VALOR Communications Group, Inc. Reports Fourth Quarter and Fiscal Year 2005 Results

Exceeds 2005 Pro Forma Cash Available to Pay Dividends Guidance 


IRVING, Texas, Feb. 28  /PRNewswire-FirstCall/ -- VALOR Communications Group, Inc. (NYSE:VCG) today reported fourth quarter and fiscal year 2005 consolidated financial and operating results and will host a conference call today at 8:30 a.m. (EST) to discuss these results and its business.

   *  Pro forma CAPD of $36.3 million for the fourth quarter and
      $134.2 million for 2005.

   *  Adjusted EBITDA of $274 million and an Adjusted EBITDA margin of 54%
      for 2005.

   *  Average monthly revenue per access line (ARPU) of $79.63 in 2005, an
      increase of $2.56 over the prior year.

   *  Total access lines of 518,456 at December 31, 2005, a decrease of 4%
      over the prior year.

   *  52,759 DSL subscribers and 232,031 long distance customers at
      December 31, 2005, increases of 131% and 7%, respectively, over the
      prior year.



"I am pleased to report pro forma cash available to pay dividends of $134 million, which exceeded our 2005 pro forma guidance of $128-133 million," commented Jack Mueller, VALOR Communications Group, Inc. president and chief executive officer.  "Capital expenditures of $57 million came in favorable to guidance of approximately $59 million, and our pro forma payout ratio was 74.5% for 2005.  We more than doubled our DSL subscribers during 2005, exceeding our objectives for both DSL growth and availability.  Our DSL and long distance penetration rates were approximately 10% and 45%, respectively, at year-end."

Net income was $16.4 million in the fourth quarter of 2005, resulting in quarterly EPS (earnings per share) of $0.24 per share.  Excluding $3.3 million of merger-related expenses and the related tax effect incurred in the fourth quarter of 2005, net income was $18.8 million.  For full year 2005, net income was $35.3 million, resulting in annual EPS of $0.42 per share.  Excluding merger-related expenses of $3.3 million and the related tax effect, net income was $37.7 million for the full year.

For full year 2005, VALOR reported revenue of $506 million, essentially flat compared to 2004, despite access line losses of 4%.  Adjusted EBITDA of $274 million was also flat in 2005 compared to the prior year due to improved operating efficiencies, lower headcount and higher ARPU.

For 2005, revenue from data services, long distance and other increased 31.6%, 7.2% and 14.0%, respectively, due to increases in average subscribers and sales of equipment and services provided to wholesale carriers.  Revenue from local service, access and Universal Service Fund decreased 4.3%, 4.9% and 3.8%, respectively, for 2005 due primarily to lower access line count.  For the fourth quarter of 2005, revenues of $126 million were down 1.6% compared to $128 million in the prior year.

Total connections increased 1.4% in 2005 over the prior year.  The majority of VALOR's markets, or approximately 88% of its total access lines, do not have active cable-telephony competition.  In these markets, VALOR's access line loss was approximately 1.5% for the full year.

Merger with Alltel Wireline

"We continue to work with the wireline management team of Alltel to develop and implement integration plans to ensure an efficient transition.  We anticipate a smooth transition of back office systems due to our selection of Alltel's billing platform several years ago," commented Jack Mueller.  "In addition, we have received early termination of the waiting period related to the Hart-Scott-Rodino Antitrust Improvements Act and have received transfer of control approval from the Federal Communications Commission.  We have filed in all states where filing is required and continue to anticipate a mid-year closing of the transaction."

Other

VALOR recorded additional fourth quarter expenses of approximately $300,000 related to Hurricane Rita cleanup.  In addition, VALOR recorded approximately $1.1 million in impairment charges for goodwill related to a small wireless broadband service provider purchased to expand our data product line.  The company also recorded $2.3 million of non-cash stock based compensation expense.

Cash and cash equivalents at December 31, 2005 were $64.2 million. VALOR's net operating loss (NOL) position increased $13 million during 2005 to approximately $320 million.

VALOR's reportable distributions during calendar year 2005 have been classified as 100% Non-dividend Distribution (return of capital).  The Company recommends shareholders consult their tax advisors to determine what impact, if any, the above information may have on their tax situations.

