UNITED ~~STATES~~ ~~SECURITIES~~ STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR ~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~ ~~For the fiscal year ended December 31, 2004 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR~~ 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-4996

For the fiscal year ended December 31, 2006

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-4996

ALLTEL CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE		34-0868285
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
(State or other jurisdiction ofincorporation or organization)		(I.R.S. EmployerIdentification No.)
One Allied Drive, Little Rock, Arkansas		72202
(Address of principal executive offices)		(Zip Code)

Registrant'’s telephone number, including area code (501) 905-8000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	~~Name of each exchange on which registered~~	Name of each exchange on which registered
Common Stock	~~New York and Pacific~~	New York Stock Exchange
$2.06 No Par Cumulative Convertible Preferred Stock	New York and Pacific
$2.06 No Par Cumulative Convertible
Preferred Stock		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

NONE

(Title of Class)

~~(Title~~ Indicate by check mark if the registrant is a well-known season issuer, as defined in Rule 405 of ~~Class)~~the Securities Act. x YES ¨ NO

Indicate by check mark ~~whether~~if the registrant ~~(1) has~~is ~~filed~~not ~~all reports~~ required to ~~be filed~~file byreports pursuant to Section 13 or Section 15(d) of the ~~Securities Exchange~~ Act ~~of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days~~. x ¨ YES o NOx NO

Indicate by check mark ifwhether ~~disclosure~~the registrant of(1) has ~~delinquent~~filed ~~filers~~all ~~pursuant~~reports required to ~~Item 405~~be offiled by ~~Regulation~~ Section ~~S-K~~13 isor ~~not~~15(d) ~~contained~~of ~~herein,~~the ~~and~~Securities ~~will~~Exchange ~~not~~Act beof ~~contained,~~1934 toduring the preceding ~~best~~12 ~~of registrant's~~months ~~knowledge,~~(or infor ~~definitive~~such ~~proxy~~shorter orperiod ~~information~~that ~~statements~~the ~~incorporated~~registrant bywas required ~~reference~~ to infile ~~Part III~~such ofreports), ~~this~~and ~~Form~~(2) has ~~10-K~~been orsubject ~~any~~to ~~amendment~~such tofiling ~~this~~requirements for ~~Form~~the ~~10-K.~~past 90 days. x YES ¨ NO

Indicate by check mark ~~whether~~if ~~the~~disclosure ~~registrant~~of delinquent filers pursuant to Item 405 of Regulation S-K is annot contained ~~accelerated~~herein, ~~filer~~and ~~(as~~will ~~defined~~not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference ~~Rule~~in Part ~~12b-2~~III of ~~the~~this ~~Act)~~Form 10-K or any amendment to this Form 10-K. x ~~YES o NO~~

~~Aggregate~~ Indicate ~~market~~by ~~value~~check mark ofwhether ~~voting~~the registrant ~~stock~~is ~~held~~a bylarge accelerated filer, an accelerated filer, or a non-~~affiliates~~accelerated asfiler. See definition of ~~June 30,~~“accelerated ~~2004~~filer ~~— $15,601,010,955~~ and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

~~Common~~ Large accelerated ~~shares~~filer x Accelerated ~~outstanding, January 31, 2005 — 302,475,315~~filer ¨ Non-accelerated filer ¨

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). ¨ YES x NO

Aggregate market value of voting stock held by non-affiliates as of June 30, 2006 — $24,865,776,928

Common shares outstanding, January 31, 2007 — 360,237,648

DOCUMENTS INCORPORATED BY REFERENCE

Document	~~Incorporated Into~~	Incorporated Into
Proxy statement for the 2005 Annual Meeting of Stockholders	Part III
Proxy statement for the 2007 Annual Meeting of Stockholders		Part III
The Exhibit Index is located on pages 30 to 36.
The Exhibit Index is located on pages 22 to 29.

ALLTEL Corporation Form 10-K, Part I

ALLTEL Corporation
Form 10-K
Table of Contents

		Page No.
Part I
Item 1.	Business	2
Item 1A.	Risk Factors	12
Item 1B.	Unresolved Staff Comments	13
Item 2.	Properties	13
Item 3.	Legal Proceedings	14
Item 4.	Submission of Matters to a Vote of Security Holders	14

Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
	of Equity Securities	14
Item 6.	Selected Financial Data	15
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 8.	Financial Statements and Supplementary Data	15
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	15
Item 9A.	Controls and Procedures	15
Item 9B.	Other Information	16

Part III
Item 10.	Directors, Executive Officers and Corporate Governance	16
Item 11.	Executive Compensation	17
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related
	Stockholder Matters	17
Item 13.	Certain Relationships and Related Transactions and Director Independence	17
Item 14.	Principal Accountant Fees and Services	17

Part IV
Item 15.	Exhibits and Financial Statement Schedules	18

~~Item 1. Business~~Forward-Looking Statements

~~THE~~This Form 10-K ~~COMPANY~~of ALLTEL Corporation (“Alltel” or the “Company”) may include certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to uncertainties that could cause actual future events and results to differ materially from those expressed in the forward-looking statements. These forward-looking statements are based on estimates, projections, beliefs and assumptions and are not guarantees of future events and results. Words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, and “should”, and variations of these words and similar expressions, are intended to identify these forward-looking statements. Alltel disclaims any obligation to update or revise any forward-looking statement based on the occurrence of future events, the receipt of new information, or otherwise.

~~GENERAL~~Actual future events and results may differ materially from those expressed in these forward-looking statements as a result of a number of important factors. Representative examples of these factors include (without limitation) adverse changes in economic conditions in the markets served by Alltel; the extent, timing, and overall effects of competition in the communications business; material changes in the communications industry generally that could adversely affect vendor relationships with equipment and network suppliers and customer relationships with wholesale customers; changes in communications technology; the risks associated with the integration of acquired businesses; adverse changes in the terms and conditions of the wireless roaming agreements of Alltel; the potential for adverse changes in the ratings given to Alltel’s debt securities by nationally accredited ratings organizations; the uncertainties related to Alltel’s strategic investments; the effects of litigation; and the effects of federal and state legislation, rules, and regulations governing the communications industry.

ALLTEL Corporation (''ALLTEL'' or the ''Company'') is a customer-focused communications company. The Company owns subsidiaries that provide wireless and wireline local, long-distance, network access and Internet services. Telecommunications products are warehoused and sold by the Company's distribution subsidiary. A subsidiary also publishes telephone directories for affiliates and other independent telephone companies. In addition, a subsidiary provides billing, customer care and other data processing and outsourcing services to telecommunications companies. The Company is incorporated in the state of Delaware.

The Company's web site address is www.alltel.com. ALLTEL files with, or furnishes to, the Securities and Exchange Commission (the ''SEC'') annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as various other information. ALLTEL makes available free of charge through the Investor Relations page of its web site its annual reports, quarterly reports and current reports, and all amendments to any of those reports, as soon as reasonably practicable after providing such reports to the SEC. In addition, on the corporate governance section of the Investor Relations page of its web site, ALLTEL makes available the Board of Director's Amended and Restated Corporate Governance Board Guidelines and the charters for the Audit, Compensation, and Governance Committees. ALLTEL will provide to any stockholder a copy of the Governance Board Guidelines and the Committee charters, without charge, upon written request to Vice President-Investor Relations, ALLTEL Corporation, One Allied Drive, Little Rock, Arkansas 72202.

FORWARD-LOOKING STATEMENTS

This Form 10-K may include certain ''forward-looking statements'' within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to uncertainties that could cause actual future events and results to differ materially from those expressed in the forward-looking statements. These forward-looking statements are based on estimates, projections, beliefs and assumptions and are not guarantees of future events and results. Words such as ''expects'', ''anticipates'', ''intends'', ''plans'', ''believes'', ''seeks'', ''estimates'', and ''should'', and variations of these words and similar expressions, are intended to identify these forward-looking statements. ALLTEL disclaims any obligation to update or revise any forward-looking statement based on the occurrence of future events, the receipt of new information, or otherwise.

Actual future events and results may differ materially from those expressed in these forward-looking statements as a result of a number of important factors. Representative examples of these factors include (without limitation) adverse changes in economic conditions in the markets served by ALLTEL; the extent, timing, and overall effects of competition in the communications business; material changes in the communications industry generally that could adversely affect vendor relationships with equipment and network suppliers and customer relationships with wholesale customers; material changes in communications technology; the risks associated with the integration of acquired businesses; adverse changes in the terms and conditions of the Company's wireless roaming agreements; the potential for adverse changes in the ratings given to ALLTEL's debt securities by nationally accredited ratings organizations; the availability and cost of financing in the corporate debt markets; the uncertainties related to ALLTEL's strategic investments; the effects of work stoppages; the effects of litigation; and the effects of federal and state legislation, rules, and regulations governing the communications industry.

In addition to these factors, actual future performance, outcomes and results may differ materially because of other more general factors including (without limitation) general industry and market conditions and growth rates, economic conditions, and governmental and public policy changes.

ALLTEL Corporation

Form 10-K, Part I

Item 1. Business

~~THE COMPANY (continued)~~ General

~~ACQUISITIONS~~Alltel is incorporated in the state of Delaware. As further discussed below under “Dispositions Completed During the Past Five Years”, on July 17, 2006, Alltel completed the spin-off of its wireline telecommunications business to its stockholders and the merger of that wireline business with Valor Communications Group, Inc. (“Valor”). The spin-off included the majority of Alltel’s communications support services, including directory publishing, information technology outsourcing services, retail long-distance and the wireline sales portion of communications products. The new wireline company formed in the merger of Alltel’s wireline operations and Valor is named Windstream Corporation (“Windstream”). Following the spin-off, Alltel provides wireless voice and data communications services to nearly 12 million customers in 36 states. Alltel manages its wireless business and retained portion of communications support services as a single operating segment, and accordingly, Alltel’s continuing operations consist of a single reportable business segment, wireless communications services.

~~Pending~~The Company’s ~~Acquisitions~~web tosite beaddress ~~Completed During 2005:~~is www.alltel.com. On Alltel files ~~January 9~~with, ~~2005,~~or ~~ALLTEL~~furnishes ~~entered~~to, ~~into~~the anSecurities ~~Agreement~~ and ~~Plan~~Exchange ofCommission ~~Merger~~ (the ~~''Merger Agreement''~~“SEC”) ~~with~~ annual ~~Western~~reports ~~Wireless~~on ~~Corporation~~Form ~~(''Western Wireless'') providing for the merger of Western Wireless with and into a wholly~~10-~~owned subsidiary of ALLTEL (the ''Merger''). In the Merger~~K, ~~each share~~quarterly ofreports ~~Western~~on ~~Wireless~~Form ~~common~~10-Q ~~stock will be exchanged for .535 shares of ALLTEL common stock~~ and ~~$9.25~~current ~~in cash unless the shareholder makes an all-cash or all-stock election. Western~~reports ~~Wireless~~ on ~~shareholders~~Form ~~making an all~~8-~~stock~~K, oras ~~all-cash~~well ~~election~~as ~~may~~various beother ~~subject to proration depending on elections made by shareholders~~information. InAlltel ~~the~~makes ~~aggregate, ALLTEL will issue approximately~~available ~~60 million shares of stock and pay approximately $1.0 billion in cash.~~ free ~~A subsidiary~~ of ~~ALLTEL~~charge ~~will~~through ~~also~~the ~~assume debt~~Investor ofRelations ~~approximately~~page ~~$2.2 billion, including $1.2 billion~~ of ~~term~~its ~~notes~~web ~~issued~~site ~~under~~its ~~Western~~annual ~~Wireless' credit facility that~~ reports, asquarterly areports ~~result~~and ofcurrent ~~a change in control~~reports, ~~will~~and ~~become~~all ~~due~~amendments ~~immediately upon~~to ~~the closing~~ any of ~~the Merger. As a~~ ~~result~~ those ~~of the Merger~~reports, ~~ALLTEL~~as ~~will~~soon ~~add~~as ~~approximately~~reasonably ~~1.3 million~~practicable ~~domestic~~after ~~wireless~~providing ~~customers (excluding~~such ~~reseller customers) in 19 midwestern and western states that are contiguous~~ reports to ~~the~~ ~~Company's~~ the ~~existing~~SEC. ~~wireless~~In ~~properties~~addition, ~~increasing~~on the ~~number~~corporate ofgovernance ~~wireless~~section ~~customers~~of ~~served~~the byInvestor ~~ALLTEL~~ Relations topage ~~approximately~~of ~~10 million.~~its ~~ALLTEL~~web ~~also will add wireless operations in nine new states~~site, ~~including~~ ~~California,~~Alltel ~~Idaho,~~makes ~~Minnesota,~~available ~~Montana,~~the ~~Nevada,~~Board ~~North~~of ~~Dakota, South Dakota, Utah and~~Director’s ~~Wyoming,~~ Amended and ~~will~~Restated ~~also~~Corporate ~~significantly~~Governance ~~expand~~Board ~~its~~Guidelines ~~wireless~~and ~~operations~~the incharters for the ~~Arizona~~Audit, ~~Colorado~~Compensation, ~~New Mexico~~ and ~~Texas~~Governance Committees. InAlltel ~~addition, ALLTEL~~ will ~~add~~provide ~~approximately 1.6 million international wireless~~to ~~customers~~ any stockholder ina ~~six~~copy ~~countries. Consummation~~ of the ~~Merger~~Governance isBoard ~~subject~~Guidelines toand ~~certain~~the ~~conditions,~~Committee ~~including~~ charters, without ~~limitation~~charge, ~~the~~upon ~~approval~~written ofrequest ~~the~~to ~~Merger by the stockholders of Western~~Director-Investor ~~Wireless~~ Relations, ~~and~~ALLTEL ~~the~~Corporation, ~~receipt~~One ofAllied ~~regulatory~~Drive, ~~approvals.~~Little ~~The~~Rock, ~~transaction is expected to close by~~Arkansas ~~mid-year 2005~~ 72202.

