not being overbuilt by Cingular in addition to AWE.

But you would think that they would want to move that toward the lower of the two rates.

Thank you.

I don't think that is necessarily true at all.

I think what we would like to do is, first of all, have a little time to reflect on the transaction.

It is fairly new, although it has been speculated for quite a while.

I honestly believe that the rates themselves, the net present value of the roaming strength, both outcollect and incollect, will only improve from here.

I can not see a situation, particularly given the nature of the contract that we have with AT&T which we believe will survive, the nature of the spectrum that we have versus the alternative to build, the nature of our relationship with Cingular, I think we generally believe that our networks are complementary and mutually beneficial.

I think that all speaks towards a relationship and a set of dynamics that allow us to create value beyond the base that we have today.

We will see how it turns out.

But that is my firm belief.

On the '03 CAPEX coming in below expectation, did I hear correctly that that was related to the GSM equipment not being available or not being delivered?

If so, is that a problem that possibly gets exacerbated in the new year if AWE and Cingular become more aggressive with their own rollouts of GSM?

The equipment delivery between the last part of '03 and the beginning '04 really had nothing to do with AT&T and Cingular or even T-Mobile's equipment needs.

Quite frankly it had to do with how fast we could get sites deployed and how fast we could sites optimized.

Also once you get into December the manufacturers of the equipment also go through slowdowns due to the holidays.

All of those things combined, it meant that the first two weeks of January we got a lot of equipment that had been ordered in 2003.

Going forward we have been actually one of the largest buyers of 850 GSM-related equipment up until recently, when some of the other carriers have gone back and actually taken some of the 1900 GSM footprints that they laid down initially and are augmenting them with 850s.

We are in a very priority type position with both of our vendors, and I feel very confident going forward.

All of the equipment necessary to complete the remainder of our GSM overlay through that 727 cell sites, all of that equipment has been delivered today.

We have it in place.

So I am very confident going forward.

On slide 108 year you ran through a number of preferred securities which are callable and the senior notes that are callable as an opportunity to lower your cost of capital.

Can you give us an update where your restricted payments capacity is right now to take out these preferreds?

How you see that restricted payments capacity growing throughout this year or changing throughout this year?

What's your other options for refinancing some of this high coupon or high-cost securities?

Thank you.

Each of our securities have their own covenants in terms of the restricted payment test.

Those restricted payment tests limit the amount of money that we can upstream to subordinated securities like the picks (ph).

Our most restrictive covenant right now is on our 10 7/8 security, and that is sitting at about $100 million.

The formula for that as you go forward is basically EBITDA less interest times -- I can not remember exactly on that one; it is one point something, 1.75; adds to your basket as you go forward.

Obviously we have close to $250 million in securities we would love to take out.

We have $100 million in terms of restricted payments from the 10 7/8.

And quite honestly there are a lot of alternatives depending on the capital market.

I think we have covered the full gamut; but obviously if we issue any security that is subordinated to the 10 7/8 that goes directly to increase the restricted payment basket.

Anytime there is a preferred or common stock, which I'm not suggesting we are doing, but just from a definitional standpoint, that goes and adds to that basket as well.

There is always opportunities perhaps to do something with those securities and changing that covenant as an option.

I'm not suggesting that that is a course we would take either, but it certainly is an option.

Everett, your stock is now trading at a significant discount to what I calculate as your underlying private market value.

You have walked through some of the steps that you have taken or will take to fix some of these problems.

So what can you tell us is a reasonable time frame that investors should wait for you to close the gap between your market value and your PMV?

And to the extent that you can not close the gap by that time frame, are you going to be willing to sell to somebody that can?

I think the presentation today is a good example of a company that is in a bit of a transition.

I think it is certainly natural to assume that there is some skepticism, if you will, about the results of this transition, the coming out of it if you will.

But I have never been more confident in our management's ability to execute on the various things we have talked about today.

In fact, in most cases the hard part if you will has been completed.

The billing conversion was a tremendous task, a tremendous undertaking.

The transition from California into Alaska, a tremendous undertaking.

The overlay of the GSM network, again largely complete; we are in the final stages of it.

The point-of-sale system, Doug touched on it, but we have a brand-new point-of-sale system in every distribution point in the entire company.

The marketing plans are in place, the sales team is trained.

We are ready to go, and we are going to be very aggressive, very active, and hopefully very successful.