Conference Call Information

As previously announced, the company will host a conference call and simultaneous Webcast to discuss fourth quarter and fiscal year 2005 results at 8:30 a.m. (EST) on Feb. 28, 2006.  During the conference call, VALOR may discuss and answer one or more questions concerning its business and financial matters as well as trends that affect the company.  VALOR's responses to these questions, as well as other matters discussed during the conference call, may contain information that has not been previously disclosed.

Simultaneously with the conference call, an audio webcast of the call will be available via a link on our website, http://www.valortelecom.com/ , "Investor Relations," or at http://www.earnings.com/ .  To access the call, dial 1-800-257-3401, or outside the United States, dial 1-303-262-2051.  A pass code is not required.  A replay of the call will be available beginning at approximately 10:30 a.m. (EST), Feb. 28, 2006, through Mar. 7, 2006, at the above websites or by calling 1-800-405-2236 or, outside the United States, 1-303-590-3000.  The pass code for the replay is 11052022#.

Non-GAAP Measures

VALOR uses certain non-GAAP financial measures in evaluating its performance and liquidity.  These include adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), Adjusted EBITDA margin and "Cash Available to Pay Dividends."  These non-GAAP financial measures are by definition not measures of financial performance under generally accepted accounting principles and are not alternatives to operating income or net income reflected in the statement of operations or to cash flow as reflected in the statement of cash flows and are not necessarily indicative of cash available to fund all cash flow needs.

VALOR presents Adjusted EBITDA because covenants in its credit facility contain ratios based on this measure.  A reconciliation of the differences between these non-GAAP financial measures to the most comparable financial measures calculated and presented in accordance with GAAP are included in the schedules that follow.

Adjusted EBITDA is defined in the credit facility as: (1) consolidated adjusted net income, as defined therein; plus (2) the following items, to the extent deducted from consolidated adjusted net income: (a) interest expense; (b) provision for income taxes; (c) depreciation and amortization; (d) certain expenses related to VALOR's initial public offering of common stock, its recent debt recapitalization and the other transactions described in "Use of Proceeds" in its registration statement for its initial public offering of common stock completed February 9, 2005; (e) other nonrecurring or unusual costs or losses incurred after the closing date of its new credit facility, to the extent not exceeding $10.0 million; (f) unrealized losses on financial derivatives recognized in accordance with SFAS No. 133; (g) losses on sales of assets other than in the ordinary course of business; and (h) all other non- cash charges that represent an accrual for which no cash is expected to be paid in a future period; minus (3) the following items, to the extent any of them increases consolidated adjusted net income; (v) income tax credits; (w) interest and dividend income (other than in respect of Rural Telephone Finance Cooperative patronage distribution); (x) gains on asset disposals not in the ordinary course of business; (y) unrealized gains on financial derivatives recognized in accordance with SFAS No. 133; and (z) all other non-cash income.

Adjusted EBITDA margin is equal to adjusted EBITDA divided by total revenue.  Adjusted EBITDA margin measures the proportion of Adjusted EBITDA remaining after deducting operating expenses.

Cash Available to Pay Dividends is defined herein as Adjusted EBITDA less the sum of (i) any item excluded from the calculation of Adjusted EBITDA that has been or will be settled in cash, (ii) cash interest expense, (iii) capital expenditures, (iv) required cash pension contributions in excess of expense, and (v) cash income taxes.

VALOR considers Adjusted EBITDA, Adjusted EBITDA margin and Cash Available to Pay Dividends (CAPD) as important indicators to investors in the company's common stock because CAPD provides information related to the company's ability to provide cash flows to service debt, fund capital expenditures and pay dividends.  If VALOR's Adjusted EBITDA were to decline below certain levels, covenants in its credit facility that are based on Adjusted EBITDA, including its interest coverage ratio and total leverage ratio covenants, may be violated and could cause, among other things, a default or mandatory prepayment under its credit facility, or result in its inability to pay dividends.  Adjusted EBITDA, Adjusted EBITDA margin and CAPD are not measures in accordance with GAAP, and should not be considered a substitute for operating income, net income or any other measure of financial performance reported in accordance with GAAP.  In addition, Adjusted EBITDA, Adjusted EBITDA margin and CAPD should not be used as a substitute for VALOR's various cash flow measures (e.g., operating, investing and financing cash flows).  The non-GAAP financial measures used by VALOR may not be comparable to similarly titled measures of other companies.