~~On November 26, 2004, ALLTEL and Cingular Wireless LLC (''Cingular''), a joint venture between~~Overview ~~SBC Communications, Inc. and BellSouth Corporation, entered into a definitive agreement to exchange certain wireless assets. Under the terms~~ of ~~the agreement, Cingular will sell to ALLTEL former AT&T~~ Wireless properties, including licenses, network assets, and subscribers, in selected markets in Kentucky, Oklahoma, Texas, Connecticut and Mississippi. Cingular will also sell to ALLTEL 20MHz of spectrum and network assets owned by AT&T Wireless in Wichita, Kansas and wireless spectrum in several counties in Georgia and Texas. In addition, ALLTEL and Cingular will exchange partnership interests, with Cingular receiving interests in markets including Wichita, Kansas; Kansas City, Missouri; Milwaukee, Wisconsin and several in Texas, and ALLTEL receiving more ownership in markets it manages in Michigan, Louisiana, and Toledo, Ohio. ALLTEL will also pay Cingular $170.0 million in cash. Completion of this transaction is contingent upon regulatory approval and is expected to occur in the second quarter of 2005. Operations

~~Following~~Alltel provides ~~completion~~a wide array of wireless communication services to individual and business customers. In terms of both the ~~acquisitions~~number ~~discussed~~of ~~above~~customers served and revenues earned, ~~ALLTEL's~~Alltel ~~domestic~~is ~~communications~~the fifth largest provider of wireless services in the United States. As of December 31, 2006, Alltel owns a majority interest in wireless operations ~~will~~in ~~serve~~116 Metropolitan Statistical Areas (“MSAs”), representing approximately 1048.12 million ~~wireless~~potential customers or POPs, ~~3.0 million~~and a majority interest ~~wireline~~ in ~~customers~~239 Rural Service Areas (“RSAs”), ~~and~~representing 1approximately 30.8 7 million POPs. ~~long-distance~~In ~~customers~~addition, Alltel owns a minority interest in 3623 ~~states~~other wireless markets, including the Chicago, Illinois and Houston, Texas MSAs. As ~~noted~~of ~~above~~December 31, ~~ALLTEL~~ 2006, ~~will~~Alltel’s ~~also~~penetration ~~serve~~rate ~~approximately~~(number 1of customers as a percentage of the total population in the Company’s service areas) was 15 percent.~~6 million~~ ~~wireless~~Alltel ~~international~~also offers ~~customers~~Personal Communications Services (“PCS”) in ~~six~~five markets, including ~~countries~~ Jacksonville, Florida and Wichita, Kansas. As of December 31, 2006, Alltel has 154 PCS licenses representing approximately 34 million POPs.

~~Acquisitions Completed~~ During 2006, ~~the~~Alltel ~~Past~~continued ~~Five~~to ~~Years: On~~upgrade ~~December 1,~~its ~~2004,~~wireless ~~ALLTEL~~network ~~completed~~infrastructure and invest in state-of-the-art ~~purchase~~code ofdivision ~~certain~~multiple ~~wireless~~access ~~assets~~(“CDMA”) ~~from~~technology, ~~United~~including ~~States~~ 1xRTT. ~~Cellular~~The ~~Corporation~~Company ~~(''U.S.~~ended ~~Cellular'')~~2006 ~~and~~with ~~TDS~~1xRTT ~~Telecommunications Corporation~~data ~~(''TDS~~coverage ~~Telecom'')~~of ~~for~~approximately ~~$148~~94 percent of its POPs.~~2 million~~ inIn ~~cash~~addition, ~~acquiring~~capital ~~wireless~~expenditures for 2006 included ~~properties~~ the Company’s ~~with~~investment ain ~~potential~~wireless ~~service~~EV-DO ~~area~~technology. ~~covering~~Through ~~approximately~~December ~~584~~31,~~000~~ 2006, ~~potential~~ Alltel ~~customers~~had ~~(''POPs'')~~expanded in1x-EVDO ~~Florida~~coverage ~~and~~to ~~Ohio~~include approximately 56 percent of its POPs. The Company also ~~purchased~~supplements ~~partnership~~its ~~interests~~wireless inservice ~~seven~~coverage ~~ALLTEL-operated~~area ~~markets~~through roaming inagreements ~~Georgia, Mississippi,~~with ~~North~~other ~~Carolina,~~wireless ~~Ohio~~service ~~and~~providers ~~Wisconsin.~~that ~~Prior~~allow Alltel’s customers to ~~this~~obtain ~~acquisition,~~wireless ~~ALLTEL~~services ~~owned~~in ~~an approximate~~those ~~42 percent~~U.S. ~~interest~~regions in ~~the~~which ~~Georgia~~Alltel does not ~~market,~~maintain ~~with~~a network presence. As a ~~potential~~result ~~service~~of ~~area~~its ~~covering~~August 1, 2005 acquisition ~~approximately~~ of ~~229~~Western Wireless Corporation (“Western Wireless”),~~000~~ ~~POPs~~Alltel diversified its wireless roaming revenue sources, and, ~~ALLTEL~~as ~~owned~~ a ~~majority~~result ~~interest~~of inoffering multiple technologies, the ~~Mississippi,~~Company ~~North~~has become the leading independent roaming partner ~~Carolina,~~ for the ~~Ohio~~four ~~and~~national ~~Wisconsin~~carriers in the markets served by Alltel. OnThrough ~~November 2,~~these roaming ~~2004~~agreements, the Company ~~purchased~~is ~~for~~able ~~$35.6 million~~to inoffer ~~cash~~its customers wireless ~~properties~~services covering ~~with~~approximately a95 ~~potential~~percent ~~service~~of ~~area~~the ~~covering~~U.S. ~~approximately 275,000~~population. ~~POPs~~Alltel incontinues to increase ~~south~~its ~~Louisiana~~network ~~from~~capacity ~~SJI,~~and acoverage ~~privately~~area ~~held~~through ~~company.~~new ~~Through these~~network ~~transactions~~ construction, ~~ALLTEL~~strategic ~~added~~acquisitions ~~approximately~~and ~~92,000~~affiliations with other wireless service ~~customers~~providers.

On August 29, 2003, the Company purchased for $22.8 million in cash a wireless property with a potential service area covering approximately 205,000 POPs in an Arizona Rural Service Area (''RSA''). On February 28, 2003, the Company purchased for $64.6 million in cash wireless properties with a potential service area covering approximately 370,000 POPs in southern Mississippi, from Cellular XL Associates, a privately held company. On February 28, 2003, the Company also purchased for $60.0 million in cash the remaining ownership interest in wireless properties with a potential service area covering approximately 355,000 POPs in two Michigan RSAs. Prior to this acquisition, ALLTEL owned approximately 49 percent of the Michigan properties. Through the completion of these transactions, ALLTEL added approximately 147,000 customers and expanded its wireless operations into new markets in Arizona, Michigan and Mississippi. Employees

At December 31, 2006, Alltel had 14,899 employees. Following the wireline spin-off, none of the Company’s employees are members of collective bargaining units.

ALLTEL Corporation

Form 10-K, Part I

Item 1. Business

~~THE~~Acquisitions Completed ~~COMPANY~~During ~~(continued)~~ the Past Five Years

~~ACQUISITIONS~~On October 3, 2006, Alltel completed the purchase of Midwest Wireless Holdings of Mankato, Minnesota (~~Continued~~“Midwest Wireless”) for $1,083.5 million in cash. In this transaction, Alltel acquired wireless properties, including 850 MHz licenses and PCS spectrum covering approximately 2 million potential customers, network assets and approximately 450,000 customers in select markets in southern Minnesota, northern and eastern Iowa, and western Wisconsin. As a condition of receiving approval from the U.S. Department of Justice (“DOJ”) and the Federal Communications Commission (“FCC”) for this acquisition, on September 7, 2006, Alltel agreed to divest certain wireless operations in four rural markets in Minnesota. On December 13, 2006, Alltel announced an agreement to sell the four rural markets to Rural Cellular Corporation. The divested properties include licenses, retail stores, employees, customers and the network assets necessary to operate the wireless business in those markets. The transaction is expected to close during the first quarter of 2007.

OnDuring the ~~August 1,~~second ~~2002,~~quarter ~~ALLTEL completed its purchase~~ of ~~local telephone properties serving approximately 589~~2006,~~000~~ ~~wireline~~Alltel ~~customers~~purchased ~~in Kentucky from Verizon Communications Inc. (''Verizon'')~~ for $1218.~~93 billion~~2 million in cash. ~~The acquired wireline~~ wireless properties ~~overlapped~~covering ~~ALLTEL's existing~~approximately ~~wireless~~727,000 ~~service~~POPs in ~~northeastern~~Illinois, ~~Kentucky.~~Texas and Virginia.

On ~~August 1~~ March 16, ~~2002~~2006, ~~ALLTEL~~Alltel ~~also~~purchased ~~completed~~from ~~its~~Palmetto ~~purchase of substantially all of the wireless properties owned by CenturyTel~~MobileNet, ~~Inc~~L.P. ~~(''CenturyTel'')~~ for ~~approximately~~ $1456.~~59 billion~~3 million in ~~cash.~~ In cash ~~this~~the ~~transaction,~~remaining ~~ALLTEL~~ownership ~~added~~interests ~~properties~~in ~~representing~~ten wireless partnerships that cover approximately 82.3 0 million POPs~~, acquired~~ ~~approximately~~in ~~762,000~~North ~~customers~~ and ~~expanded~~South ~~its~~Carolina. ~~wireless~~Prior ~~footprint~~to ~~into new~~this ~~markets across Arkansas~~ transaction, ~~Louisiana,~~Alltel ~~Michigan,~~owned ~~Mississippi,~~a ~~Texas~~50 ~~and~~percent ~~Wisconsin.~~interest ~~Also included~~ in ~~the~~each ~~transaction~~of ~~were~~the ~~minority~~ten ~~partnership interests in cellular operations~~wireless ~~representing approximately 1~~ partnerships.~~8 million proportionate POPs and Personal Communications Services (''PCS'') licenses covering 1.3 million POPs in Wisconsin and Iowa.~~

On ~~October 3~~ August 1, ~~2000~~2005, ~~ALLTEL~~Alltel ~~purchased~~and ~~wireless~~Western ~~properties~~Wireless incompleted ~~New~~the ~~Orleans,~~merger ~~Baton~~of ~~Rouge~~Western Wireless with and into a wholly-owned subsidiary of Alltel. In the merger, each share ~~three~~ of Western ~~rural~~Wireless ~~service~~common ~~areas~~stock was exchanged for 0.535 shares of Alltel common stock and $9.25 in ~~Louisiana~~cash ~~from~~unless ~~SBC~~the ~~Communications~~shareholder made an all-cash election, in which ~~Inc~~case the shareholder received $40 in cash. ~~(''SBC'')~~Western Wireless shareholders making an all-stock election were subject to proration and received approximately 0.539 shares of Alltel common stock and $9.18 in cash. In ~~connection~~the ~~with~~ aggregate, ~~this~~Alltel ~~transaction~~issued approximately 54.3 million shares of stock valued at $3,430.4 ~~ALLTEL~~million and paid ~~SBC~~approximately $~~387~~933.6 4 million in cash. ~~and~~Through ~~acquired approximately~~its ~~150,000~~ wholly-owned ~~wireless~~subsidiary ~~customers~~that ~~and~~merged ~~300~~with Western Wireless,~~000~~ ~~paging~~Alltel ~~customers~~also assumed debt of approximately $2.1 ~~The~~billion. ~~Company~~As ~~disposed~~a result of the ~~paging~~merger, Alltel added ~~operations~~ approximately 1.3 million domestic wireless customers in ~~2001.~~19 mid-western and western states that were contiguous to the Company’s existing wireless properties.