Roaming, we can't change the events of AT&T over the last several months.

In fact it did, without question, it impacted our bottom line and our forecast in '04 significantly.

So in terms of are we contemplating selling the company, no, I do not think that is in the cards.

I don't even think that is a discussion point.

We are contemplating building shareholder value through the operations, and completing the business strategy and plans that we have talked about today.

Can you talk about a couple of things that have to do with roaming?

First of all, in the 2005-2006 roaming yield outlook, it is a blend between TDMA and GSM.

I'm just wondering, what is the difference between that blended rate compared to the lowest GSM yield per minute that you would get from Cingular and AWE?

Second question is I am just wondering, there is a big drop in AWE roaming minutes year-over-year between September and October.

I am just wondering if you can attribute that to anything other than AWE market share?

Because it just seems like down 7 percent in October seems fairly large.

On that point I hopefully partially answered the question a little bit earlier.

I think what we think happened -- we don't really know, other than we think there was a subscriber management programs that was implemented where they simply churned off or wrote letters to subscribers and asked them to move to different rate plans more roamer-friendly or more profitable to them.

In terms of the drop from September to October, I think that is largely what happened; that and market share.

They emphasized in their marketing plan, they began emphasizing plans that just didn't offer as attractive a footprint (inaudible) roaming.

Even the carriers on a national basis that are losing market share, they are still turning on a tremendous amount of gross adds.

So you can affect the dynamics of your roaming, both incollect and outcollect, relatively quickly.

What was the first part of the question?

I was talking about the GSM, the expected lower GSM roaming yield you would get in '05 (multiple speakers) .

In fact we had this debate internally a few days ago.

If the shift from GSM is faster than we have modeled in the table, it will have only a nominal impact on the yield itself.

So yield is going to be pretty close to the table that we have put in the presentation, regardless of the shift.

The timing of it influences it a little bit.

But again the shift itself, in and of itself, will not have a dramatic impact on yield.

How different is the yield between TDMA and GSM?

The yield in GSM is slightly below the yield in TDMA today.

Is that kind of 20 percent magnitude, 30 percent?

Slightly, I don't know.

I don't have it in front of me.

But again, and I understand your needing to know the answer; but the yield itself is not going to shift dramatically from what we -- unless there is a dramatic change in the fundamentals of this business.

The yield itself in the table won't shift.

The shift between TDMA and GSM won't shift the yield.

I guess that is the best way to describe the answer.

It seems you're looking for ways to grow ARPU; and one of your peers, Western Wireless, has been pretty successful tapping the universal service fund.

I was wondering if you can give us an update on your plans for that?

We have made application in a handful of states for ETC status.

We're going through the process.

We have got another handful of states that we would like to or we are preparing an application, and we would like to see our ETC status approved as well.

We said in the past and we're still holding to this, although I wish I had a little more update to give you; but we have said in the past that we think that there may be as much as 12 to $15 million annualized ETC or USF fund, access to that fund in that amount.

That is our estimation at the top end.

In terms of this year we may start to receive somewhere near half that; again on an annualized or a run rate basis.

So it is not a significant impact on our business.

It is high profit margin, and I think it would affect -- assuming that those funds would flow to specific states, I think it would affect long-term our investment in those states.

So I think it is a good program for us.

It is good public policy and it is good for the rural communities where we operate.

So we are very supportive of it and we do think wireless is a better source and a better use of the USF funding, and we will lobby hard for it.

First of all, in broad brush, what percentage of your roaming minutes today come from markets in which AT&T offers either TDMA or GSM coverage, but Cingular offers nothing?

And vice versa what percentage comes in markets in which Cingular offers either TDMA or GSM, and AT&T offers nothing?

Did you guys get that?

Because I didn't.

Can you start at the first part?

I just want to understand, irrespective of all of the issues of noncompetes and preferential roaming and exclusivity, just looking at it in broad brush today, what percentage of your roaming minutes come in markets in which Cingular offers GSM or TDMA, but AT&T offers nothing?

And what percentage come in markets in which AT&T offers GSM or TDMA, and Cingular offers nothing?

In other words, what is the real match here between the two companies?

Are you asking from a combined AT&T Cingular, how many of our POPs overlap by their coverage?

By one but not the other.

In other words, in which one could at some point, even if it is five years from now, offer coverage to the other; and the other could offer.