While VALOR utilizes these non-GAAP financial measures in managing and analyzing its business and financial condition and believes these measures are useful to management and to investors for the reasons described above, these non-GAAP financial measures have certain shortcomings.  In particular, Adjusted EBITDA does not represent the residual cash flow available for discretionary expenditures, since items such as debt repayments and interest payments are not deducted from such measure.  Management compensates for the shortcomings of these measures by utilizing them in conjunction with their comparable GAAP financial measures.  The information in this press release should be read in conjunction with the financial statements and footnotes contained in documents filed periodically with the U.S. Securities and Exchange Commission.

About VALOR Communications Group

VALOR Communications Group is one of the largest providers of telecommunications services in rural communities in the southwestern United States.  The company, through its subsidiary VALOR Telecom, offers to residential, business and government customers a wide range of telecommunications services, including: local exchange telephone services, which covers basic dial-tone service as well as enhanced services, such as caller identification, voicemail and call waiting; long distance services; and data services, such as providing digital subscriber lines.  VALOR Communications Group is headquartered in Irving, Texas.  For more information, visit http://www.valortelecom.com/ .  Information contained on our website does not comprise a part of this press release.

VALOR Communications Group ("VALOR") is a holding company and has no direct operations.  VALOR was formed for the sole purpose of reorganizing the company's corporate structure and consummation of our initial public offering in February 2005.  VALOR's principal assets are the direct and indirect equity interests in its subsidiaries.  As a result, the historical consolidated financial results prior to the offering in February 2005 only reflect the operations of VALOR Telecommunications, LLC.

Safe Harbor Statement

Certain matters discussed in this press release may constitute "forward- looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995.  Words such as "believes," "anticipates," "expects," "intends," "estimates," "projects, " "outlook" and other similar expressions, which are predictions of or indicate future events and trends, typically identify forward-looking statements.  Statements in this press release regarding VALOR Communications Group's business that are not historical facts, including our intention to pay quarterly dividends, are forward-looking statements.  Forward-looking statements involve risks and uncertainties that could cause actual results or the timing of events to differ materially from those described in the forward-looking statements.  We cannot assure you that the expectations discussed in these forward-looking statements will be attained.  Some of the factors that could cause actual results or the timing of certain events to differ from those described in these forward-looking statements include, without limitation: our leverage and debt service obligations; the terms of our credit facility and our rights and obligations thereunder; any adverse changes in government regulation; the risk that we may not be able to retain existing customers or obtain new customers; the risk of increased competition in the markets we serve; our financial position, results of operations and availability of capital; risks associated with the impending merger with Alltel Wireline, including but not limited to, the risk that the anticipated benefits from the merger may not be realized, integration-related risks and challenges that could negatively impact operations and financial results, the risk that regulatory agencies could delay or impose conditions on approval of the merger, which may diminish the anticipated benefits of the merger and other risks detailed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, the risks described in our proxy statement/prospectus-information statement dated February 28, 2006, relating to our merger with Alltel Wireline and in our Annual Report on Form 10-K filed on February 28, 2006 with the Securities and Exchange Commission.  We disclaim any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, the occurrence of future events or otherwise, except as required by law.

   Supplemental Schedules
   Consolidated Statements of Operations                                 A
   Condensed Consolidated Balance Sheets                                 B
   Condensed Consolidated Statements of Cash Flows                       C
   Non-GAAP Measures - Adjusted EBITDA Calculation                       D
   Non-GAAP Measures - Cash Available to Pay Dividends Reconciliation    E
   Historical Operating Statistics                                       F



   Schedule A
   VALOR Communications Group, Inc.
   Consolidated Statements of Operations
   (Dollars, except per share amounts, in thousands)
   (Unaudited)