~~On January 31, 2000, ALLTEL, Bell Atlantic Corporation (''Bell Atlantic'') and GTE Corporation~~As ~~(''GTE'')~~ a condition ~~signed~~of ~~agreements~~receiving toapproval ~~exchange~~for ~~wireless~~the ~~properties~~merger infrom 13the ~~states.~~DOJ Onand ~~April 3~~FCC, ~~2000,~~Alltel ~~ALLTEL~~ agreed ~~completed~~to ~~the~~divest ~~initial~~certain ~~exchange of~~ wireless ~~properties~~operations ~~with~~of ~~Bell~~Western ~~Atlantic~~Wireless in ~~five~~16 markets ~~states~~ in Arkansas, ~~acquiring~~Kansas ~~operations~~and ~~in Arizona~~Nebraska, ~~New~~as ~~Mexico~~well ~~and~~as ~~Texas~~the ~~and~~“Cellular ~~divesting~~One” ~~operations~~brand. inOn ~~Nevada~~ December ~~and~~19, ~~Iowa.~~2005, InAlltel ~~addition~~completed toan ~~the~~ exchange of wireless ~~assets,~~properties ~~ALLTEL~~with United ~~also~~States ~~paid~~Cellular ~~Bell Atlantic~~Corporation ~~$624~~(“U.~~3 million~~S. inCellular”) ~~cash~~that toincluded ~~complete~~a ~~this~~substantial portion ~~transaction.~~of Onthe ~~June 30,~~divestiture ~~2000,~~requirements ~~ALLTEL completed~~related to the ~~remaining~~merger. ~~wireless~~Under ~~property~~terms of the ~~exchanges~~agreement with ~~Bell~~U.S. ~~Atlantic~~Cellular, ~~and~~Alltel ~~GTE~~acquired approximately 90,000 customers in ~~which ALLTEL~~two ~~acquired~~RSA ~~operations~~markets in ~~Alabama,~~Idaho ~~Florida,~~that ~~Ohio,~~are ~~and~~adjacent ~~South~~to ~~Carolina,~~the ~~and~~Company’s ~~divested~~existing operations inand ~~Illinois,~~received ~~Indiana,~~$48.2 ~~New~~million ~~York~~in ~~and~~cash ~~Pennsylvania.~~in ~~ALLTEL~~exchange ~~also~~for ~~transferred~~15 torural ~~Bell~~markets ~~Atlantic~~ in orKansas ~~GTE~~and ~~certain~~Nebraska ofowned ~~its~~by ~~minority~~Western ~~investments in unconsolidated wireless properties, representing approximately 2~~Wireless.~~6 million~~ ~~POPs.~~ In ~~connection~~December ~~with~~2005, Alltel sold the ~~transfer~~Cellular ofOne ~~the remaining~~brand ~~wireless~~to ~~assets,~~Dobson ~~ALLTEL~~Cellular ~~received~~Systems, ~~$216~~Inc.~~9 million~~ ~~in cash~~ and ~~prepaid~~in ~~vendor~~March ~~credits~~2006, of Alltel ~~$199.6 million~~sold ~~and~~the ~~assumed~~remaining ~~long-term~~market ~~debt~~in ofArkansas ~~$425.0 million.~~to ~~Through~~Cingular ~~the~~Wireless ~~completion of~~LLC ~~the~~ (“Cingular”). ~~above~~During ~~transactions,~~the ~~ALLTEL~~third ~~acquired~~and ~~interests~~fourth inquarters 27of ~~wireless~~2005, ~~markets~~Alltel ~~representing~~completed ~~about~~the ~~14.6 million~~ sale ~~POPs~~of ~~and~~Western ~~approximately~~Wireless’ ~~1.5 million~~international ~~wireless~~operations ~~customers, while divesting interests~~ in 42Georgia, ~~wireless~~Ghana ~~markets~~and ~~representing~~Ireland for 6$570.9 3 million ~~POPs~~in ~~and approximately 778,000 customers~~cash. During ~~2000,~~the ~~ALLTEL~~second ~~also~~quarter ~~acquired~~of ~~the~~2006, ~~remaining~~Alltel ~~ownership~~completed the ~~interests~~sales inof ~~wireless properties~~Western inWireless’ ~~Florida~~international ~~and~~operations ~~Georgia~~ in ~~which~~Austria, ~~ALLTEL already owned a controlling interest. In~~Bolivia, ~~connection~~ Côte ~~with~~d’Ivoire, ~~these acquisitions~~Haiti, ~~the~~and ~~Company~~Slovenia ~~paid~~for approximately $~~19.~~1 ~~million~~.7 inbillion in cash.

~~DISPOSITIONS~~On April 15, 2005, Alltel and Cingular exchanged certain wireless assets. Under the terms of the agreement, Alltel acquired former AT&T Wireless properties, including licenses, network assets, and approximately 212,000 customers, in selected markets in Kentucky, Oklahoma, Texas, Connecticut and Mississippi representing approximately 2.7 million POPs. Alltel also acquired 20MHz of spectrum and network assets in Kansas and wireless spectrum in several counties in Georgia and Texas. In addition, Alltel and Cingular exchanged partnership interests, with Cingular receiving interests in markets in Kansas, Missouri and Texas, and Alltel receiving more ownership in majority-owned markets it manages in Michigan, Louisiana, and Ohio. Alltel also paid Cingular approximately $153.0 million in cash.

InOn February ~~December 2003~~28, ~~ALLTEL~~2005, ~~sold~~Alltel tocompleted ~~Convergys Information~~the ~~Management~~purchase ~~Group~~of ~~(''Convergys'')~~wireless ~~for~~properties, ~~$37.0 million~~ representing inapproximately ~~cash~~900,000 ~~certain~~POPs ~~assets~~in Alabama and ~~related~~Georgia ~~liabilities,~~for ~~including~~$48.1 million in ~~selected~~cash. ~~customer contracts~~Through ~~and~~the ~~capitalized~~completion ~~software~~of ~~development~~this ~~costs~~transaction, ~~associated~~Alltel ~~with~~added ~~the Company's~~approximately ~~telecommunications~~ 54,000 ~~information services operations~~customers.

On April 1, 2003, ALLTEL completed the sale of the financial services division of its information services subsidiary, ALLTEL Information Services, Inc., to Fidelity National Financial Inc. (''Fidelity National''), for $1.05 billion, received as $775.0 million in cash and $275.0 million in Fidelity National common stock. As part of this transaction, Fidelity National acquired ALLTEL's mortgage servicing, retail and wholesale banking and commercial lending operations, as well as the community/regional bank division. Approximately 5,500 employees of the Company transitioned to Fidelity National as part of the transaction. The telecom division of ALLTEL Information Services, Inc. was retained by the Company and was not part of the sale transaction with Fidelity National.

In January 2003, ALLTEL completed the termination of its business venture with Bradford & Bingley Group. The business venture, ALLTEL Mortgage Solutions, Ltd., a majority-owned consolidated subsidiary of ALLTEL, was created in 2000 to provide mortgage administration and information technology products in the United Kingdom.

During 2002, the Company sold its majority ownership interest in a Pennsylvania cellular partnership to Verizon for a total cash purchase price of $24.1 million.

ALLTEL Corporation

Form 10-K, Part I

Item 1. Business

~~THE~~Acquisitions Completed ~~COMPANY~~During the Past Five Years (~~continued~~Continued)

~~DISPOSITIONS~~On December 1, 2004, Alltel completed the purchase of certain wireless assets from U.S. Cellular and TDS Telecommunications Corporation (~~Continued~~“TDS Telecom”) for $148.2 million in cash, acquiring wireless properties with a potential service area covering approximately 584,000 POPs in Florida and Ohio. The Company also purchased partnership interests in seven Alltel-operated markets in Georgia, Mississippi, North Carolina, Ohio and Wisconsin. Prior to this acquisition, Alltel owned an approximate 42 percent interest in the Georgia market, with a potential service area covering approximately 229,000 POPs, and Alltel owned a majority interest in the Mississippi, North Carolina, Ohio and Wisconsin markets. On November 2, 2004, the Company purchased for $35.6 million in cash wireless properties with a potential service area covering approximately 275,000 POPs in south Louisiana from SJI, a privately held company. Through these transactions, Alltel added approximately 92,000 wireless customers.

~~During~~On August 29, ~~2001~~2003, the Company ~~sold~~purchased 20for ~~PCS~~$22.8 ~~licenses~~million in ~~six~~cash ~~states~~a towireless ~~Verizon~~property with ~~Wireless~~a potential service area covering approximately 205,000 POPs in an Arizona RSA. On February 28, 2003, the Company purchased for $64.6 million in cash wireless properties with a ~~total~~potential service area covering approximately ~~cash~~ 370,000 POPs ~~purchase~~in ~~price~~southern ofMississippi, from Cellular XL Associates, a privately held company. On February 28, 2003, the Company also purchased for $~~410~~60.0 million in cash the remaining ownership interest in wireless properties with a potential service area covering approximately 355,000 POPs in two Michigan RSAs. Prior to this acquisition, Alltel owned approximately 49 percent of the Michigan properties. Through the completion of these transactions, Alltel added approximately 147,000 customers and expanded its wireless operations into new markets in Arizona, Michigan and Mississippi.

~~During~~On August 1, ~~2000~~2002, Alltel completed its purchase of substantially all of the ~~Company~~wireless properties ~~sold~~owned ~~its~~by ~~PCS~~CenturyTel, ~~operations~~Inc. (“CenturyTel”) for approximately $1.59 billion in ~~Birmingham~~cash. ~~and~~In ~~Mobile~~this transaction, ~~Alabama~~Alltel added properties representing approximately 8.3 million POPs, acquired approximately 762,000 customers and expanded ~~PCS~~its wireless footprint into new markets across Arkansas, Louisiana, ~~licenses~~ Michigan, Mississippi, Texas and Wisconsin. Also included in ~~nine~~the ~~other~~transaction were ~~markets~~minority ~~for~~partnership interests in cellular operations representing approximately ~~$112~~1.0 8 million inproportionate ~~cash~~POPs and PCS licenses covering 1.3 million POPs in Wisconsin and Iowa.

~~MANAGEMENT~~Dispositions Completed During the Past Five Years

~~The~~On July 17, 2006, Alltel completed the spin-off of the Company'’s ~~staff~~wireline telecommunications atbusiness to its ~~headquarters~~stockholders and ~~regional~~the ~~offices~~merger ~~supervise,~~of ~~coordinate~~that wireline business with Valor. Pursuant to the plan of distribution and ~~assist~~immediately ~~subsidiaries~~ prior to inthe ~~management~~effective ~~activities,~~time ~~investor~~of ~~relations~~the merger with Valor described below, ~~acquisitions~~Alltel contributed all of the assets of its wireline telecommunications business to ALLTEL Holding Corp. (“Alltel Holding” or “Spinco”), ~~corporate~~a ~~planning~~wholly-owned subsidiary of the Company, in exchange for: (i) the issuance to Alltel of Spinco common stock to be distributed pro rata to Alltel’s stockholders as a tax ~~planning~~free stock dividend, ~~cash~~(ii) ~~management~~the payment of a special dividend to Alltel in the amount of $2.3 billion ,and ~~insurance~~(iii) the distribution by Spinco to Alltel of certain Spinco debt securities, ~~sales~~consisting ~~and~~of ~~marketing~~$1,746.0 ~~support~~million aggregate principal amount of 8.625 percent senior notes due 2016 (the “Spinco Securities”). The Spinco Securities were issued at a discount, ~~government~~and ~~affairs~~accordingly, at the date of distribution to ~~legal~~ Alltel, ~~matters~~the Spinco Securities had a carrying value of $1,703.2 ~~engineering~~million ~~services~~(par value of $1,746.0 ~~and~~million ~~technical~~less ~~research~~discount of $42.8 ~~They~~million). In connection with the spin-off, Alltel also ~~coordinate~~transferred ~~the financing~~to ~~program~~Spinco ~~for~~$260.8 ~~all~~million of long-term debt that had been issued by the Company'’s ~~operations~~wireline subsidiaries. Alltel exchanged the Spinco Securities received in the spin-off transaction for certain of its outstanding debt securities.

~~EMPLOYEES~~Immediately after the consummation of the spin off, Alltel Holding merged with and into Valor, with Valor continuing as the surviving corporation. As a result of the merger, all of the issued and outstanding shares of Spinco common stock were converted into the right to receive an aggregate number of shares of common stock of Valor. Valor issued in the aggregate approximately 403 million shares of common stock to Alltel stockholders pursuant to the merger, or 1.0339267 shares of Valor common stock for each share of Spinco common stock outstanding as of the effective time of the merger. Upon completion of the merger, Alltel stockholders owned approximately 85 percent of the outstanding equity interests of the surviving corporation, which is named Windstream, and the stockholders of Valor owned the remaining 15 percent of such equity interests.

At In December ~~31,~~ ~~2004~~2003, ~~the~~Alltel ~~Company~~sold ~~had~~to ~~18,598~~Convergys ~~employees.~~Information ~~Within~~Management ~~the Company's work force,~~Group ~~approximately~~ (“Convergys”) ~~1,526~~for ~~employees~~$37.0 ~~are~~million ~~part~~in ofcash ~~collective~~certain ~~bargaining~~assets ~~units.~~and ~~During~~related ~~2004~~liabilities, ~~ALLTEL~~ ~~had~~ including noselected ~~material~~customer ~~work~~contracts ~~stoppages~~and ~~due~~capitalized tosoftware ~~labor~~development costs, ~~disputes~~associated with ~~its~~the ~~unionized~~Company’s ~~employees.~~telecommunications information services operations.

ORGANIZATIONAL STRUCTURE AND OPERATING SEGMENTS

The Company has focused its communications business strategy on growing its customer base through strategic acquisitions and enhancing the value of its customer relationships by offering additional products and services and providing superior customer service. Through the various wireless acquisitions completed since 2000 discussed above under ''Acquisitions'', ALLTEL has significantly expanded its wireless business and enhanced the Company's ability to provide multiple communications services to its customers. The acquisition of Verizon's wireline properties in Kentucky, completed in 2002, increased ALLTEL's total number of wireline customers to more than 3 million. As of December 31, 2004, including customers of its wireless, wireline and long-distance services, the Company serves more than 13 million communications customers in 26 states. ALLTEL operates its communications businesses as a single operation capable of delivering to customers one-stop shopping for a full range of communications products and services. In addition to its wireless, wireline and long-distance service offerings, the Company also provides Internet, high-speed data transport services (''DSL''), paging and cable television services in select markets.

ALLTEL is organized based on the products and services that it offers. Under this organizational structure, the Company's communications operations consist of its wireless, wireline and communications support services segments. ALLTEL's wireless segment consists of the Company's cellular, PCS and paging operations. The wireline segment consists of ALLTEL's incumbent local exchange carrier (''ILEC''), competitive local exchange carrier (''CLEC'') and Internet access operations. Communications support services consist of the Company's long-distance and network management services, communications products, directory publishing operations and the retained telecommunications information services operations of ALLTEL Information Services, Inc. that were not sold to Fidelity National. For financial information about ALLTEL's operating segments, refer to pages F-72 to F-75 of the Financial Supplement, which is incorporated by reference herein.

WIRELESS OPERATIONS

As of December 31, 2004, the Company provided wireless communications service to more than 8.6 million customers in 24 states. ALLTEL owns a majority interest in wireless operations in 90 MSAs, representing approximately 41.2 million wireless POPs, and a majority interest in 149 RSAs, representing approximately 21.1 million wireless POPs. In addition, ALLTEL owns a minority interest in 56 other wireless markets, including the Chicago, Illinois and Houston, Texas MSAs. As of December 31, 2004, ALLTEL's penetration rate (number of customers as a percentage of the total population in the Company's service areas) was 13.8 percent.