On a stand-alone basis, in one of the charts, on a stand-alone basis AT&T overlaps us in about 2.0 million POPs.

And Cingular by itself overlaps us by about 2.2 million POPs.

Combined together it is not 4.2.

Everett, you had that at one point.

I think 3.8 is the incremental overlap by one or the other provider.

So in other words together they are 3.8 but separate they are -- am I missing?

4.4 separately, but 3.8 together.

So they have got some overlap between themselves.

So if measured by POPs it is only about 600,000 POPs?

Is that right?

And what about in terms of roaming minutes?

Is there a way to break it out that way?

That is what we have attempted to do, break out the forecast along the lines of what happened.

Again pursuant to the contracts, what happens in the event of an AT&T Cingular merger.

And the only roaming revenue we're going to lose is in a couple of markets where Cingular has a TDMA network where AT&T customers would start to use that network, presumably.

Again I say presumably because it is not certain, to me anyway, that they would automatically transition those TDMA customers over in a time frame that is relevant.

Again we are shifting from TDMA to GSM, so it becomes a moot point over a specific time.

That is right.

In our forecast that we provide, remember under the GSM world, AT&T and Cingular prefer each other first.

So our estimates have already assumed that those minutes as they go to GSM would be lost from our footprint.

Unlike after Q3 you didn't make quite as much today about a potential deceleration in roaming minute growth stemming from your lag in turning on GSM networks, as Cingular's base moved increasingly to GSM.

Was that just not a factor this quarter as much?

Yes, I don't think it affected the fourth quarter much at all.

It is really hard to say, because it is minutes that we don't see.

But intuitively when you see what the conversion of AT&T's TDMA to GSM transition was, which slowed down -- that was not -- we did not have a lot of our network that were seeing GSM roamers, essentially.

There weren't that many probably in the fourth quarter.

But I have got to tell you that transition is happening pretty rapidly.

Where we have lit up GSM we are starting to see significant growth in GSM minutes.

And that trend is going to continue the rest of this year and beyond.

Is there any way you can quantify the inflection point at which one of your roaming partners begins to prefer constructing its own cell site rather than paying you by the minute?

For example, how many minutes on average a day, let's say at 10 cents a minute, does it take before the payback period of building one's own cell site rather than roaming on Dobson become significant?

Is there any way to tie that back to your network?

To something about the average minutes on some of your cell sites or so forth.

That is an interesting question.

Lately we have not gone into that exercise, because lately we negotiated an agreement with AT&T that did not offer them a chance to make that determination in a practical sense.

Fortunately with Cingular they don't believe that 1900 spectrum in rural America is -- my view is Cingular doesn't believe 1900 spectrum in rural America is a suitable spectrum alternative, given the enormous capital cost to build those kind of networks.

When you step back and look, well what about the MSAs?

We already compete with Cingular in the biggest MSA, and that is in Youngstown.

It has not been an exercise that we have been focused on.

But in the past, yes, we have looked at that; what is the optimum or what is the highest rate that one might suggest is the rate at which they would rather roam than build?

It just varies so dramatically.

Again going forward I don't believe for us it is a relevant discussion in the big bulk of minutes.

That is not to say we have some areas where US Cellular and ALLTEL or somebody (indiscernible) in analog might look at it differently.

But it would be hard for me to sit here today and say this is the exact rate at which someone would be willing to roam versus build.

When you were talking earlier about the cost per gross add expectations for next year, it seemed like about 20 percent of that was customer retention.

Can you talk a little bit more about what that is composed of?

How that compares historically?

How much has it been impacted by number portability?

Also if you could, how that compares to your peer group?

I will let Doug talk about some of the programs that we have, but most of that cost really is associated with the cost of the phone.

That is the biggest piece of the cost.

But there are some others.

I mean overall the programs that we put out there, we are getting to customers at certain timelines in their life cycle.

We want to get them before the contract comes up and encourage them to come back online.

We have got certainly marketing costs; we do mailers and we do telemarketing out to our base, to give them an opportunity to choose us first and foremost.

We know it is a hypercompetitive environment.

There is certainly a lot of advertising going on.

So we want to get to the customers while they are still under contract, talk to them and give them an offer.

It winds up being, to Bruce's point, a handset subsidy more than anything else.

There's small commissions involved, but they are not typical new-customer commissions.

So it is marketing and it is handset subsidy.

