VALOR Communications Group, Inc. Reports Third Quarter 2005 Operating Results

Affirms Pro Forma CAPD Guidance of $128 Million to $133 Million for 2005; Reports Continued DSL and Long Distance Penetration Increases 


IRVING, Texas, Nov. 7  /PRNewswire-FirstCall/ -- VALOR Communications Group, Inc. (NYSE:VCG) today reported third quarter 2005 consolidated operating results and will host a conference call tomorrow at 11 a.m. (EST) to discuss these results and its business.  Highlights for the quarter include:

   *  Affirmed previously issued guidance for full year pro forma Cash
      Available to Pay Dividends (CAPD) of $128 million to $133 million;

   *  DSL subscribers increased 186% over the prior year to 47,309;

   *  Long distance subscribers increased 7.2% over the prior year to
      229,530;

   *  Average monthly revenue per access line increased 5.5% over the prior
      year to $80.86;

   *  Generated CAPD of $31.0 million; pro forma CAPD year to date of
      $98.0 million;

   *  Increased total connections, defined as total access lines plus DSL
      subscribers, by 1.3% over the prior year to 572,011 total connections.



"We continued to add high-value DSL subscribers and increased DSL penetration of total access lines to 9%.  Based on access lines with DSL service available, or addressable lines, the penetration rate was 13% at the end of the quarter.  Due to the success of our DSL program, we accelerated our DSL rollout in the third quarter and now have 71% DSL availability, exceeding our year-end target of 70%," said Jack Mueller, VALOR Communications Group president and chief executive officer.  "We see continued opportunities for growth in DSL subscribers, as well as long distance, which reached 44% penetration in the quarter."

"Average revenue per access line increased by nearly 3% sequentially in the third quarter -- to $80.86 -- and by 5.5% compared to a year ago," said Mueller.  "And we maintained our year-to-date adjusted EBITDA margins despite declines in revenues related to access line losses and $0.3 million of additional expense due to cleanup efforts associated with Hurricane Rita."

"Last month we welcomed Jerry Vaughn to VALOR as our new chief financial officer and we congratulated Grant Raney, who was named chief operating officer," continued Mueller.  "We are pleased to have expanded our executive team's capacity to strategically manage our business in this competitive telecommunications environment, and we look forward to continuing to execute on our focused strategy."

Net income more than doubled to $13.3 million in the third quarter of 2005 over the prior year, resulting in EPS of $0.19 per share.  Cash and cash equivalents at September 30, 2005 were $46.7 million.

Increases in revenue from data services and long distance of 33.3% and 5.5%, respectively, as well as revenue generated from equipment sales, led to a 1.0% increase in operating revenues in the third quarter of 2005 over the prior year.  Local service and universal service revenues decreased by 3.1% and 7.2%, respectively, over the prior year due to a decrease in access lines.

Total connections increased by 0.3% sequentially and 1.3% over the prior year while total access lines decreased 1% sequentially, and 4.2% over the prior year.  The majority of VALOR's markets, or 88% of its total access lines, do not have active cable-telephony competition.  In these non-active cable telephony markets, VALOR's year-to-date access line losses are less than 1%.  Active cable telephony markets represent more than 70% of the year-to- date line losses.  VALOR continues to compete aggressively in all markets with targeted marketing programs and win-back strategies.

Other

In the quarter, VALOR recognized a $2.3 million impairment charge related to investments in its unconsolidated cellular partnerships and a $0.6 million impairment charge on its long-lived assets that were damaged as a result of Hurricane Rita.  The company also recorded $2.1 million of non-cash stock based compensation expense.

As previously disclosed, an optional prepayment of $10 million was made on VALOR's credit facility.  This brings year-to-date debt repayments to $30 million, excluding repayments the company made in conjunction with its IPO and reorganization.  VALOR also entered into two additional interest rate protection agreements.  These agreements bring the percentage of the company's outstanding debt that is not exposed to interest rate volatility to 78% for the next three years.  In August, VALOR renegotiated its credit facility, lowering the spread to LIBOR +1.75% from LIBOR +2.00%.  This will result in a $1.8 million annual decrease in interest expense.

VALOR made cash contributions to its defined benefit pension plan totaling $14.1 million in the third quarter, including a $6.0 million optional contribution, which fully funded the plan on a current liability basis as of January 1, 2005 for the 2005 plan year.  As a result, further cash contributions to the plan will not be required until 2007.

In August 2005, VALOR completed an exchange offer for the outstanding $400 million 7.75% Senior Notes issued in conjunction with its earlier reorganization.

2005 Outlook

For the full year 2005, VALOR maintains its expectations of cash available to pay dividends, as defined herein, of $128 million to $133 million on a pro forma basis.  The company continues to expect full year 2005 capital expenditures of approximately $59 million.