ALLTEL Corporation

Form 10-K, Part I

Item 1. Business

~~WIRELESS~~Dispositions Completed ~~OPERATIONS~~During the Past Five Years (~~continued~~Continued)

~~ALLTEL has offered PCS service in Jacksonville~~On April 1, ~~Florida~~2003, ~~since~~Alltel ~~March 1998.~~completed ~~As previously discussed, in connection with~~ the ~~acquisition~~sale of the ~~wireless~~financial ~~assets~~services ~~from~~division ~~CenturyTel~~of its information inservices ~~2002~~subsidiary, ALLTEL ~~acquired~~Information ~~PCS~~Services, ~~licenses covering 1~~Inc.~~3 million~~, ~~POPs~~to inFidelity National ~~Wisconsin~~Financial ~~and Iowa~~Inc. In(“Fidelity ~~2000~~National”), ~~the Company~~for ~~sold~~$1.05 ~~its PCS operations in Birmingham and Mobile~~billion, ~~Alabama~~received ~~and~~as $775.0 ~~PCS~~million ~~licenses~~ in ~~nine other~~cash ~~markets,~~ and ~~in 2001, ALLTEL sold 20 additional PCS licenses~~$275.0 ~~Giving~~million ~~effect~~in toFidelity ~~these transactions,~~National ~~the~~common ~~Company has 51 PCS licenses representing approximately 19~~stock.~~8 million POPs.~~ ~~ALLTEL~~ As part ~~provides~~of ~~paging~~this ~~services~~transaction, inFidelity ~~select~~National ~~markets~~acquired toAlltel’s ~~customers on a resale basis. As of~~mortgage ~~December 31~~ servicing, ~~2004,~~retail ~~ALLTEL~~and ~~provided~~wholesale ~~paging~~banking ~~service~~and tocommercial ~~approximately~~lending 22operations,~~000 customers.~~ ~~Revenues~~ as well ~~derived~~as ~~from~~the ~~paging~~community/regional ~~services~~bank ~~are not significant to ALLTEL's wireless operating results~~division.

~~During 2004, ALLTEL continued to upgrade~~In it January ~~wireless network infrastructure and invest in state-of-the-art code division multiple access (''CDMA'') technology~~2003, ~~including~~Alltel ~~1XRTT.~~completed ~~Capital expenditures for 2004 also included~~ the ~~Company's~~termination ~~initial investment in wireless EV-DO technology in selected markets. ALLTEL expects to deploy EV-DO technology in 6 to 10 additional markets in 2005. Substantially all~~ of ~~the Company's wireless markets operate on digital-based systems. In addition, the Company supplements~~ its ~~wireless~~business ~~service~~venture ~~coverage area through roaming agreements~~ with ~~other wireless service providers that allow ALLTEL's~~ ~~customers~~ Bradford to& ~~obtain~~Bingley ~~wireless services in those U~~Group.S. ~~regions~~The inbusiness ~~which~~venture, ALLTEL ~~does~~Mortgage ~~not maintain~~Solutions, ~~a network presence~~ Ltd. ~~Through these roaming agreements~~, ~~the~~a ~~Company~~majority-owned isconsolidated ~~able~~subsidiary ~~to offer its customers wireless services covering approximately 95 percent~~ of ~~the~~Alltel, ~~U.S.~~was ~~population.~~created ~~ALLTEL~~in ~~continues~~ 2000 to provide ~~increase~~mortgage ~~its~~administration ~~network capacity~~ and ~~coverage~~information ~~area~~technology ~~through~~products ~~new~~in ~~network~~the ~~construction,~~ United ~~strategic acquisitions and affiliations with other wireless service providers~~Kingdom.

~~PRODUCT~~Product Offerings ~~OFFERINGS~~and ~~AND PRICING~~ Pricing

~~Wireless~~ Service revenues are derived primarily from monthly access and airtime charges, roaming ~~and~~ and long-distance charges and charges for data services, custom calling and other enhanced service features. ~~Wireless~~ ~~revenues comprised 60 percent of ALLTEL's total operating revenues from business segments in 2004, compared to 58 percent in 2003 and 57 percent in 2002.~~ Prices of wireless services are not regulated by the ~~Federal Communications Commission (''~~FCC~~'')~~ or by state regulatory commissions; however, as more fully discussed under the caption ''“Regulation''” on page 8, states are permitted to regulate the terms and conditions of wireless services unrelated to either rates or market entry.

~~ALLTEL~~ Alltel strives to address the needs of a variety of customer segments, stimulate usage, increase penetration, and improve customer retention rates through a diverse product offering and pricing strategy. To accomplish these objectives, the Company offers competitive local, statewide, and national service plans. These service plans include packages of daytime, night and weekend, and mobile-to-mobile minutes. Customers can choose lower monthly access ~~plans~~ plans with fewer minutes, while customers needing more minutes can choose slightly higher access plans with more minutes. Family Freedom —- an offering that gives customers the option to share minutes by adding additional lines of service at a discounted rate —- helps target the growing number of families that have integrated wireless into their lives. In addition, the Company offers Call Home Free minutes. By allowing the lines on an account to designate a home telephone number as a wireless phone, customers are also able to receive the ~~benefit~~ benefit of their mobile-to-mobile minutes when calling their home phone.

~~ALLTEL~~ Alltel provides several voice features to enhance its wireless calling plans, including ~~call~~ call waiting, call forwarding, caller identification, three-way calling, no-answer transfer, directory assistance call completion and voicemail. Depending on the customer'’s selection of rate plan, some or all of these features are included as an extra value to the plan, with the expectation of extending customer life.

The wireless industry has ~~shifted~~continued to offer higher recurring revenue plans which provide a large number of packaged minutes, unlimited night and weekend calling ~~and~~ , long-distance within the United States, asand anfree mobile-to-mobile calling as integral ~~component~~components of the plan. InThrough ~~order~~reciprocal toroaming ~~offer~~agreements ~~one-rate~~with other ~~plans~~domestic onwireless ~~a profitable basis~~companies, ~~the~~Alltel ~~Company~~is ~~has~~able ~~endeavored~~ to ~~negotiate~~offer ~~more favorable terms and conditions under~~ its ~~roaming agreements with other~~customers ~~domestic~~ competitively-priced ~~wireless~~rate ~~companies.~~plans Asthat ~~previously~~provide ~~discussed,~~nationwide ~~these~~coverage. ~~roaming~~These roaming agreements provide ~~ALLTEL'~~Alltel’s customers with the capability to use their wireless telephones while traveling outside the Company'’s service areas. In ~~conjunction with the wireless assets exchange transaction completed in~~ 2000, ~~ALLTEL~~ Alltel and Verizon Wireless ~~also~~ signed a reciprocal roaming ~~agreements.~~ ~~These agreements~~agreement, which ~~expire~~ expires in January 2010. During 2006, ~~allow~~Alltel ~~customers~~signed ofa ~~each~~10-year ofroaming ~~the~~agreement with ~~companies~~ Sprint Nextel toCorporation ~~roam~~(“Sprint”) onand ~~each~~extended ~~other's~~its ~~networks~~GSM ~~across~~roaming aagreement ~~footprint~~with Cingular ~~that~~until ~~covers~~2012. ~~approximately~~The ~~95 percent~~Sprint ofroaming ~~the~~agreement ~~U.S.~~provides ~~population.~~for Asvoice, a1xRTT and EV-DO ~~result~~roaming ofand ~~these~~expands ~~roaming~~on ~~agreements,~~Alltel’s ~~ALLTEL~~existing ~~can~~roaming ~~offer~~relationship towith Sprint, ~~customers~~ while ~~profitably~~the ~~its~~Cingular ~~one-rate~~roaming ~~pricing~~agreement ~~plans,~~provides ~~Total~~for ~~and~~expansion ~~National~~of ~~Freedom.~~GSM ~~While these~~roaming ~~national~~ services ~~rate~~into ~~plans~~areas ~~provide~~outside ~~the~~of ~~Company~~Alltel’s ~~the~~GSM ~~ability~~footprint tothat ~~compete~~had ~~effectively~~been ~~for~~acquired in the ~~high volume,~~Western ~~roaming~~Wireless ~~customer,~~transaction. ~~retail~~These roaming ~~revenues~~agreements ~~will~~allow ~~continue~~customers of each toof ~~decline to~~ the ~~extent customers~~companies ~~migrate~~ to ~~these~~roam ~~national~~on ~~rate~~each ~~plans~~other’s networks.

During 2006, Alltel launched its “My Circle” service offering. My Circle allows customers on select plans to choose ten numbers they want to call for free - any number, any network. These numbers are shared by other lines on the account and can be changed daily by accessing an online account system. Calls to and from these numbers, whether to a wireless or landline number, are free for the customer. My Circle has helped differentiate Alltel in the market while allowing customers to have control over their wireless service. Additionally, My Circle promotes customer loyalty. Existing customers were allowed to take advantage of My Circle without having to extend their contracts.

ALLTEL Corporation

Form 10-K, Part I

Item 1. Business

~~WIRELESS~~Product Offerings ~~OPERATIONS~~and Pricing (~~continued~~Continued)

~~PRODUCT~~During 2006, ~~OFFERINGS~~Alltel ~~AND~~expanded ~~PRICING~~its ~~(continued)~~data service offerings through its first quarter launch of a new Mobile Web 2.0 service and second quarter launch of streaming radio service called “Axcess Radio”, which offers customers more than 40 channels of commercial free music. During the third quarter of 2006, Alltel became the first domestic carrier to provide XM radio to its customers via their mobile handsets and to offer a mobile podcasting service. In the fourth quarter of 2006, Alltel introduced its first location-based product offering, “Axcess Mobile Guide” available on the Samsung u520 and TeleNav GPS Navigator for the BlackBerry® 8703e handset devices. Axcess Mobile Guide offers customers with point to point navigation, as well as local search capabilities for restaurants, gas stations, ATM’s, movie theaters, lodging and emergency services.

In 2006, Alltel ~~addition~~experienced tosignificant ~~these~~growth ~~voice~~in ~~features,~~data inrevenues ~~early~~primarily ~~2004,~~driven ~~the~~by expansion ~~Company~~of ~~launched~~its ~~Touch2Talk~~Axcess Broadband data network, ~~which~~increased isavailability of smart phone and PC data card devices, and the launch of a ~~walkie~~new push e-~~talkie~~mail service called ~~designed~~“Office toSync” ~~make~~in itthe ~~easy~~second ~~for~~quarter ~~customers~~of 2006. In order to ~~talk~~maximize the wireless data capabilities of the smart phone devices sold to its business ~~associates~~ customers, ~~family~~Alltel entered into several joint marketing relationships with third party software vendors, such as Skyscape, for intelligent healthcare solutions and ~~friends~~GE atSecurity ~~the~~Supra ~~touch~~eKEY™ offor aproperty ~~button~~listing updates and electronic key boxes for realtors. ~~Touch2Talk~~These ~~service~~applications isenable aAlltel’s ~~niche~~wireless data customers ~~product~~ to ~~offered~~access bycritical ~~several~~information ~~other~~at ~~carriers~~anytime from anywhere in the United States. In January ~~Touch2Talk~~2007, Alltel launched “Celltop”, which is ~~differentiated~~currently byavailable ~~its~~on ~~ability~~the Samsung tou520 handset and will be available on all new phones by late 2007. ~~offer~~ Celltop ~~users~~offers ~~real-time~~customers ~~presence~~an easier way to access, ~~which~~manage ~~allows~~and organize a ~~user~~wide range toof ~~determine~~information ifalready ~~another~~available ~~user~~via their cell phone. Celltop is free-of-charge and currently offers 10 cells that come pre-installed and ~~available~~ via download. toEach ~~receive~~cell is a ~~walkie~~category-~~talkie~~specific ~~call,~~half screen comprised of graphics and text ~~its~~that ~~ability~~provides toshortcuts ~~allow~~for users to ~~easily~~navigate ~~alternate between~~through ainformation ~~walkie-talkie~~and applications including call ~~and~~log, aweather, ~~regular~~news, ~~cellular~~baseball, ~~call.~~basketball, football, rodeo, stocks, text messaging inbox and ringtones.

InAlltel offers ~~response~~prepaid tovoice ~~increasing~~service ~~demand~~under two product names, ~~the~~“U ~~Company~~Personalized ~~continued~~Prepaid” and to“Simple ~~expand~~Freedom”. ~~its~~Prepaid ~~various~~service ~~data~~offers ~~solutions to~~an ~~its~~alternative ~~customers~~to inpostpaid ~~2004~~service. Paying ~~Axcess,~~in ~~ALLTEL's~~advance ~~brand~~for ~~name~~service ~~for~~allows ~~its~~customers ~~suite~~to ofcontrol ~~data~~their ~~services,~~payment ~~was~~expenses ~~broadened~~ and ~~throughout~~avoid ~~the~~overage ~~year~~charges, tobecause ~~include~~prepaid ~~many~~service ~~new~~is ~~downloadable~~only ~~wireless~~active ~~applications~~until ~~such as~~the ~~games,~~ funds ~~ringtones,~~on ~~wallpaper~~the ~~and~~account ~~office~~are ~~applications~~depleted. ~~Through~~“U ~~its~~Personalized ~~Axcess~~Prepaid” ~~product, ALLTEL~~was ~~also~~launched ~~offers~~in ~~text and picture messaging~~the ~~services.~~ first ~~During~~quarter ~~2004,~~of ~~ALLTEL~~2006 ~~also~~in ~~continued~~Alltel’s toretail ~~expand~~stores ~~its~~and ~~1XRTT~~authorized ~~high-speed~~agent ~~data network.~~locations At and ~~December 31,~~allows ~~2004,~~customers ~~the~~to ~~Axcess~~select ~~high-speed~~from ~~data~~a ~~network~~family ~~had~~of ~~been~~customizable ~~implemented~~rate ~~in markets~~plans, ~~covering~~ including ~~approximately~~options ~~50 percent~~to ofpay ~~ALLTEL's~~by ~~POPs.~~the ~~Text~~minute, ~~Messaging~~the ~~continues~~day toor be the ~~flagship~~ ~~data~~month. ~~product~~Simple Freedom is sold exclusively in ~~the~~Wal-Mart ~~Axcess~~and ~~suite,~~Kmart ~~exhibiting~~stores ~~growth~~and inoffers ~~excess~~a ofsingle ~~200 percent~~pay ~~during~~as ~~fiscal~~ you ~~2004.~~go (by Athe ~~large~~minute) ~~scale~~rate ~~promotion~~plan. ~~aimed~~Alltel’s atprepaid ~~increasing~~customers ~~text~~are ~~messaging~~also ~~usage~~able ~~and~~to ~~adoption,~~choose ~~using~~ from ~~Super~~many ~~Bowl~~Axcess ~~XXXIX~~services, asincluding atext ~~backdrop~~messaging, ~~began~~picture inmessaging ~~the~~and content ~~latter~~downloads. ~~half~~As of ~~2004~~December ~~and~~31, ~~had~~2006, aprepaid ~~positive~~customers represented ~~effect~~ approximately on10 ~~the~~percent ~~entire~~of ~~suite~~Alltel’s ofwireless ~~data~~customer ~~products~~base.