You have got two roaming contracts, one with AWE and one with Cingular.

We talked a little bit about this before.

One is more beneficial to you, and one is more beneficial to the combined entity.

It seems like somewhere in the middle there is a negotiation.

Cingular, the combined entity is going to want to honor the most beneficial contract to them; and you're going to want to honor the most beneficial contract to you.

It seems like there is a legal fight in there, and maybe there is a negotiation between.

Are you prepared to meet them in the middle?

I don't know -- in any contract there is always an opportunity to re-evaluate, and relook at it, and see if the other party is willing to discuss the terms and condition that you previously agreed to.

So would we entertain a discussion if the Cingular folks called and asked to revisit it?

I am sure we would.

There is no question about that.

It is more relationship driven, and collectively I think we want to be the premier wireless network in the United States, speaking of GSM.

So that drives the relationship and the discussion more so than do we need or is there an opportunity to renegotiate the rate.

If we do what is right, I think we have an opportunity to increase market share in the GSM community.

And that to me is more important than anything we would sit down and discuss.

How can we do that collectively?

In terms of the rate, the contract itself is going to drive the discussion, and the contract is what it is.

As I said earlier I think when you balance all things that would go into the discussion, I think we have got a basis and a belief that it is only upside from here.

Raymond James.

First, earlier you talked about local number portability.

Can you talk a little bit about who you saw your customers that left you porting to?

Who was successful at grabbing customers?

Second, you talked a little bit about your call centers earlier.

We have seen now Sprint has joined Nextel in outsourcing.

So large companies are starting to outsource customer care and other things.

Have you thought about outsourcing?

Are there economies of scale or other benefits you could get from doing that?

Or is the offset on churn control something you wouldn't look at?

The third question, on the 200 to 250 new GSM standalone cell sites, is that in the CAPEX budget for actual physical towers?

Or are you thinking of colocating?

You mentioned American Tower and Crown Castle in one of the presentations.

The final question is on push to talk.

You were saying you hoped for intercarrier push to talk by the year end '04.

Is that a solution that comes through the handsets or the network or both?

Thanks.

Let me take a stab at it.

If I get lost, guys, help me out here.

In terms of on the port-out, who we lost subscribers to, there really was not any pattern.

Let me rephrase that.

The pattern went along the lines of market share in the respective markets, which is what you would expect.

In the case of Youngstown we took more customers from ALLTEL than we did anyone else; and ALLTEL took more customers from us than did anyone else.

But that is no shocker.

But beyond that their really wasn't a pattern.

In terms of customer care outsourcing, particularly offshore outsourcing, we have considered it in the past.

It is a tough call.

There are some opportunities to outsource portions of it.

But I am not necessarily a big believer that long-term it is in the strategic best interest of our company to do that.

We believe that we gain a lot by having regional call centers and the customer service centers as close as possible to the customers.

It is a philosophical belief.

But we are not going to ignore overwhelming cost advantages either as we explore some potential opportunities in the future.

I think the question was, in the towers, we won't own any towers next year.

We will do all build-to-suit essentially or colocates.

I think that is fair to say.

We won't own any new towers.

We will maintain our ownership.

Push to talk; what was the question on push to talk?

It deals with the intercarrier part.

That is a network-based solution.

So the users that we sign up for push to talk, and frankly what other carriers, the handsets that have the clients or the capability -- this is all back office network.

The same way that short message service, when it initially came out, you could only go between like subscribers on a particular network.

It is the same deal.

But the push to talk over cellular, the POC (ph) steering committee has outlined all the standards to do that.

It is just getting it all inked between all of the carriers.

So that will be a nice upgrade for the early adopters of push to talk as we go forward.

A question with regards to your strategy in the balance sheet.

You listed, in terms of your uses of free cash flow, acquisitions, reinvestment, paying down debt.

Given the fact that the free cash flow generation in the near-term will be much lower than I think most people had expected, could you perhaps rank those in order of priority, and in terms of your ability to seek alternative financings to continue to bring down debt on the balance sheet?

From a priority standpoint it is going to be what gives us the best return.

I can't say one is better than the other necessarily.

We will just see what opportunities come up.

In terms of alternatives, I think anything you can think of is an opportunity we would consider.

Again our goal is to balance reducing our overall debt levels that we have on our books or reducing the cost of our debt to create shareholder value.