Conference Call Information

As previously announced, the company will host a conference call and simultaneous Webcast to discuss third quarter results at 11 a.m. (EST) on Nov. 8, 2005.  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 web site, http://www.valortelecom.com/ , "Investor Relations," or at http://www.earnings.com/ .  To access the call, dial 1-800-218-8862, or outside the United States, dial 1-303-262-2194.  A pass code is not required.  A replay of the call will be available beginning at approximately 1 p.m. (EST), Nov. 8, 2005, through Nov. 15, 2005, at the above web sites or by calling 1-800-405-2236 or, outside the United States, 1-303-590-3000.  The pass code for the replay is 11041207#.

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) 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; (y) unrealized gains on financial derivatives recognized in accordance with SFAS No. 133; and (z) all other non-cash income.

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 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 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 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.

This press release includes management's estimate of pro forma CAPD for the year ending December 31, 2005.  VALOR believes the most directly comparable GAAP measure would be "Net cash provided by operating activities." Due to the difficulty in forecasting and quantifying the amounts that would be required to be included in this comparable GAAP measure, VALOR is not providing an estimate of net cash provided by operating activities for the year ending December 31, 2005 at this time.

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 and our 2005 outlook, 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; 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 Prospectus dated July 1, 2005, relating to our senior notes exchange offer and in our Annual Report on Form 10-K filed on March 31, 2005 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 Income                                     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 Income
   (Dollars, except per share amounts, in thousands)
   (Unaudited)

                                              Three months ended
                                                 September 30,
                                               2005       2004     % Change
  Operating revenues
    Local service                             $37,594    $38,783      -3.1%
    Data services                               8,656      6,492      33.3%
    Long distance services                     10,572     10,018       5.5%
    Access services                            30,842     30,625       0.7%
    Universal Service Fund                     28,241     30,444      -7.2%
    Other services                             12,055     10,269      17.4%
      Total operating revenues                127,960    126,631       1.0%

  Operating expenses
    Cost of service (exclusive of
     depreciation and amortization shown
     separately below)                         29,092     26,674       9.1%
    Selling, general and administrative        32,395     31,915       1.5%
    Non-cash stock based compensation           2,069        ---       n/a
    Asset impairment                              614        ---       n/a
    Depreciation and amortization              22,460     22,022       2.0%
      Total operating expenses                 86,630     80,611       7.5%

  Operating income                             41,330     46,020     -10.2%
  Operating margin                              32.3%      36.3%

  Other income (expense)
    Interest expense                          (19,814)   (28,289)    -30.0%
    Gain (loss) on interest rate hedging
     arrangements                                 178        (85)   -309.4%
    Earnings from unconsolidated
     cellular partnerships                        146        339     -56.9%
    Impairment on investment in cellular
     partnerships                              (2,339)    (6,678)    -65.0%
    Loss on debt extinguishment                   ---        ---       n/a
    Other income and (expense), net               300     (6,703)   -104.5%
      Total other income (expense)            (21,529)   (41,416)    -48.0%

  Income from continuing operations
   before income taxes
   and minority interest                       19,801      4,604     330.1%

  Income tax expense (benefit)                  6,480     (2,029)   -419.4%

  Income from continuing operations
   before minority interest                    13,321      6,633     100.8%

  Minority interest                               ---        367    -100.0%

  Net income                                  $13,321     $6,266     112.6%

  Earnings per share:
    Basic                                       $0.19        n/m
    Diluted                                     $0.19        n/m

  Weighted average common shares
   outstanding:
    Basic                                  69,370,344        n/m
    Diluted                                69,552,976        n/m



                                             Nine months ended
                                                September 30,
                                             2005         2004     % Change
  Operating revenues
    Local service                          $114,378     $116,305     -1.7%
    Data services                            24,054       18,592     29.4%
    Long distance services                   31,088       28,173     10.3%
    Access services                          91,232       96,301     -5.3%
    Universal Service Fund                   86,862       90,759     -4.3%
    Other services                           32,340       29,149     10.9%
      Total operating revenues              379,954      379,279      0.2%

  Operating expenses
    Cost of service (exclusive of
     depreciation and amortization
     shown separately below)                 81,163       78,704      3.1%
    Selling, general and administrative      96,737      100,098     -3.4%
    Non-cash stock based compensation        10,412          ---      n/a
    Asset impairment                            614          ---      n/a
    Depreciation and amortization            67,184       63,993      5.0%
      Total operating expenses              256,110      242,795      5.5%

  Operating income                          123,844      136,484     -9.3%
  Operating margin                            32.6%        36.0%