~~ALLTEL~~Primarily driven ~~also~~by ~~offers~~improvements ~~several~~in ~~prepaid~~data ~~alternatives~~revenues ~~designed~~and tothe ~~increase~~effects ~~market~~of ~~penetration.~~Universal ~~One~~Service ~~alternative,~~ Fund ~~''Pay-As-You-Go'',~~(“USF”) issupport areceived ~~traditional~~by ~~prepaid~~Alltel ~~service~~as inan ~~which~~Eligible ~~the customer~~Telecommunications ~~purchases~~ Carrier a(“ETC”), ~~set~~retail ~~amount~~revenue ofper ~~airtime~~customer toper bemonth ~~used~~increased as1 ~~needed~~percent to $47.02 ~~Prepaid~~in ~~package~~2006, ~~plans~~compared ~~present customers~~to ~~with~~$46.68 ~~slightly~~in ~~different~~2005. ~~prepaid~~Maintaining ~~solutions~~low bypostpay ~~offering~~customer churn ~~monthly~~rates ~~access~~(average ~~for~~monthly ~~buckets~~rate of ~~anytime~~ ~~and~~customer ~~night~~disconnects) ~~and~~is ~~weekend~~a ~~minutes.~~primary ~~This~~goal of the ~~solution~~Company, ~~targets~~particularly ~~new~~as ~~market~~customer ~~segments~~growth ~~that~~rates ~~desire monthly~~slow ~~access~~due ~~and~~to ~~buckets~~increased competition ofand ~~minutes~~higher ~~but~~penetration ~~choose~~levels ~~prepaid~~in tothe ~~control expenses~~marketplace. ~~Several~~Alltel ~~voice~~experienced ~~and~~ an ~~data~~average ~~feature~~monthly ~~enhancements,~~postpay ~~including~~customer ~~text~~churn ~~messaging,~~rate ~~are~~in ~~available~~its ~~with~~wireless ~~prepaid~~service ~~offerings~~areas ~~as well~~ of 1.57 Inpercent ~~addition,~~for ~~through~~the ayear ~~distribution~~ended ~~agreement~~December ~~with~~31, ~~Wal-Mart~~2006, ~~the~~compared ~~Company~~to ~~also~~1.77 ~~offers~~percent ~~prepaid~~ and 1.74 ~~service~~percent ~~under~~for the ~~''Simple~~years ~~Freedom''~~ended ~~trademark.~~December ~~Simple~~31, ~~Freedom~~2005 ~~offers~~and ~~nationwide calling~~2004, arespectively. To improve ~~flat~~customer ~~rate~~retention, ~~per~~Alltel ~~minute~~continues ~~and~~to ~~does~~upgrade ~~not~~its ~~require~~telecommunications network ain ~~deposit~~order orto ~~service~~offer ~~contract.~~expanded Asnetwork ~~of December 31,~~coverage ~~2004,~~and ~~prepaid~~quality ~~customers~~and ~~represented~~to ~~approximately~~provide enhanced ~~9 percent~~service ofofferings ~~ALLTEL's~~to ~~wireless customer~~its ~~base~~customers.

Primarily as a result of the increased sales of the Company's higher-yield local, regional and national calling plans and increased sales of data services, retail revenue per customer per month increased to $44.39 in 2004, compared to $43.39 in 2003 and $42.90 in 2002. The increase in retail revenue per customer per month in 2004 and 2003 was partially offset by decreased wholesale roaming rates, which resulted in average revenue per customer per month of $48.13 in 2004, compared to $47.51 in 2003 and $46.97 in 2002. Marketing

~~Maintaining~~Alltel’s marketing ~~low~~strategy ~~postpay customer churn rates (average monthly rate of customer disconnects)~~ is a ~~primary~~to ~~goal~~create ofand ~~the~~execute ~~Company~~products, ~~particularly~~services asand communications ~~customer~~that drive growth ~~rates~~while ~~slow~~optimizing ~~due~~its tomarketing ~~increased~~return on ~~competition~~ investment and ~~higher~~minimizing ~~penetration~~customer ~~levels~~churn ~~occur~~rates. inThe ~~the~~Company’s ~~marketplace.~~marketing campaigns ~~ALLTEL~~emphasize ~~experienced~~that ~~an average~~Alltel ~~monthly~~is ~~postpay~~a customer-focused ~~churn~~communications ~~rate~~company offering inthe ~~its~~nation’s largest wireless ~~service~~network—covering ~~areas~~more of ~~1.74 percent~~the ~~for~~country ~~the~~than any ~~year~~other ~~ended~~wireless ~~December 31,~~company. ~~2004,~~The ~~compared~~Company tobuilds ~~2.09 percent~~consumer awareness and ~~2.23 percent~~promotes the ~~for~~Alltel ~~the years~~brand ~~ended~~by ~~December 31,~~strategically ~~2003~~advertising and ~~2002,~~differentiating ~~respectively. To improve~~ relevant customer ~~retention~~benefits, ~~the Company~~calling ~~offers competitively priced rate~~ plans, ~~proactively~~price ~~analyzes~~promotions ~~customer usage patterns~~ and ~~migrates~~new ~~customers to newer digital handsets~~products. ~~ALLTEL~~The Alltel brand ~~also~~works ~~continues~~ to ~~upgrade~~establish ~~its telecommunications~~an ~~network~~emotional inconnection ~~order~~with tocurrent ~~offer~~and ~~expanded~~prospective customers ~~network~~by ~~coverage~~focusing ~~and~~on ~~quality~~meeting ~~and~~the ~~to provide~~real ~~enhanced~~needs ~~service~~of ~~offerings~~the ~~to its customers~~customer. The Company’s marketing ~~believes~~campaigns ~~that~~target ~~its improvements~~distinct in customer ~~service~~segments ~~levels,~~by ~~proactive~~usage ~~retention~~patterns including ~~efforts~~individuals, families, and ~~digital~~businesses. ~~network expansion~~Alltel ~~contributed~~uses segmented marketing to ~~the~~target ~~decrease~~new incustomers, ~~postpay~~especially ~~customer~~those ~~churn~~switching infrom ~~both~~other ~~2004~~carriers, as ~~and~~well as ~~2003~~retaining current customers.

MARKETING

ALLTEL's marketing strategy is to create and execute products, services and communications that drive growth while optimizing costs and minimizing customer churn rates. The Company's marketing campaigns emphasize that ALLTEL is a customer-focused communications company. The Company builds consumer awareness and promotes the ALLTEL brand by strategically advertising and differentiating relevant customer benefits, calling plans, price promotions and new products. The ALLTEL brand works to establish an emotional connection with current and prospective customers by focusing on meeting the real needs of the customer. The Company's marketing campaigns target distinct customer segments by usage patterns including individuals, families, and businesses. ALLTEL uses segmented marketing to target new customers, especially those switching from other carriers, as well as retaining current customers.

ALLTEL Corporation

Form 10-K, Part I

Item 1. Business

~~WIRELESS OPERATIONS (continued)~~ Distribution

~~DISTRIBUTION~~Alltel distributes its products and services in each of its markets through Company retail stores, Company retail kiosks, dealers and direct sales representatives. Alltel also distributes products utilizing direct fulfillment to customers who shop online at Alltel’s web store or by phone through Alltel’s sales action call centers. Using multiple distribution channels in each of its markets enables the Company to provide effective and extensive marketing of Alltel’s products and services and to reduce its reliance on any single distribution channel.

~~ALLTEL~~Alltel currently ~~utilizes~~conducts ~~four methods of distributing~~ its ~~wireless~~retail ~~products~~operations ~~and services~~ in ~~each~~almost of800 ~~its~~locations strategically ~~markets:~~ located ~~Company~~in ~~retail~~neighborhood ~~stores, Company~~ retail ~~kiosks,~~centers ~~dealers~~ and ~~direct~~shopping ~~sales representatives.~~malls ~~Using~~to ~~multiple~~capitalize ~~distribution channels in each of its markets enables the~~on ~~Company~~ favorable todemographics ~~provide effective~~ and ~~extensive~~retail ~~marketing~~traffic ofpatterns. ~~ALLTEL'~~The Company’s ~~products~~retail ~~and~~focus is ~~services and~~ to ~~reduce~~ ~~its~~attract ~~reliance~~new oncustomers ~~any~~through ~~single~~competitive ~~distribution~~phone ~~channel. Dealer~~ and ~~direct~~service ~~sales channels~~offerings ~~remain important components of the Company's overall distribution strategy, with the primary~~ as ~~objective~~ well ~~for~~as ~~all channels being~~ to ~~produce~~offer ~~the~~existing ~~best~~customers ~~combination~~new ~~of lower customer acquisition costs~~ and ~~higher~~expanded ~~customer retention rates~~services.

~~ALLTEL~~Alltel also ~~currently~~contracts ~~conducts~~with ~~its~~large national retail ~~operations~~stores into ~~approximately~~sell ~~800~~wireless ~~locations strategically~~products ~~located~~ and services indirectly ~~neighborhood~~through its own kiosks. The Company utilizes retail ~~centers~~sales representatives ~~and~~at ~~shopping~~kiosks ~~malls~~in tolarge ~~capitalize~~retailers onto ~~favorable demographics~~take ~~and~~advantage ~~retail~~of high traffic generated ~~patterns.~~by ~~The~~the ~~Company's~~retailers. ~~retail~~Existing ~~focus~~customers iscan topurchase ~~attract~~wireless ~~new~~telephone ~~customers~~ accessories, ~~through~~pay ~~competitive~~bills ~~service~~or ~~offerings~~inquire ~~and~~about anAlltel’s ~~efficient~~services ~~sales~~and ~~process.~~features ~~For~~while ~~ALLTEL,~~in ~~the~~ retail ~~incremental~~stores ~~cost~~or ofat ~~obtaining~~kiosks. aThrough dedicated customer ~~through~~service aat ~~Company~~its retail stores ~~store~~and kiosks, the Company’s goal is to build customer loyalty and increase the ~~lowest~~retention rate of ~~any~~ ~~distribution~~new ~~channel~~and existing customers.

~~ALLTEL~~Alltel’s direct ~~also~~sales ~~contracts~~force ~~with~~focuses ~~large~~its ~~national~~efforts ~~retail~~on ~~stores~~selling toand ~~sell~~servicing ~~wireless~~larger ~~products~~business customers ~~and~~who ~~services directly~~have ~~through~~multiple ~~its~~lines ~~own~~of ~~kiosks~~service. ~~The~~Direct ~~Company utilizes retail~~ sales representatives ~~at kiosks~~ in are trained ~~large retailers~~ to ~~take~~sell ~~advantage of high traffic generated by the retailers,~~ to ~~reduce the cost of the sale,~~ and toservice ~~ensure customers receive proper training in~~ the ~~use~~demands of larger wireless ~~equipment~~ ~~and services. Existing~~ customers ~~can purchase wireless telephone accessories, pay~~who ~~bills~~ often orhave ~~inquire~~special ~~about ALLTEL's services and features while in retail stores or at kiosks. Through dedicated customer~~ service ~~at its retail stores~~ and ~~kiosks,~~equipment ~~the Company's goal is to build customer loyalty and increase the retention rate of new and existing customers~~requirements.

The Company enters into dealer agreements with ~~electronics~~national and local retailers and discounters in its markets. ~~These local dealers may offer other wireless services like paging.~~ In exchange for a commission payment, these dealers solicit customers for the Company'’s wireless ~~service~~services. The commission payment is subject to charge-back provisions if the customer fails to maintain ~~service~~ service for a specified period of time. ~~This~~Similar to the Company’s retail stores and kiosks, the majority of Alltel’s dealers can also service existing customers by offering additional services, features, accessories, and taking bill payments. This arrangement increases store traffic and sales volume for the dealers and provides a valuable source of new customers for the Company. ~~ALLTEL~~ ~~actively~~Alltel actively supports its dealers with regular training and promotional support.

~~ALLTEL'~~Alltel provides consumers an opportunity to shop for the majority of Alltel’s ~~direct~~products and ~~sales~~services ~~force~~by ~~focuses~~phone ~~its~~or ~~efforts~~the oninternet ~~business~~via ~~customers~~Alltel’s ~~with~~web ~~high~~store, ~~wireless~~shopalltel.com. ~~telephone~~ Phones ~~usage~~ and ~~multiple~~accessories ~~lines~~purchased ofthrough ~~service.~~these ~~This~~distribution ~~channel~~channels ~~produces~~are delivered directly to the ~~lowest~~customer. ~~churn compared~~These channels provide customers with exclusive ~~any~~pricing ~~other~~where ~~distribution~~appropriate, ~~channel.~~and are able to respond quickly to market changes.