That is the balance of the equation.

So depending on what alternatives are available and what their costs are, we will weigh the one that makes the most sense for the shareholder.

Do we have anybody on the phone holding to ask questions?

Daniel Lewis (ph), Citigroup.

Raj Patel (ph), Farallon Capital.

You talked about a 12 to 15 percent increase in gross adds for '04 while increasing distribution by 20 percent, having lots of new products attacking new market segments, and having GSM.

I am wondering why that 12 to 15 percent isn't higher?

Or if you are leading us to flattish kind of gross for the first half and really large percent gross for the second half of the year?

That is my first question.

In part you are right.

We don't get to the 12 to 15 percent.

We don't expect to see or we are not currently seeing a quote rebound in sales on the TDMA technology front.

So in looking at the yearly 12 to 15 percent, it does imply relatively flat gross adds the first quarter; and even into the second quarter in many of the markets.

Then after that we are probably being a little hesitant to say that the sales force and the team and everybody is going to be fully equipped and capable of getting completely ramped up in GSM, and hitting on all cylinders if you will day one.

So there is a little ramp up and build up to what I would call optimum GSM sales and distribution.

Okay.

The interest and dividend range you have given, is that assuming calling any securities?

I'm not really sure why there is such a large range.

Right, it assumes if we have an opportunity to call some of those instruments and refinance them at lower rates; that is basically the difference, obviously, if we can reprice our bank debt and lower that value.

So those are all of the elements that go into that range.

Is that top end of the range status quo?

Top end of the range is status quo.

You mentioned USF.

Is that in the numbers at all at this point?

Yes, we don't expect material amounts this year.

So yes, they are in the numbers.

The ARPU increase, is that for the whole year?

Or is that what you expect to exit '04 on?

That is for the year.

The $1.25 to $1.75 is for the full year.

Last question and probably the biggest, can you give us some guidance on similar to the chart in the back here for '05, as far as EBITDA and free cash?

At least some round, general ranges along those lines for '05?

We are going to be reluctant to do beyond what we have done in '05.

But I will remind you that I indicated that I think we can penetrate the market at the top third of the industry.

And I further said that that should put us I think in the 1 to 1.3 maybe 1.4 incremental growth per year; 1.4 percent incremental penetration growth premier on the top end; 1 percent would be probably more standard, more average.

And we would expect to do that in '05, so if you start to imply customers from that.

We would expect also to continue to grow ARPU into '05.

There is no reason for us to believe that with all the changes being created from GSM, particularly around data and higher value customers and your higher usage customers, all of those things wouldn't translate into -- and there is a little bit from USF potentially as well, but all of that should translate into a $1.25, $1.75 in '04.

We will see what happens toward the end of '04; but right now I would expect to see an increase into '05 as well.

Sam Martini (ph) , Cobalt Capital.

Just a quick overview of some of the stuff we have heard today.

Going back over the last couple of quarters we have seen EBITDA guidance come down very dramatically, significantly as you said in the press release, 100 million roughly from when these transactions with American Cellular were begun.

There have been some balance sheet improvements.

However we lever up every time we take EBITDA down, which aims to be a quarterly event.

Obviously we are being asked to take, to the question from the previous caller, we are being asked to make some fairly aggressive assumptions to get to an '05 number that gets us to a level where the financial risk is reasonably removed from this equity story.

Obviously the stock market agrees; the stock is down 35 percent; bonds are trading off meaningfully.

I think some of the call value is harder to enact now, given the free cash flow numbers have come down.

You put the company up for sale in the fall of 2001.

Could you please lay out for shareholders very simply over the timeline and the milestones that you have laid out -- Everett, you own 20 plus million shares;

I know you care -- at what point is this management team not capable of executing on this plan?

How do we realize the intrinsic fair value of this equity story, which will include cleaning up the credit and it will include making the stock price go up which comes very simply by growing cash flow?

Could you please give us some light onto that subject?

As well if you could give us any impression and your personal values of what you think this equity is worth?

The present value of future cash flows.

I think the best way to answer the question, Sam, I thought you were here.

You were here a few minutes ago.

I think the best way to answer the question is we are going to do it one day at a time with one customer at a time.

We are going to continue to execute in the fundamentals of the business in the manner in which we have laid out over the last few hours.

We think that translates into shareholder value.

We are going to continue to focus on relationships with our large roaming customers.