  Other income (expense)
    Interest expense                        (64,726)     (83,384)   -22.4%
    Gain (loss) on interest rate
     hedging arrangements                      (378)        (122)   209.8%
    Earnings from unconsolidated
     cellular partnerships                      207        1,007    -79.4%
    Impairment on investment in
     cellular partnerships                   (2,339)      (6,678)   -65.0%
    Loss on debt extinguishment             (29,262)         ---      n/a
    Other income and (expense), net             901      (25,060)  -103.6%
      Total other income (expense)          (95,597)    (114,237)   -16.3%

  Income from continuing operations
   before income taxes
   and minority interest                     28,247       22,247     27.0%

  Income tax expense (benefit)                8,852       (6,095)  -245.2%

  Income from continuing operations
   before minority interest                  19,395       28,342    -31.6%

  Minority interest                             468        3,171    -85.2%

  Net income                                $18,927      $25,171    -24.8%

  Earnings per share:
    Basic                                     $0.18 *        n/m
    Diluted                                   $0.18 *        n/m

  Weighted average common shares
   outstanding:
    Basic                                69,366,739 *        n/m
    Diluted                              69,686,542 *        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 September 30, 2005.
      n/m = not meaningful



   Schedule B

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

                                             September 30,      December 31,
                                                  2005              2004
  ASSETS
  Cash & cash equivalents                        $46,721           $17,034
  Accounts receivable, net                        59,503            62,757
  Prepayments and other current assets             9,057            10,221
  TOTAL CURRENT ASSETS                           115,281            90,012

  NET PROPERTY, PLANT AND EQUIPMENT              727,315           749,984

  INVESTMENTS AND OTHER ASSETS                 1,109,504         1,131,171

  TOTAL ASSETS                                $1,952,100        $1,971,167

  LIABILITIES AND EQUITY
  Total current liabilities                      $96,369           $74,916
  Long-term debt, net of current maturities    1,180,555         1,599,177
  Other long-term liabilities                     99,245           290,603
  TOTAL LIABILITIES                            1,376,169         1,964,696

  TOTAL STOCKHOLDERS' EQUITY                     575,931             6,471

  TOTAL LIABILITIES AND EQUITY                $1,952,100        $1,971,167



   Schedule C

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

                                      Three months ended  Nine months ended
                                         September 30,      September 30,
                                         2005     2004      2005     2004
  Cash flow from operating activities:
     Net income                         $13,321   $6,266   $18,927  $25,171
     Adjustments to reconcile net
      income to net cash provided by
      operating activities:
       Depreciation and amortization     22,460   22,022    67,184   63,993
       Loss on debt extinguishment          ---      ---    29,262      ---
       Expense incurred related to
        cash payment to minority
        shareholders in connection
        with reorganization                 ---      ---       ---   17,988
       Non-cash stock compensation
        expense                           2,069      ---    10,412      ---
       Asset impairment                     614      ---       614      ---
       Impairment on investment in
        cellular partnerships             2,339    6,678     2,339    6,678
       Changes in working capital          (301)  12,002       233   11,104
       Other, net                        (3,160)  (2,338)    7,048      360
         Net cash provided by
          operating activities           37,342   44,630   136,019  125,294

  Cash flow from investing activities:
     Payments for property, plant
      and equipment                     (15,155) (15,757)  (45,044) (51,520)
     Redemption of RTFC capital
      certificate                           ---      ---    24,445      ---
     Other, net                             136      (12)      225     (476)
       Net cash used in investing
        activities                      (15,019) (15,769)  (20,374) (51,996)

  Cash flow from financing activities:
     Payments of long-term debt, net of
      proceeds from issuance of debt    (10,086) (31,538) (420,300) (59,347)
     Proceeds from issuance of common
      stock, net of offering costs          (85)     ---   411,322      ---
     Prepayment fees paid in connection
      with IPO                              ---      ---   (19,393)     ---
     Payments of debt issuance costs       (587)     ---   (17,381)    (124)
     Cash dividends paid                (24,973)     ---   (37,459)     ---
     Cash payment to minority interest
      holders in connection with
      reorganization                        ---      ---       ---  (18,646)
     Other, net                             ---    2,550    (2,747)   4,063
       Net cash used in financing
        activities                      (35,731) (28,988)  (85,958) (74,054)

  Net increase (decrease) in cash and
   cash equivalents from continuing
   operations                           (13,408)    (127)   29,687     (756)

  Net operating cash used in
   discontinued operations                  ---       (1)      ---      (17)

  Net increase (decrease) in cash and
   cash equivalents                     (13,408)    (128)   29,687     (773)

  Cash and cash equivalents at
   beginning of period                   60,129      769    17,034    1,414

  Cash and cash equivalents at end of
   period                               $46,721     $641   $46,721     $641



   Schedule D

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

                                   Three months ended  Nine months ended
                                     September 30,       September 30,
                                     2005     2004      2005      2004