~~COMPETITION~~ Competition

Substantial and increasing competition exists within the wireless communications industry. Cellular, PCS and Enhanced Specialized Mobile Radio service providers may operate in the same geographic area, along with any number of resellers that buy bulk wireless services from one of the wireless providers and resell it to their customers. PCS services generally consist of wireless two-way communications services for voice, data and other transmissions employing digital technology. The entry of multiple competitors, including PCS providers, within the Company'’s wireless markets has made it increasingly difficult to attract new customers and retain existing ones. Competition for customers among wireless service providers is based primarily on the types of services and features offered, call quality, customer service, ~~system~~ network coverage, and price. ~~ALLTEL~~Alltel has responded to this growing competitive environment by capitalizing on its position as an incumbent wireless service provider by providing high capacity networks, strong distribution channels and superior customer service and by ~~developing~~ developing competitive rate plans and offering new products and services. ~~ALLTEL'~~Alltel’s ability to to compete successfully in the future will depend upon the Company'’s ability to anticipate and respond to changes in technology, customer preferences, new service offerings, demographic trends, economic conditions, and competitors' ’ pricing strategies.

In the current wireless market, ~~ALLTEL'~~Alltel’s ability to compete also depends on its ability to to offer regional and national calling plans to its customers. As previously noted, the Company depends on roaming agreements with other wireless carriers to provide roaming capabilities in areas not covered by ~~ALLTEL'~~Alltel’s network. These agreements are subject to renewal and termination if certain events occur, including if network quality standards are not maintained. If the Company were unable to maintain or renew these agreements, ~~ALLTEL'~~Alltel’s ability to continue to provide competitive regional and nationwide wireless service to its ~~customers~~ customers could be impaired, which, in turn, would have an adverse effect on its ~~wireless~~ operations.

ALLTEL Corporation

Form 10-K, Part I

Item 1. Business

~~WIRELESS OPERATIONS (continued)~~ Technology

~~TECHNOLOGY~~Since inception, mobile wireless technologies have seen significant improvements in speed, capacity, quality, and reliability. The first-generation of wireless technology was analog, while second-generation technologies employ digital signal transmission technologies. Third-generation technologies, which are currently being deployed in the United States, provide even greater data transmission rates and allow the provision of enhanced data services.

~~Since~~Alltel will ~~inception,~~maintain ~~mobile~~its ~~wireless~~first-generation ~~technologies~~analog ~~have~~services ~~seen~~until ~~significant~~such ~~improvements~~time inas ~~both~~the FCC ~~speed~~no ~~and~~ longer ~~reliability~~requires it. ~~The~~By ~~first~~the ~~generation~~end of ~~wireless~~2006, ~~technology~~less ~~was~~than ~~analog,~~two ~~while~~percent ~~second~~of Alltel’s ~~generation~~ traffic ~~technologies~~remained ~~employ~~on its analog network. Second-generation digital ~~signal~~systems in ~~transmission~~the U. ~~technologies~~S. ~~Third~~compress ~~generation technologies~~voice and data signals, ~~which~~enabling ~~are~~a ~~just~~single ~~beginning~~radio channel to simultaneously becarry ~~deployed~~multiple insignal ~~the U~~transmissions.~~S.,~~ ~~provide~~Compared ~~even~~to ~~greater~~analog, ~~data~~CDMA ~~transmission~~ digital ~~rates~~technology ~~and~~provides ~~allow~~expanded ~~the~~channel ~~provision~~capacity ofand ~~enhanced~~the ~~data~~ability to offer advanced services and functionality. In addition, digital technology improves call quality and offers improved customer call privacy.

~~ALLTEL~~Third-generation digital ~~will~~wireless ~~maintain~~technologies ~~its~~increase ~~first~~voice ~~generation~~capacity, ~~analog~~allow ~~services~~high-speed ~~until~~wireless packet ~~the~~data ~~FCC~~services, noand ~~longer~~are ~~requires~~capable ~~it or~~of assupporting ~~long~~more ascomplex ~~non-CDMA~~data applications. ~~operators~~In ~~continue~~2006, Alltel continued to ~~request~~deploy ~~roaming~~CDMA ~~services.~~2000 ~~The~~1xRTT ~~Company~~data ~~has~~services, ~~effectively~~ bringing ~~completed~~this ~~the~~third-generation ~~deployment~~coverage ofto ~~its~~94 ~~CDMA~~percent ~~digital~~of ~~network~~Alltel’s ~~throughout~~POPs, ~~its~~up ~~wireless~~from ~~markets,~~ 92 ~~offering~~percent ~~its~~in ~~customers~~2005. ~~quality~~In ~~second~~addition, ~~generation~~during ~~voice~~2006 ~~and~~the ~~circuit~~Company ~~switch~~expanded ~~data.~~its ByCDMA ~~the~~ 2000 1xEV-DO ~~end~~deployments ofto ~~2004,~~include ~~less~~50 ~~than 3~~ percent of ~~ALLTEL'~~Alltel’s ~~traffic~~cell ~~remained~~sites. onThe ~~its analog network.~~Company ~~Second~~ will ~~generation~~continue ~~digital~~to ~~systems~~deploy in1x-EVDO ~~the~~and U.expects S.to ~~compress~~equip ~~voice~~approximately or65 ~~data~~percent of its ~~signals~~cell ~~enabling~~sites ~~a single~~with ~~radio~~1x-EVDO ~~channel~~capability toby ~~simultaneously~~the ~~carry~~end ~~multiple~~of ~~signal~~2007, ~~transmissions.~~and ~~CDMA digital~~approximately ~~technology~~ 90 percent ~~provides~~of ~~expanded~~Alltel’s ~~channel~~POPs ~~capacity~~will ~~and~~be ~~the~~covered ~~ability~~as toa ~~offer~~result ~~advanced~~of ~~services~~EV-DO ~~and~~roaming ~~functionality~~ agreements. InEV-DO ~~addition,~~technologies ~~digital~~provide ~~technology~~a ~~improves~~broadband ~~call~~wireless ~~quality~~environment ~~and~~capable of ~~offers~~supporting ~~improved~~various leading edge wireless multimedia features and services ~~customer~~ along ~~call~~with ~~privacy~~enhanced speed on currently offered applications.

Third generation digital wireless technologies increase voice capacity, allow high-speed wireless packet data services and are capable of supporting more complex data applications. In 2004, ALLTEL deployed CDMA2000 1XRTT data services in selected markets bringing coverage at year end to approximately 50 percent of ALLTEL's POPs. During 2005, the Company plans to continue expanding 1XRTT data deployments in additional markets with an expected total coverage of more than 90 percent of ALLTEL's POPs by the end of 2005. In addition, during 2004 the Company deployed CDMA2000 1xEV-DO in selected key markets, and anticipates expanding its deployment of EV-DO into 6 to 10 additional markets during 2005. EV-DO technologies provide a broadband wireless environment capable of supporting various leading edge wireless multimedia features and services along with enhanced speed on currently offered applications. Regulation

~~REGULATION~~Alltel is subject to regulation primarily by the FCC as a provider of Commercial Mobile Radio Services (“CMRS”). The FCC’s regulatory oversight consists of ensuring that wireless service providers are complying with the Communications Act of 1934, as amended (the “Communications Act”), and the FCC’s regulations governing technical standards, spectrum usage, license requirements, market structure, consumer protection, including public safety issues like enhanced 911 emergency service (“E-911”) and the Communications Assistance for Law Enforcement Act (“CALEA”), and environmental matters governing tower siting. State public service commissions are pre-empted under the Communications Act from regulatory oversight of wireless carriers’ market entry and retail rates, but they are entitled to address certain terms and conditions of service offered by wireless service providers. The nation’s telecommunications laws continue to be reviewed with bills introduced in Congress, rulemaking proceedings pending at the FCC, and state regulatory initiatives, the effects of which could significantly impact Alltel’s wireless telecommunications business in the future.

~~The Company is subject to regulation by~~Regulation ~~the~~ - ~~FCC~~Wireless as a provider of Commercial Mobile Radio Services (''CMRS''). The FCC regulates the licensing, construction, and operation of CMRS and other wireless communications systems, as well as the provision of services over those systems. The FCC has exercised its authority to refrain from rate regulation of wireless communications services, but retains its statutory authority to impose such regulation by prohibiting unjust or unreasonably discriminatory rates through complaint proceedings. The Company also is subject to state regulation with respect to the terms and conditions of its provision of CMRS. States may petition the FCC for authority to regulate rates if the states demonstrate that (1) the market has failed to protect consumers from unreasonable, unjust or discriminatory rates; or (2) market conditions exist such that CMRS are a replacement for land line telephone exchange service for a ''substantial'' portion of the telephone land line exchange service within each state. Spectrum

~~The~~Alltel holds ~~Telecommunications~~FCC ~~Act~~authorizations offor ~~1996~~Cellular ~~(''96~~Radiotelephone ~~Act''~~Service (“CRS”), ~~provides~~PCS, ~~wireless~~and paging ~~carriers~~services, ~~numerous opportunities~~as towell ~~provide~~as anancillary ~~alternative~~authorizations toin the ~~telephony~~private ~~services provided by local exchange~~radio ~~telephone companies~~ and microwave ~~interexchange~~services ~~carriers.~~(collectively, ~~These~~the ~~opportunities~~“FCC ~~include~~Licenses”). ~~the~~Generally, ~~ability~~FCC tolicenses ~~provide~~ are ~~calling~~issued ~~plans~~initially ~~that~~for ~~integrate~~10-year orterms ~~bundle~~and ~~both~~may ~~local~~be ~~calling~~renewed ~~and~~for ~~long~~additional 10-~~distance service.~~year ~~Under~~ terms ~~the~~upon 96FCC ~~Act~~approval ~~and~~of the ~~FCC's~~renewal ~~rules,~~application. ~~wireless~~The ~~telecommunications~~Company ~~carriers~~has ~~are~~routinely ~~entitled~~ sought toand ~~reciprocal~~been ~~compensation~~granted ~~from~~renewal ~~local~~of ~~exchange~~its ~~carriers~~FCC ~~(''LECs'')~~Licenses ~~for~~without ~~calls~~contest ~~transmitted~~and anticipates ~~from~~that ~~the~~future ~~LECs'~~renewals ~~networks~~of ~~and~~its ~~terminated~~FCC onLicenses ~~the~~will ~~wireless~~be ~~carriers' networks~~granted. ~~Additionally~~Minority, ~~wireless~~ ~~carriers~~ non-controlling ~~are~~interests ~~characterized~~in asan ~~''telecommunications~~FCC ~~carriers''~~license ~~under~~generally ~~the~~may 96be ~~Act and not LECs.~~transferred ~~Consequently,~~ or assigned ~~CMRS~~without ~~carriers~~prior ~~are~~FCC ~~not~~approval, subject to ~~the~~compliance ~~interconnection,~~with ~~resale,~~the ~~unbundling, and~~restrictions ~~other obligations applicable to LECs~~ under the 96 Act ~~until~~on ~~such~~ownership ~~time~~interests asheld ~~the~~by ~~FCC~~foreign ~~makes a finding that treatment of CMRS carriers as LECs is warranted~~entities. ~~The 96 Act also eliminated any~~However, ~~requirement~~ significant ~~that~~changes ~~CMRS~~in ~~carriers~~ownership ~~provide~~or ~~subscribers~~control ~~with~~of ~~equal~~an ~~access~~FCC tolicense ~~their~~require ~~long distance~~prior ~~carrier~~ approval ofby ~~choice, although~~ the FCC, isand ~~empowered~~interested ~~under~~parties ~~the~~are 96afforded ~~Act~~the opportunity to ~~impose an equal access~~file ~~requirement~~ comments onor ~~CMRS~~formal ~~carriers~~petitions ~~through~~contesting ~~rulemaking~~the ~~should market conditions so warrant~~transaction.

~~The~~All of the Company’s ~~holds~~PCS ~~FCC~~licenses ~~authorizations~~are for ~~Cellular~~10 ~~Radiotelephone~~MHz-wide ~~Service~~broadband ~~(''CRS''), Personal Communications Service (''~~PCS~~''),~~ ~~and paging services, as well as ancillary authorizations in the private radio and microwave services (collectively, the ''FCC Licenses'')~~systems. ~~Generally, FCC~~PCS licenses are ~~issued~~granted ~~initially~~ for 10-year terms, and ~~may~~licensees bemust ~~renewed~~meet ~~for~~certain ~~additional 10-year~~network ~~terms~~ build-out ~~upon~~requirements established by the FCC ~~approval~~to ofmaintain the ~~renewal~~license ~~application~~in good standing. ~~The~~In ~~Company~~order ~~has~~to ~~routinely~~meet ~~sought~~the ~~and~~FCC’s ~~been granted~~build-out ~~renewal~~requirements, ofthe ~~its~~Company ~~FCC~~must construct ~~Licenses~~networks ~~without~~in ~~contest~~each ~~and~~licensed ~~anticipates~~market that ~~future~~provide ~~renewals~~coverage ofto at least ~~its~~ 25 percent ~~FCC~~of ~~Licenses~~the ~~will~~population bein ~~granted.~~the ~~Significant~~market ~~changes~~within infive ~~ownership~~years orafter ~~control~~the initial grant of anthe ~~FCC~~ license ~~require~~or, ~~prior~~alternatively, ~~approval~~make bya ~~the~~showing ~~FCC,~~of ~~and~~“substantial ~~interested~~service” within ~~parties~~that ~~are~~same ~~afforded~~five-year ~~the~~period. ~~opportunity to~~Alltel ~~file~~met ~~comments~~the orFCC’s ~~formal~~build ~~petitions~~out ~~contesting~~requirements for ~~the~~its ~~transaction~~PCS licenses.

ALLTEL Corporation

Form 10-K, Part I

Item 1. Business

~~WIRELESS~~Regulation - ~~OPERATIONS~~Wireless Spectrum (~~continued~~Continued)

~~REGULATION~~Cellular systems ~~(continued)~~operate on one of two 25 MHz-wide frequency blocks that the FCC allocates and licenses for CMRS service referred to as the A and B block cellular systems. The FCC has eliminated the limitation on the amount of CMRS spectrum that a licensee may hold and the prohibition on the common ownership of both cellular licenses in the same metropolitan market. The FCC has also eliminated the prohibition on the common ownership of both cellular licenses in the same rural market.