We are going to continue to focus on long-term contracts that takes the risk out of the equation.

We are going to continue to be upfront in terms of our disclosure to the investment community.

We want you to know -- we don't have anything to hide.

We want you to know what our strategy and our philosophies are.

We wish, obviously, that we would have been more accurate in October of last year in being able to predict what roaming revenue was going to be in the fourth quarter and was going to look like in '04.

But all of the information we had was the trend that Bruce showed on his slides where we were seeing year-over-year growth monthly, and clearly we look at it monthly.

Year-over-year growth in the 19 to 20 percent range, and suddenly it fell to negative growth in October.

Now it did bounce back a little bit in November and December, but again, that is what we look at, it's the way we operate our business, and we are going to continue to do it that way.

I think if you look at our track record, I think, Sam, you have been a shareholder for under a year, but if you look at this management's track record in terms of its operating performance and abilities over the last 10 years, then I think you would gain perhaps a little bit more comfort.

Well, I think that -- I hope you know that we have comfort.

However, there is going to be a question I think all logical shareholders are going to have to ask where last quarter we had this, today we are going through it again.

If EBITDA goes down quarterly, the credit becomes strained at some point over time.

I think that we can all pretty clearly do a sum of the parts or a breakup value or a competitive analysis and come up to a value that is meaningfully higher than a 4.73 stock price, which is where the stock is currently trading.

My question, I guess just to rephrase it is, is it next quarter, is it June '04?

At some point, something is not working.

Everett, to your point, the track record has been in many ways good.

However, I'm trying to look forward, and you have given us guidance today that it was down as you said significantly, down 25 percent, 20 percent.

At some point, the risk reward becomes questionable, and I want to know what management is prepared to do.

Is there a point in keeping with what you guys had announced in August of 2001, where it would make sense that you think you could realize value for shareholders more effectively by putting the company up for sale than it is by trying to fight the daily fight?

Thank you, Sam.

I hate to sound like a politician, but I don't think, like, what are we going to do in the event of failure?

This management team doesn't think along those lines either.

We are not thinking about what happens in June if we fail.

That is not in the cards.

We know how to run this business; we have been running it successfully for many years.

And we have done, I think, an incredible job over the last two or three months in assessing the market, the opportunity, putting our systems and networks in place.

So check me in June, and I am more than confident that in June we will be talking about some momentum that we have built in the marketplace that can translate into long-term sustainable growth and value creation.

We won't think anything differently.

As I look back over the course of the industry, yes, we did assess some strategic alternatives in 2001, but think about it.

That is when values were at their all-time greatest.

I don't think values are at their all-time greatest right now.

I think there is an opportunity to see long-term value in the wireless arena doing what we do in markets where we operate.

That is what we are about.

I hope you know that we agree.

On the other hand, I can also guarantee that come June if we're not having the conversation that we just discussed, that I probably won't be the only one asking this question.

F.R.

Bernhardt (ph) with Shenkman Capital.

Just had a question.

I'll be brief.

I have got a question, not a statement.

Everett, just give us comfort.

Given that roaming was a big surprise for you guys, a big hit, give us comfort that you guys have a handle on the right metrics now.

So that we know '04 you have to not revise that down.

For example the subscriber management programs, what metrics do you have looking forward that give you comfort, that give us comfort too?

Obviously it is a tough game right now.

As I said the best comfort that we can give you, and the metrics that are important for you for '04, are the ones that we laid out in the table and the analysis that we went into to come up with our forecast for the year.

It is still tough to predict other people's successes or lack therein.

And we need AT&T and Cingular to sell GSM phones and TDMA phones in the manner and the numbers that we forecast.

Having said that, I think if you take a step back and say, where is the comfort here?

The single most important development that, in my estimation, will impact the roaming dynamics this year and beyond is the inclusion of our footprint in their recent rate plans that they have come out with.

Both AT&T and Cingular.

I look back to, I guess it was 2000, 2001, I can not remember exactly when; but when AT&T launched its national digital one rate plan and included our footprint in those plans for TDMA, we saw an infusion of minutes.

In GSM AT&T has not included one cell site of Dobson Communications in their footprint prior to about two weeks ago.

It looks like they include it.

It is hard to say.

There are some plans that don't include us, but it looks like the bulk of their sales force are selling plans that do in fact include our footprint.