                              Three months ended      Twelve months ended
                                  December 31,            December 31,
                                2005       2004         2005        2004
  Operating revenues
    Local service              $37,171   $42,099      $151,549    $158,404
    Data services                9,155     6,647        33,209      25,239
    Long distance services      10,021    10,177        41,109      38,350
    Access services             29,450    30,537       120,682     126,838
    Universal Service Fund      28,678    29,286       115,540     120,045
    Other services              11,465     9,285        43,805      38,434
      Total operating
       revenues                125,940   128,031       505,894     507,310

  Operating expenses
    Cost of service
     (exclusive of
     depreciation and
     amortization shown
     separately below)          26,418    26,230       107,581     104,934
    Selling, general and
     administrative
     (exclusive of non-cash
     stock compensation shown
     separately below)          30,209    37,361       126,946     137,459
    Non-cash stock based
     compensation                2,287     1,345        12,699       1,345
    Asset impairment             1,082       ---         1,696         ---
    Depreciation and
     amortization               22,744    22,458        89,928      86,451
      Total operating
       expenses                 82,740    87,394       338,850     330,189

  Operating income              43,200    40,637       167,044     177,121
  Operating margin               34.3%     31.7%         33.0%       34.9%

  Other income (expense)
    Interest expense           (18,428)  (26,903)      (83,154)   (110,287)
    Loss on interest rate
     hedging arrangements          (21)       (4)         (399)       (126)
    Earnings from
     unconsolidated cellular
     partnerships                  214       106           421       1,113
    Impairment on investment
     in cellular partnerships      ---       ---        (2,339)     (6,678)
    Loss on debt
     extinguishment                ---   (62,975)      (29,262)    (62,975)
    Other income and
     (expense), net             (2,799)      (56)       (1,898)    (25,116)
      Total other income
       (expense)               (21,034)  (89,832)     (116,631)   (204,069)

  Income (loss) before income
   taxes, minority interest
   and cumulative effect of
   change in accounting
   principle                    22,166   (49,195)       50,413     (26,948)

  Income tax expense             5,477     6,760        14,329         665

  Income (loss) before
   minority interest and
   cumulative effect of
   change in accounting
   principle                    16,689   (55,955)       36,084     (27,613)

  Minority interest                ---    (3,029)          468         142

  Income (loss) before
   cumulative effect of
   change in accounting
   principle                    16,689   (52,926)       35,616     (27,755)

  Cumulative effect of change
   in accounting principle,
   net of tax of $156              269       ---           269         ---

  Net income (loss)            $16,420  $(52,926)      $35,347    $(27,755)


  Earnings per share-basic:
    Earnings per share before
     cumulative effect of
     accounting change           $0.24       n/m         $0.42 *       n/m
    Loss per share from
     cumulative effect of
     accounting change             ---       n/m          $--- *       n/m
    Earnings per share           $0.24       n/m         $0.42 *       n/m

  Earnings per share-diluted:
    Earnings per share before
     cumulative effect of
     accounting change           $0.24       n/m         $0.42 *       n/m
    Loss per share from
     cumulative effect of
     accounting change             ---       n/m        $(0.01)*       n/m
    Earnings per share           $0.24       n/m         $0.41 *       n/m

  Weighted average common
   shares outstanding:
    Basic                   69,372,369       n/m    69,368,333 *       n/m
    Diluted                 69,620,880       n/m    69,666,018 *       n/m

   *  Represents earnings per share and weighted average shares outstanding
      for the period from the initial public offering date of February 9,
      2005 through December 31, 2005.

   n/m = not meaningful



   Schedule B
   VALOR Communications Group, Inc.
   Condensed Consolidated Balance Sheets
   (Dollars in thousands)
   (Unaudited)

                                       December 31, 2005  December 31, 2004

  ASSETS
  Cash & cash equivalents                    $64,178            $17,034
  Accounts receivable, net                    59,973             62,757
  Prepayments and other current assets        11,724             10,221
  TOTAL CURRENT ASSETS                       135,875             90,012