~~Minority~~The FCC conducts proceedings through which additional spectrum is made available for the provision of wireless communications services, ~~non-controlling~~including ~~interests~~broadband inservices. Additional spectrum is generally made available to carriers through auctions conducted by the FCC. In October 2003, the FCC issued an order adopting rules that allow CMRS licensees to lease spectrum to others. The FCC ~~license~~further streamlined ~~generally~~its ~~may~~rules beto ~~transferred~~facilitate orspectrum ~~assigned~~leasing in a subsequent order ~~without~~ issued ~~prior~~in September 2004. The FCC’s ~~approval,~~spectrum ~~subject~~leasing rules revise the standards for transfer of control and provide new options for the lease of spectrum to providers ~~compliance~~of new and existing wireless technologies. The FCC decisions provide increased flexibility to wireless companies with regard to obtaining additional spectrum through leases and retaining spectrum acquired in conjunction with wireless company acquisitions. The FCC recently completed the ~~restrictions~~auction ~~under~~for Advanced Wireless Services (“AWS”) spectrum and must begin the 96auction ~~Act~~of spectrum onin the 700 MHz band no later than January 28, 2008. Alltel did not ~~ownership~~ participate ~~interests~~in ~~held~~the byAWS ~~foreign~~spectrum ~~entities~~auction. The FCC is currently considering the spectrum plan and service rules that will be applicable to the 700 MHz spectrum. Alltel has made no determination as to whether it will participate in the auction at this time.

~~All of the Company's PCS licenses are for 10 MHz-wide broadband PCS systems. PCS licenses~~Under ~~are~~ FCC and ~~granted~~Federal ~~for~~Aviation ~~10-year~~Administration ~~terms~~(“FAA”) regulations, ~~and~~wireless ~~licensees~~carriers must comply ~~meet~~with certain ~~network build-out~~ requirements ~~established~~regarding by the ~~FCC~~siting, tolighting ~~maintain~~and ~~the~~construction of ~~license~~transmitter intowers ~~good~~and ~~standing~~antennas. In ~~order to meet the FCC's build-out requirements~~addition, ~~the Company must construct networks in each licensed market that provide coverage to at least 25 percent of the population in the market within five years after the initial grant of the license or~~federal, ~~alternatively~~state, ~~make~~and ~~a showing of~~local ~~''substantial~~ environmental ~~service''~~regulations ~~within~~require ~~that~~carriers ~~same~~to ~~five-year~~comply ~~period.~~with ~~ALLTEL~~land ~~met~~use ~~the~~and ~~FCC's build out~~radio ~~requirements~~ frequency ~~for~~standards ~~its~~and ~~PCS~~require ~~licenses~~wireless byfacilities ~~providing~~and ~~coverage~~handsets to ~~25 percent or more of the~~comply ~~population~~ with radio infrequency ~~each~~radiation ~~licensed market by the end of the five-year build-out period on April 28, 2002~~guidelines.

~~Cellular systems operate on one of two 25 MHz~~Regulation -~~wide~~ ~~frequency~~Universal blocks that the FCC allocates and licenses for CMRS service. Effective January 2003, the FCC eliminated the limitation on the amount of CMRS spectrum that a licensee may hold and the prohibition on the common ownership of both cellular licenses in the same metropolitan market. Effective February 2005, the FCC also eliminated the prohibition on the common ownership of both cellular licenses in the same rural market. Service

InTo ensure affordable anaccess ~~effort~~ to ~~promote~~telecommunications ~~more~~services ~~efficient~~throughout ~~number~~the ~~utilization,~~United States, the FCC ~~adopted~~and ~~rules~~many ~~requiring~~state commissions administer universal service programs. CMRS providers toare ~~participate~~required into acontribute ~~nationwide~~to ~~number~~the ~~conservation~~federal ~~program~~USF ~~known~~and asare required ~~''thousand~~ to ~~block~~ contribute ~~number~~to ~~pooling''~~some instate ~~accordance~~universal ~~with~~service ~~roll~~funds. ~~out~~The ~~schedules~~rules ~~established~~and bymethodology under ~~the~~which ~~FCC,~~carriers ~~and~~contribute to the ~~extent~~federal ~~applicable,~~fund ~~state-sponsored~~are ~~number~~the ~~pooling~~subject ~~trials.~~of ~~Under~~an ongoing ~~number~~FCC ~~pooling,~~rulemaking ~~carriers are~~in ~~required~~which toa ~~return~~change ~~unused~~from ~~numbers~~the incurrent ~~their~~interstate revenue-based ~~inventory~~system to asome ~~centrally~~other ~~administered~~system ~~pool~~based ~~and to~~upon ~~accept~~line ~~assignment~~capacity ofor ~~new~~ utilized numbers inis ~~blocks~~being ofconsidered. 1In the meantime,~~000~~ ~~instead~~the ofFCC has increased the ~~10,000~~safe harbor ~~number~~percentage ~~blocks~~of a wireless carrier’s revenue subject to a federal universal ~~previously~~ service ~~assigned~~assessment from 28.5 ~~The~~percent ~~FCC~~to ~~exempted~~37.1 ~~small~~percent and ~~rural~~clarified the alternative methods under which CMRS ~~and~~providers ~~local~~contribute ~~exchange~~to ~~carriers~~the ~~from~~fund. CMRS providers also are eligible to receive support from the ~~pooling~~federal ~~requirement~~USF ~~until~~if ~~such~~they obtain ~~time~~designation as ~~they~~an ~~implement~~ETC. ~~local~~The ~~number~~collection ~~portability~~and indistribution of USF fees ~~response~~ are under tocontinual areview ~~specific~~by ~~request~~federal ~~from~~and ~~another~~state ~~carrier~~legislative and regulatory bodies. A pending FCC proceeding, for example, could change the way universal service programs are funded and the way these funds are disbursed to program recipients.

~~CMRS~~The Company ~~providers~~is indesignated ~~the~~as ~~top~~an ~~100~~ETC ~~markets were~~and ~~required~~receives byUSF ~~the~~support ~~FCC~~in tothe ~~implement~~following states: byAlabama, ~~November 24~~Arkansas, ~~2003~~California, ~~(and~~Colorado, ~~for~~Florida, ~~all~~Georgia, ~~other~~Iowa, ~~markets~~ Kansas, Louisiana, byMichigan, ~~May 24~~Minnesota, ~~2004~~Mississippi, orMontana, ~~six~~Nebraska, ~~months~~Nevada, ~~after~~New Mexico, ~~the~~North ~~carrier~~Carolina, ~~receives~~North ~~its~~Dakota, ~~first request~~South toDakota, ~~port~~Texas, ~~whichever~~Virginia, isWest Virginia, ~~later)~~Wisconsin, ~~wireless~~and ~~local~~Wyoming. ~~number~~The ~~portability~~Company ~~(''WLNP''), which~~also ~~permits~~receives ~~customers~~state touniversal service ~~retain~~support ~~their~~for ~~existing~~certain ~~telephone~~product ~~number~~offerings ~~when~~in ~~switching~~Texas. toThe ~~another~~Communications ~~telecommunications~~ Act and ~~carrier.~~FCC ~~Additionally,~~regulations onrequire ~~November 10,~~that ~~2003,~~universal ~~the~~service ~~FCC~~receipts ~~released~~be aused ~~decision~~to ~~providing~~ provision, ~~guidance~~maintain onand ~~number~~upgrade ~~porting~~the ~~between~~networks ~~wireline~~that ~~and~~provide ~~wireless~~the ~~carriers, or~~supported ~~''intermodal porting''~~ services. ~~The~~Additionally, ~~FCC required LECs in~~ the ~~top~~Company ~~100~~accepted ~~markets,~~certain ~~beginning~~federal onand ~~November 24,~~state ~~2003~~reporting requirements (and ~~beginning~~ ~~on May 24, 2004 for all~~ other ~~markets),~~obligations toas ~~port~~a ~~numbers~~condition toof ~~wireless~~the ~~carriers~~ETC ~~where~~designation. ~~the~~ As ~~coverage area~~ of December ~~the~~31, ~~wireless carrier (i.e.~~2006, the ~~area~~Company inis ~~which~~compliant with the ~~wireless~~FCC ~~carrier~~regulations and ~~provides~~ all ~~service) overlaps~~ of the ~~geographic~~federal ~~location~~and ofstate ~~the~~reporting ~~rate~~requirements ~~center~~and inother ~~which~~obligations. ~~the wireline~~Alltel ~~number~~ expects isto ~~provisioned,~~receive ~~provided~~approximately ~~that~~$65.0 ~~the~~to ~~wireless~~$70.0 ~~carrier~~million ~~maintains~~of ~~the~~USF ~~rate~~support ~~center~~each ~~designation~~ quarter ofduring ~~the number~~2007.

An appeal by the United States Telecommunications Association (''USTA''), along with certain rural telephone companies, of the FCC's November 10, 2003 decision is pending before the U.S. Court of Appeals for the District of Columbia Circuit (the ''D.C. Circuit Court''). To date, the volume of intermodal porting requests processed by the Company for wireless customers has not been significant. In addition, various state public service commissions have granted the requests of rural LECs to suspend their obligations to port numbers to CMRS carriers.

Wireless service providers are required by the FCC to provide enhanced 911 emergency service (''E-911'') in a two-phased approach. In phase one, carriers must, within six months after receiving a request from a phase one enabled Public Safety Answering Point (''PSAP''), deliver both the caller's number and the location of the cell site to the PSAP serving the geographic territory from which the E-911 call originated. A phase one-enabled PSAP is generally one that is capable of receiving and utilizing the number and cell site location data transmitted by the carrier. ALLTEL has generally complied with the phase one requirements and provides service to phase one capable PSAPs. As a result of certain technology and deployment issues, the six month window in which service is to be provided under the FCC rules has, in certain instances and in accordance with the rules, been extended by mutual agreement between ALLTEL and the particular PSAPs involved.

ALLTEL Corporation

Form 10-K, Part I

Item 1. Business

~~WIRELESS OPERATIONS (continued)~~Regulation - E-911

~~REGULATION~~Wireless service providers are required by the FCC to provide E-911 in a two-phased approach. In phase one, carriers must, within six months after receiving a request from a phase one enabled Public Safety Answering Point (~~continued~~“PSAP”), deliver both the caller’s number and the location of the cell site to the PSAP serving the geographic territory from which the E-911 call originated. In phase two, CMRS carriers that have opted for a handset-based solution must determine the location of the caller within 50 meters for 67 percent of the originated calls and 150 meters for 95 percent of the originated calls and deploy Automatic Location Identification (“ALI”) capable handsets according to specified thresholds, culminating with a requirement that carriers reach a 95 percent deployment level of ALI capable handsets within their subscriber base by December 31, 2005. ALI capability permits more accurate identification of the caller’s location by PSAPs. Furthermore, on April 1, 2005, the FCC issued an order imposing an E-911 obligation to deliver ALI data on carriers providing only roaming services. In the acquired Western Wireless properties, Alltel operates a CDMA network with Phase II E-911 capability for its customers and a GSM network without Phase II capability for roamers in the same geographic area. Alltel believes that its multi-technology operations with Phase II CDMA capability is distinguishable from the carrier providing roaming only services specified in the April 1, 2005 order.

InAlltel began ~~phase~~selling ~~two,~~ALI-capable ~~CMRS~~handsets ~~carriers~~in ~~like~~June ~~ALLTEL~~2002 ~~have~~and ~~opted~~had ~~for~~complied awith ~~handset-based solution must~~each ~~determine, for originated calls, the location~~ of the ~~caller~~intermediate ~~within~~handset ~~fifty~~deployment ~~meters~~thresholds ~~for~~under ~~67 percent of~~ the ~~originated~~FCC’s ~~calls~~order ~~and~~or otherwise ~~150~~obtained ~~meters~~short-term ~~for~~relief ~~95 percent~~from of the ~~originated~~FCC ~~calls. The phase two requirements were set~~ to ~~begin~~facilitate ~~by October 1, 2001, but, because of~~ certain ~~technology~~ acquisitions. ~~and~~On ~~other~~September ~~factors~~30, ~~the~~2005, ~~Company~~due ~~requested~~to athe ~~limited~~slowing ~~waiver~~pace of ~~these requirements,~~customer as migration ~~did~~to ~~virtually~~ALI-capable ~~every~~handsets ~~other~~and ~~carrier.~~lower Onthan ~~July 26,~~forecasted ~~2002~~churn, ~~the~~Alltel filed a ~~FCC~~request ~~released~~with anthe ~~order~~FCC ~~granting~~for a ~~temporary~~ ~~stay~~waiver of the ~~E-911~~December ~~emergency~~31, ~~implementation~~2005 ~~rules as they applied~~ requirement to ~~the Company~~ ~~(the~~ achieve ~~''FCC~~95 ~~Order'').~~percent ~~The~~penetration ~~FCC Order provides for a phased-in deployment~~ of ~~Automatic Location Identification (''~~ALI~~'')~~ -capable ~~network~~phones. orThe ~~handset-based~~request ~~technology that began on March 1,~~included ~~2003.~~ an explanation ~~ALI~~of ~~capability~~the ~~permits~~Company’s ~~more~~compliance ~~accurate~~efforts ~~identification~~to ofdate and the ~~caller's~~expected ~~location by PSAPs.~~date ~~Under~~ when ~~the~~it ~~FCC~~will ~~Order,~~meet the ~~Company~~95 ~~was~~percent ~~required~~penetration ~~to:~~rate ~~(1) begin~~of ~~selling and activating~~ ALI-capable handsets ~~prior to March 1~~, June 30, ~~2003;~~2007. ~~(2) ensure~~A ~~that,~~number as of ~~May 31,~~other ~~2003~~wireless carriers, atincluding ~~least~~large 25national carriers ~~percent~~ and ofCTIA-The ~~all~~Wireless ~~new~~Association ~~handsets activated were ALI-capable;~~ (3“CTIA”) ~~ensure~~ ~~that,~~on asbehalf of ~~November 30,~~CMRS carriers in ~~2003~~ general, atalso ~~least~~sought ~~50 percent~~relief offrom ~~all~~the ~~new~~95 ~~handsets~~percent ~~activated~~requirement. ~~were~~On ~~ALI-capable;~~January ~~(4) ensure that 100~~5, ~~percent~~ 2007, the ofFCC ~~its~~issued ~~digital~~a ~~handsets~~number ~~activated~~of ~~were~~orders ~~ALI-capable~~denying ascertain of ~~May 31,~~the ~~2004;~~waivers ~~and (5) ensure that penetration~~ of ~~ALI~~the E-~~capable~~911 handset ~~handsets~~deployment ~~among~~requirement, ~~its~~including ~~customers~~the ~~will~~waiver ~~reach~~filed ~~95 percent~~by nothe ~~later~~Company. ~~than~~ The FCC’s ~~December 31,~~order ~~2005.~~imposed ~~ALLTEL~~reporting ~~began~~requirements ~~selling~~on ~~ALI-capable~~the ~~handsets~~Company ~~in June 2002~~ and toreferred ~~date has complied with~~ the ~~handset~~issue of ~~deployment thresholds under~~ the ~~FCC'~~Company’s ~~Order,~~compliance orwith ~~otherwise obtained~~the ~~short-term~~rules ~~relief~~to ~~from~~ the FCC’s toEnforcement ~~facilitate~~Bureau ~~certain~~for consideration ~~recent~~of ~~acquisitions~~further action. ~~Based~~While on the ~~current~~Company ~~pace~~seeks ~~of customer migration~~ to ~~ALI-capable~~resolve ~~handsets~~this matter, ~~including the additional~~ ~~subscribers~~ it ~~acquired~~cannot ~~through~~predict ~~recent~~the ~~acquisitions,~~outcome ~~ALLTEL~~of ~~may~~any ~~have~~proceeding ~~difficulty~~before ~~complying with~~ the ~~December 31~~FCC’s Enforcement Bureau, ~~2005~~although ~~requirement~~fines toand benew ~~95 percent~~handset ~~penetrated~~deployment ~~without~~thresholds ~~incurring~~are ~~a significant increase in its operating costs~~possible.