  Net income                        $13,321   $6,266   $18,927   $25,171
  Adjustments:
       Income tax expense (benefit)   6,480   (2,029)    8,852    (6,095)
       Interest expense              19,814   28,289    64,726    83,384
       Depreciation and
        amortization                 22,460   22,022    67,184    63,993
       Minority interest                ---      367       468     3,171
       Gain (loss) on interest rate
        hedging arrangements           (178)      85       378       122
       Earnings from unconsolidated
        cellular partnerships          (146)    (339)     (207)   (1,007)
       Asset impairment                 614      ---       614       ---
       Impairment on investment in
        cellular partnerships         2,339    6,678     2,339     6,678
       Other income and (expense),
        net                            (300)   6,703      (901)   25,060
       Loss on debt extinguishment      ---      ---    29,262       ---
       Management fees paid to
        equity sponsors                 ---      250       ---       750
       Non-cash stock based
        compensation                  2,069      ---    10,412       ---
       Excluded items (a)               282      ---     2,758     5,279

  Total adjustments                  53,434   62,026   185,885   181,335

  Adjusted EBITDA                   $66,755  $68,292  $204,812  $206,506

  (a) Excluded items, as defined in
       the credit agreement:
       Termination benefits
        associated with workforce
        reduction                      $---     $---      $---      $279
       CEO transition payment           ---      ---       ---     5,000
       IPO cash bonuses                 282      ---     2,258       ---
       Expenses related to credit
        facility amendment              ---      ---       500       ---

  Total excluded items, as defined
   in the credit agreement             $282     $---    $2,758    $5,279



   Schedule E

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

                                      Three     Three    Three     Nine
                                      months    months   months    months
                                      ended     ended    ended     ended
                                    March 31,  June 30, Sept. 30, Sept. 30,
                                       2005      2005     2005      2005

  Net cash provided by operating
   activities                        $40,489   $58,188   $37,342  $136,019
  Adjustments:
       Interest expense               26,048    18,864    19,814    64,726
       Amortization of debt
        issuance costs                  (910)     (942)     (921)   (2,773)
       Provision for doubtful
        accounts receivable           (1,093)   (1,358)   (1,795)   (4,246)
       Changes in working capital      3,824    (4,358)      301      (233)
       Other, net                     (2,020)     (588)   12,070     9,462
       Income tax expense (benefit)   (5,437)    7,809     6,480     8,852
       Deferred income taxes           5,437    (7,771)   (6,518)   (8,852)
       Other income and (expense),
        net                              (83)     (518)     (300)     (901)
       Excluded items (a)              2,193       283       282     2,758

  Total adjustments                   27,959    11,421    29,413    68,793

  Adjusted EBITDA (b)                 68,448    69,609    66,755   204,812

  Items excluded from Adjusted
   EBITDA settled in cash:
       Cash income (expenses)
        excluded from Adjusted
        EBITDA (c)                    (2,110)      235        18    (1,857)
       Cash interest expense         (26,451)  (18,201)  (19,041)  (63,693)
       Cash pension contributions
        in  excess of estimated
        expense (d)                      ---    (1,600)   (1,566)   (3,166)
       Capital expenditures          (17,379)  (12,510)  (15,155)  (45,044)

  Cash available to pay
   dividends (b)                     $22,508   $37,533   $31,011   $91,052

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

  Pro forma - cash available
   to pay  dividends                 $29,408   $37,533   $31,011   $97,952

   (a) Excluded items, as defined
        in the credit agreement:
        IPO cash bonuses              $1,693      $283      $282    $2,258
        Expenses related to credit
         facility amendment              500       ---       ---       500

   Total excluded items, as defined
    in the credit agreement           $2,193      $283      $282    $2,758

   (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 or
        net income reflected in the statement of income 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)  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.

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



   Schedule F

   Historical Operating Statistics

                                9/30/05  6/30/05  3/31/05 12/31/04  9/30/04
  Access lines:
    Primary                     474,723  480,717  488,165  493,314  498,321
    Secondary                    49,979   49,537   48,837   47,023   49,604
      Total access lines (A)    524,702  530,254  537,002  540,337  547,925

  Long distance subscribers     229,530  227,347  222,874  216,437  214,048
    Penetration rate of total
     access lines                   44%      43%      42%      40%      39%
  DSL subscribers (B)            47,309   40,144   31,208   22,884   16,521
    Penetration rate of total
     access lines                    9%       8%       6%       4%       3%
    Penetration rate of total
     addressable lines (1)          13%      11%       9%       8%       6%
  Total connections (A+B)       572,011  570,398  568,210  563,221  564,446
  Average monthly revenue per
   access line (ARPU) (2) (3)    $80.86   $78.75   $77.92   $78.43   $76.66

   (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, both

[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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