Likewise for Cingular.

Would be the motivation for them to do that, though?

I'm just curious.

If they were trying to cut the cost, why they didn't include it now?

Competitive pressures, quite frankly; and the rates are lower.

Obviously there is at some point, and we --.

Everett, what about October?

Were they not in the footprint in October?

They were not in the footprint in October.

What about your trends for January and February roaming?

Does it bear fruit to what you have just said, that they are in the plan, that they are their starting to come on?

In GSM?

It is hard to --

Just across the board, just roaming in general for January and February.

Roaming in general in January and February is trending in the same manner it was in the fourth quarter.

Do you guys feel that you have a handle on all the right shoes that are going to drop on this issue?

There's not going to be another conference call where you say well, the costs in subscriber management (multiple speakers) ?

The answer to that question is, yes.

We feel like we have analyzed it in the manner and we have described it in a manner and a level of detail that is analyzed it.

Obviously we worked hard on it.

So the answer to that question is clearly, yes.

I appreciate that.

Thank you very much.

There are no further phone questions.

Mr. Henry, I will turn the conference back over to you.

Got time for a couple more questions.

I just wonder for 2004 EBITDA estimate, do you assume the roaming revenue flowing to the EBITDA number?

Do we assume the roaming revenue flows to the EBITDA number?

Yes, I'm just trying to have a sense of the EBITDA breakdown between roaming revenue EBITDA and just local revenue EBITDA.

Do we assume 100 percent of the roaming revenue flows into EBITDA?

What assumptions do you use?

What we do is we build up our revenue streams and then look at our cost structure.

Certainly roaming revenue is a higher margin than the local business, because you don't have SG&A costs, you don't have sales and marketing cost.

But you do have network cost.

And we didn't really break those two streams down into an EBITDA number.

We looked at the revenue stream from roving, the revenue stream from local, and then our cost structure.

First, on 1900 MHz.

MPI in Alaska looked like strong roaming opportunities.

Are there any other initiatives in your footprint where 1900 MHz makes sense, where there may be spectrum available so you could grow that, for instance, T-Mobile roaming business?

A little bit.

There are a few little spot areas that there is that opportunity.

It is not significant, I will put it that way.

Alaska is the real opportunity in that area.

The second question is on the loss of Verizon roaming minutes in the quarter.

Did those minutes go CDMA?

Was there another carrier that captured the analog minutes?

Did someone all of a sudden turn on a CDMA site in those markets?

A little color there would be great.

In terms of the Verizon minutes, first of all we expect over time that Verizon minutes will disappear as more and more of them go to CDMA and there is less analog.

Certainly that was part of the decline.

But also in the fourth quarter Verizon in certain territories had made a decision not to include our footprint in some of their price plans.

So that was really the dramatic decline we saw from Verizon in the fourth quarter.

Everett, would you like to summarize and close for us?

Let's ask one more back there and then I will close it up.

When you look at your forecasts for the shift from TDMA to GSM getting towards 80 percent by the end of the year, can you just comment within both GSM and TDMA what you view the product mix as being?

Based on what you laid out on slide 86.

So maybe the percent that you view of GSM being local versus the national plan.

And then similarly on the TDMA side if there is a particular price point that you think is going to dominate the mix?

First off I would say that the expectation between TDMA and GSM on an annual basis is probably going to be still tilted towards TDMA when you annualize it.

So probably in the 55 percent range of TDMA and about 45 percent on GSM when you look out for the full year, because of the heavy TDMA in the first four or five months of the year.

Then when you look at GSM and you break it out, we still expect to sell the bulk of our GSM plans on our local plan.

So we would expect somewhere in the probably 45 to 55 percent range on local GSM.

Then the balance coming onto the national GSM plans.

I think that when you look at the TDMA rate plans that we're putting out there, once we launch GSM we expect those to be somewhere in the 8 to 12 percent range.

Finally I want to obviously thank everyone for their participation.

It has been a while since we have done an investor conference like this.

I think it is very healthy for everyone involved.

We look forward to future ones.

I also want to acknowledge everybody that put the conference on from our group.

Warren and Cindy and Theresa (ph) and everyone involved.

You did a fabulous job, pulled together a tremendous amount of information, brought it to New York, and I think you did a wonderful job.

Thanks, everyone.

This concludes today's conference.

Thank you for your participation.

You may disconnect at this time.