  NET PROPERTY, PLANT AND EQUIPMENT          717,529            749,984

  INVESTMENTS AND OTHER ASSETS             1,109,377          1,131,171

  TOTAL ASSETS                            $1,962,781         $1,971,167


  LIABILITIES AND EQUITY
  Total current liabilities                 $100,259            $74,916
  Long-term debt, net of current
   maturities                              1,180,555          1,599,177
  Other long-term liabilities                110,199            290,603
  TOTAL LIABILITIES                        1,391,013          1,964,696

  TOTAL STOCKHOLDERS' EQUITY                 571,768              6,471

  TOTAL LIABILITIES AND EQUITY            $1,962,781         $1,971,167



   Schedule C
   VALOR Communications Group, Inc.
   Condensed Consolidated Statements of Cash Flows
   (Dollars in thousands)
   (Unaudited)

                                  Three months ended    Twelve months ended
                                      December 31,          December 31,
                                    2005       2004      2005        2004

  Cash flow from operating
   activities:
     Net income (loss)            $16,420    $(52,926)  $35,347    $(27,755)
     Adjustments to reconcile net
      income (loss) to net cash
      provided by operating
      activities:
       Depreciation and
        amortization               22,744      22,458    89,928      86,451
       Loss on debt
        extinguishment                ---      62,975    29,262      62,975
       Expense incurred related
        to cash payment to
        minority shareholders in
        connection with
        reorganization                ---         ---       ---      17,988
       Non-cash stock
        compensation expense        2,287       1,345    12,699       1,345
       Asset impairment             1,082         ---     1,696         ---
       Impairment on investment
        in cellular partnerships      ---         ---     2,339       6,678
       Cumulative effect of
        change in accounting
        principle, net of tax         269         ---       269         ---
       Changes in working capital   2,686     (17,173)    2,919      (6,069)
       Other, net                   9,584       1,743    16,632       2,103
         Net cash provided by
          operating activities     55,072      18,422   191,091     143,716

  Cash flow from investing
   activities:
    Payments for property, plant
     and equipment                (12,341)    (14,005)  (57,385)    (65,525)
    Redemption of RTFC capital
     certificate                      ---      31,111    24,445      31,111
    Other, net                        (22)         32       203        (444)
      Net cash provided by (used
       in) investing activities   (12,363)     17,138   (32,737)    (34,858)

  Cash flow from financing
   activities:
    Proceeds from issuance of
     long-term debt                   ---   1,300,000   400,000   1,359,000
    Payments of long-term debt,
     net of proceeds from
     issuance of debt                 (64) (1,104,902) (820,364) (1,223,249)
    Proceeds from issuance of
     common stock, net of
     offering costs                   (65)        ---   411,257         ---
    Prepayment fees paid in
     connection with IPO              ---         ---   (19,393)        ---
    Payments of debt issuance
     costs                           (149)    (31,206)  (17,530)    (31,330)
    Cash dividends paid           (24,974)        ---   (62,433)        ---
    Cash payment to minority
     interest holders in
     connection with
     reorganization                   ---         ---       ---     (18,646)
    Prepayment fees paid in
     connection with the
     repayment of debt                ---     (11,376)      ---     (11,376)
    Redemption of redeemable
     preferred interests              ---    (134,102)      ---    (134,102)
    Redemption of Class C
     interests                        ---     (16,458)      ---     (16,458)
    Redemption of redeemable
     preferred interests in
     subsidiary                       ---      (8,791)      ---      (8,791)
    Other, net                        ---     (12,336)   (2,747)     (8,273)
      Net cash used in financing
       activities                 (25,252)    (19,171) (111,210)    (93,225)

  Net increase in cash and cash
   equivalents from continuing
   operations                      17,457      16,389    47,144      15,633

  Net operating cash provided by
   (used in) discontinued
   operations                         ---           4       ---         (13)

  Net increase in cash and cash
   equivalents                     17,457      16,393    47,144      15,620

  Cash and cash equivalents at
   beginning of period             46,721         641    17,034       1,414

  Cash and cash equivalents at
   end of period                  $64,178     $17,034   $64,178     $17,034



   Schedule D
   VALOR Communications Group, Inc.
   Non-GAAP Measures - Adjusted EBITDA Calculation
   (Dollars in thousands)
   (Unaudited)

                                     Three months ended  Twelve months ended
                                        December 31,        December 31,
                                       2005      2004      2005      2004

  Net income (loss)                   $16,420  $(52,926)  $35,347  $(27,755)
  Adjustments:
        Income tax expense              5,477     6,760    14,329       665
        Interest expense               18,428    26,903    83,154   110,287
        Depreciation and amortization  22,744    22,458    89,928    86,451
        Minority interest                 ---    (3,029)      468       142
        Cumulative effect of change
         in accounting principle, net
         of tax                           269       ---       269       ---
        Loss on interest rate hedging
         arrangements                      21         4       399       126
        Earnings from unconsolidated
         cellular partnerships           (214)     (106)     (421)   (1,113)
        Asset impairment                1,082       ---     1,696       ---
        Impairment on investment in
         cellular partnerships            ---       ---     2,339     6,678
        Other income and (expense),
         net                            2,799        56     1,898    25,116
        Loss on debt extinguishment       ---    62,975    29,262    62,975
        Management fees paid to
         equity sponsors                  ---       250       ---     1,000
        Non-cash stock based
         compensation                   2,287     1,345    12,699     1,345
        Excluded items (a)                282     3,862     3,040     9,141

  Total adjustments                    53,175   121,478   239,060   302,813

  Adjusted EBITDA                     $69,595   $68,552  $274,407  $275,058


  (a) Excluded items, as defined in
    the credit agreement:
        Termination benefits
         associated with workforce
         reduction                       $---      $346      $---      $625
        2003 expanded local calling
         surcharge recorded in 2004       ---    (1,602)      ---    (1,602)
        Bonuses related to debt
         recapitalization                 ---     5,118       ---     5,118
        CEO transition payment            ---       ---       ---     5,000
        IPO cash bonuses                  282       ---     2,540       ---
        Expenses related to credit
         facility amendment               ---       ---       500       ---

  Total excluded items, as defined in
   the credit agreement                  $282    $3,862    $3,040    $9,141



   Schedule E
   VALOR Communications Group, Inc.
   Non-GAAP Measures - Cash Available to Pay Dividends Reconciliation
   (Dollars in thousands)
   (Unaudited)

                         Three      Three      Three      Three      Twelve
                         months     months     months     months     months
                         ended      ended      ended      ended      ended
                        March 31,  June 30,  Sept. 30,   Dec. 31,   Dec. 31,
                          2005       2005       2005       2005       2005

  Net cash provided by
   operating activities  $40,489   $58,188    $37,342    $55,072   $191,091
  Adjustments:
      Interest expense    26,048    18,864     19,814     18,428     83,154
      Amortization of
       debt issuance
       costs                (910)     (942)      (921)      (917)    (3,690)
      Provision for
       doubtful
       accounts
       receivable         (1,093)   (1,358)    (1,795)    (1,827)    (6,073)
      Changes in
       working
       capital             3,824    (4,358)       301     (2,686)    (2,919)
      Other, net          (2,020)     (588)    12,070     (1,711)     7,751
      Income tax
       expense
       (benefit)          (5,437)    7,809      6,480      5,477     14,329
      Deferred income
       taxes               5,437    (7,771)    (6,518)    (5,322)   (14,174)
      Other income and
       (expense), net        (83)     (518)      (300)     2,799      1,898
      Excluded items (a)   2,193       283        282        282      3,040

  Total adjustments       27,959    11,421     29,413     14,523     83,316

  Adjusted EBITDA (b)     68,448    69,609     66,755     69,595    274,407

  Items excluded from
   Adjusted EBITDA
   settled in cash:
      Cash income
       (expenses)
       excluded from
       Adjusted
       EBITDA (c)         (2,110)      235         18     (3,081)    (4,938)
      Cash interest
       expense           (26,451)  (18,201)   (19,041)   (19,588)   (83,281)
      Cash pension
       contributions
       in excess of
       estimated
       expense (d)           ---    (1,600)    (1,566)    (1,600)    (4,766)
      Capital
       expenditures      (17,379)  (12,510)   (15,155)   (12,341)   (57,385)

  Cash available to pay
   dividends (b)         $22,508   $37,533    $31,011    $32,985   $124,037

  Pro forma adjustments:
  Transaction fees
   expensed (e)              500       ---        ---        ---        500
  Merger costs (f)           ---       ---        ---      3,306      3,306
  Cash interest (g)        6,500       ---        ---        ---      6,500
  Cash taxes (h)            (100)      ---        ---        ---       (100)

  Pro forma - cash
   available to pay
   dividends             $29,408   $37,533    $31,011    $36,291   $134,243


  (a) Excluded items,
  as defined in the
  credit agreement:
      IPO cash bonuses    $1,693      $283       $282       $282     $2,540
      Expenses related
       to credit
       facility
       amendment             500       ---        ---        ---        500

  Total excluded items,
   as defined in the
   credit agreement       $2,193      $283       $282       $282     $3,040

   (b) Adjusted EBITDA and Cash Available to Pay Dividends are non-GAAP
   financial measures and by definition are not measures of financial
   performance under generally accepted accounting principles (GAAP). They
   should not be considered an alternative to operating income (loss) or net
   income (loss) reflected in the statement of operations or to cash flow as
   reflected in the statement of cash flows and are not necessarily
   indicative of cash available to fund all cash flow needs.

   (c) Represents cash income (expenses) reflected above under Other income
   and expense, net, and Excluded items that were excluded from the
   calculation of Adjusted EBITDA.  These items were received or (paid) by
   us in cash and would have impacted the amount of cash that would have
   been available to pay dividends.

   (d) Reflects our previously disclosed accelerated funding requirements to
   our pension plan in 2005.  This accelerated funding requirement consists
   of our $1.6 million contributions in each of April and July of 2005.
   CAPD excludes the optional pension payments of $6.0 million funded in
   September of 2005.  This optional payment is treated similarly as the
   optional debt repayments in the CAPD calculation.

   (e) Legal expenses charged to expense in connection with the modification
   of our credit facility that we completed in conjunction with our IPO and
   reorganization.

   (f) Costs charged to expenses in connection with the pending Alltel
    merger.

   (g) Cash interest expense in the quarter ended March 31, 2005 is
   approximately $6.5 million higher than it would have been had the IPO and
   the related debt reduction occurred at the beginning of the quarter.

   (h) Reflects estimated cash taxes we expect to pay on our taxable income.



   Schedule F

   Historical Operating Statistics

                               12/31/05  9/30/05  6/30/05  3/31/05 12/31/04
  Access lines:
    Primary                     468,225  474,723  480,717  488,165  493,314
    Secondary                    50,231   49,979   49,537   48,837   47,023
        Total access lines (A)  518,456  524,702  530,254  537,002  540,337

  Long distance subscribers     232,031  229,530  227,347  222,874  216,437
    Penetration rate of total
     access lines                   45%      44%      43%      42%      40%
  DSL subscribers (B)            52,759   47,309   40,144   31,208   22,884
    Penetration rate of total
     access lines                   10%       9%       8%       6%       4%
    Penetration rate of total
     addressable lines (1)          14%      13%      11%       9%       8%
  Total connections (A+B)       571,215  572,011  570,398  568,210  563,221
  Average monthly revenue per
   access line (ARPU) (2) (3)    $80.49   $80.86   $78.75   $77.92   $78.43

   (1) Addressable lines are lines that have DSL service available.
   (2) ARPU is computed by dividing the total revenue for the quarter by the
   average of the access lines at the beginning and end of the quarter.
   (3) ARPU for quarter ending 12/31/04 includes out-of-period revenue
   recorded in the fourth quarter 2004 from the favorable resolution of a
   regulatory proceeding Valor had pending before the Texas Public Utility
   Commission related to expanded local calling.  Excluding ELC recovery
   revenue, ARPU is $76.31


DATASOURCE: VALOR Communications Group, Inc.



CONTACT:  investor relations, Keith Terreri or Sheryl Seyer,

[phone], or fax, [phone], or

 , or media, Cynthia T. Cruz,

[phone], or fax, [phone], or  , all of

VALOR Communications Group, Inc.



Web site:  http://www.earnings.com/ 

Web site:  http://www.valortelecom.com/ 

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