~~To ensure affordable access to telecommunications services throughout the United States, the~~Regulation FCC and many states commissions administer universal service programs. CMRS providers are required to contribute to the federal universal service fund (''USF'') and are required to contribute to some state universal service funds. Under FCC rules, CMRS providers also are eligible to receive support from the federal USF if they obtain certification as an Eligible Telecommunications Carrier (''ETC''). The federal universal service program is under legislative, regulatory and industry scrutiny as a result of the growth in the fund and structural changes within the telecommunications industry. The structural changes include an increase in the number of ETC's receiving money from the universal service fund and a migration of customers from wireline service to voice -~~over-Internet-protocol~~ (''VoIP'') providers that, today, are not required to contribute to the universal service program. There are several FCC proceedings underway that are considering changes to the way the universal service programs are funded and the way universal service funds are disbursed to program recipients. The specific proceedings are discussed in greater detail below. CALEA

~~During~~CALEA requires ~~2004,~~wireless ~~the Company sought ETC certification by the FCC~~ and ~~various~~wireline ~~state~~carriers ~~commissions. In~~to ~~September 2004,~~ensure ~~the~~that ~~Company~~their ~~received~~networks ~~ETC approval by the FCC in certain non-rural~~are ~~properties~~ capable inof ~~Alabama,~~accommodating ~~Virginia,~~lawful ~~Georgia,~~intercept ~~North~~requests ~~Carolina~~received ~~and Florida. ALLTEL also obtained approval of ETC applications~~ from ~~state~~law ~~commissions for certain of its properties in~~enforcement ~~Michigan, Mississippi, Arkansas, Wisconsin, West Virginia, Louisiana and Kansas~~ agencies. The ~~Company began~~FCC ~~receiving~~has ~~USF~~imposed ~~support~~various ~~associated~~obligations ~~with~~and ~~these~~compliance ~~ETC certifications in Michigan~~deadlines, ~~Mississippi,~~ with which ~~Arkansas,~~Alltel ~~Wisconsin~~has ~~and~~either ~~West~~complied ~~Virginia in the first quarter of 2004~~or, ~~and~~as ~~for Louisiana~~to ~~and Kansas in~~ the ~~fourth~~future ~~quarter~~deadline of ~~2004.~~May ~~The Company also sought ETC~~14, ~~certification from the state commission in Arizona. On November 2~~ 2007, ~~2004, the Arizona~~ ~~commission~~ for ~~granted~~Voice ~~ETC~~Over ~~certification~~Internet toProtocol ~~ALLTEL~~and ~~subject~~Broadband toInternet ~~various~~Access ~~conditions.~~Services ~~On December~~under ~~15, 2004,~~ the ~~Company~~FCC’s ~~notified~~May ~~the~~12, ~~Arizona~~2006 ~~commission~~order, ~~that~~will ~~the~~comply ~~Company declined to accept the ETC certification in Arizona because the conditions associated~~ with ~~the~~CALEA ~~certification were overly burdensome~~ and ~~could have hindered~~ the ~~Company'~~FCC’s ~~ability to effectively compete.~~ ~~ALLTEL received approximately $50~~ rules.0 million of gross USF subsidies in 2004 related to the approved ETC petitions and net USF subsidies of approximately $42.0 million after deducting the portion of USF subsidies distributed to its unaffiliated partners in certain markets. ALLTEL expects to receive net USF subsidies of approximately $25.0 million per quarter in 2005.

~~The FCC, in conjunction with the Federal/State Joint Board on Universal Service, is~~Regulation ~~considering~~ - ~~changes~~Inter-Carrier to the USF program, including strengthening the requirements in the ETC certification process and modifying the services qualified to receive USF support. The Joint Board recommended that the FCC adopt optional more stringent federal guidelines to assist states in the ETC certification process and limit USF support to a single ''primary'' connection per customer. In the 2005 Omnibus Appropriations Bill, Congress included language that prevents the FCC from enacting a primary line restriction on universal service support recommended to the FCC by the Joint Board. The Joint Board also asked the FCC to provide guidance on whether states choosing to apply these guidelines could rescind existing ETC designations if the states subsequently found that such designations were no longer in the public interest. Finally, the Joint Board recommended that states strengthen the annual ETC certification process to ensure USF funds are used ''only for the provision, maintenance and upgrading of facilities Compensation

Under the 96 Act and the FCC’s rules, CMRS providers are subject to certain requirements governing the exchange of telecommunications traffic with other carriers. Additionally, CMRS carriers are characterized as “telecommunications carriers” under the 96 Act and not Local Exchange Carriers (“LECs”). Consequently, CMRS carriers are not subject to the interconnection, resale, unbundling, and other obligations applicable to LECs under the 96 Act until such time as the FCC makes a finding that treatment of CMRS carriers as LECs is warranted. The 96 Act also eliminated any requirement that CMRS carriers provide subscribers with equal access to their long-distance carrier of choice, although the FCC is empowered under the 96 Act to impose an equal access requirement on CMRS carriers through rulemaking should market conditions so warrant. There is a pending rulemaking at the FCC addressing inter-carrier compensation, which could impact Alltel’s future costs to provide service.

ALLTEL Corporation

Form 10-K, Part I

Item 1. Business

~~WIRELESS~~Regulation - ~~OPERATIONS~~Telephone ~~(continued)~~ Numbers

~~REGULATION~~In an effort ~~(continued)~~to promote more efficient number utilization, the FCC adopted rules requiring CMRS providers to participate in a nationwide number conservation program known as “thousand block number pooling” in accordance with roll out schedules established by the FCC, and to the extent applicable, state-sponsored number pooling trials. Under number pooling, carriers are required to return unused numbers in their inventory to a centrally administered pool and to accept assignment of new numbers in blocks of 1,000 instead of the 10,000 number blocks previously assigned. The FCC exempted small and rural CMRS and local exchange carriers from the pooling requirement until such time as they implement local number portability in response to a specific request from another carrier or as otherwise determined by a state that has been granted numbering authority by the FCC.

~~for~~CMRS providers ~~which~~in the ~~support~~top is100 ~~intended''.~~markets Ifwere ~~adopted~~required by the FCC to implement by November 24, ~~these~~2003 ~~changes~~(and, ~~would~~for ~~adversely~~all ~~affect~~other ~~the~~markets, by May 24, 2004, or six months ~~availability~~ after ofthe ~~USF~~carrier receives its first request to ~~ALLTEL's~~port, whichever is later) wireless ~~business~~local number portability (“WLNP”), ~~although~~which ~~until~~permits ~~the~~customers ~~final~~to retain their existing telephone number when switching to another telecommunications carrier. The FCC ~~Order~~has isalso required LECs in the top 100 markets, beginning ~~released~~ on November 24, 2003 (~~expected~~and beginning on May 24, 2004 for all other markets), to ~~occur~~port numbers to wireless carriers where the coverage area of the wireless carrier (i.e., the area in ~~February 2005~~which the wireless carrier provides service) ~~and~~overlaps the geographic location of the ~~specific~~rate ~~changes~~center in which the wireline number is provisioned, ifprovided ~~any~~that the wireless carrier maintains the rate center designation of the number. An appeal by the United States Telecommunications Association (“USTA”), ~~are~~along with certain rural telephone companies, of the FCC’s ~~determined~~ November 10, 2003 decision before the ~~Company~~U.S. ~~cannot~~Court ~~estimate~~of Appeals for the ~~specific~~District of Columbia ~~impact~~Circuit ~~that~~was ~~these~~denied, ~~changes~~although ~~would~~the ~~have.~~FCC's order with respect to the intermodal porting obligations of certain small carriers was stayed and remanded to the FCC for further proceedings to address its regulatory flexibility analysis.

~~The FCC mandated that, effective~~Regulation October 1, 2004, the Universal Service Administrative Company (''USAC'') must begin accounting for the USF program in accordance with generally accepted accounting principles for federal agencies, rather than the accounting rules that USAC formerly used. This accounting method change subjected USAC to the Anti -~~Deficiency~~ ~~Act (the~~Customer ''ADA''), the effect of which could have caused delays in USF payments to USF program recipients and significantly increase the amount of USF regulatory fees charged to wireline and wireless consumers. In December 2004, Congress passed legislation to exempt USAC from the ADA for one year to allow for a more thorough review of the impact the ADA would have on the universal service program. Billing

~~In October 2003, the~~ The FCC requires ~~issued~~CMRS ancarriers ~~order~~to ~~adopting~~ensure ~~rules~~ that ~~allow~~the ~~CMRS~~descriptions ~~licensees~~of toline ~~lease spectrum~~items toon ~~others.~~customer bills ~~The~~are ~~FCC~~clear ~~further~~and ~~streamlined~~not ~~its~~misleading, ~~rules~~and tohas ~~facilitate~~declared ~~spectrum~~that ~~leasing~~any inrepresentation of a ~~subsequent~~discretionary ~~order~~item ~~issued~~on ina ~~September 2004.~~bill ~~The~~as ~~FCC's~~a ~~spectrum~~tax ~~leasing~~or ~~rules~~government-mandated ~~revise~~charge ~~the~~is ~~standards~~ misleading. ~~for~~The ~~transfer~~Federal Court of ~~control~~Appeals ~~and provide new options~~ for the ~~lease~~Eleventh ofCircuit ~~spectrum~~has tovacated ~~providers~~ an order of ~~new~~the ~~and~~FCC ~~existing~~preempting ~~wireless~~states ~~technologies.~~from ~~The~~requiring ~~FCC~~or ~~also~~prohibiting ~~deleted~~ the ~~rule~~use ~~prohibiting ownership~~ of ~~both~~line items Aon ~~and~~CMRS Bcarriers’ ~~block~~bills ~~cellular~~and ~~systems~~remanded in the ~~same~~decision ~~rural~~to ~~service~~the ~~area. The~~ FCC ~~decisions~~for ~~provide increased flexibility to wireless companies with regard to~~further ~~obtaining additional spectrum through leases and retaining spectrum acquired in conjunction with wireless company acquisitions~~ proceedings. The ~~Company's~~FCC ~~evaluation~~is ofalso ~~opportunities~~considering ~~created~~additional asCMRS abilling ~~result of these decisions is ongoing~~ regulations.

~~The Communications Assistance for Law~~Regulation Enforcement Act (''CALEA'') requires wireless and wireline carriers to ensure that their networks have the capability and capacity to accommodate law enforcement agencies' lawful intercept requests. The FCC has imposed various obligations and compliance deadlines, with which ALLTEL has either complied or, in accordance with CALEA, filed a request for an extension of time. On August 18, 2004, the U.S. Department of Justice (''DOJ'') objected to ALLTEL's pending extension request relating to the Company's packet -~~mode~~ ~~services~~CMRS insofar as that extension request relates to ALLTEL's ''Touch2Talk'' walkie-talkie service. ALLTEL is initiating discussions with DOJ personnel in an effort to address the DOJ's concerns. In response to a petition filed by the DOJ and other federal agencies, the FCC in August 2004 initiated a rulemaking to adopt new rules under CALEA pertaining to wireless and wireline carriers' packet mode communications services, including Internet protocol (''IP'') based services. The FCC concurrently issued a declaratory ruling concerning the appropriate treatment of push-to-talk services under CALEA. Rules or precedents adopted as a result of these proceedings could impose new costs and obligations on ALLTEL and other carriers. The Company's ''Touch2Talk'' service is compliant with CALEA standards. The Company's packet services network requires a modest upgrade to be fully compliant with CALEA standards for packet requests from Law Enforcement. The cost of the upgrade is immaterial and will not adversely affect the Company's operations. Roaming

~~Under~~ The FCC has ~~and~~initiated ~~Federal~~a ~~Aviation~~rulemaking ~~Administration~~proceeding ~~regulations,~~to ~~wireless~~examine ~~carriers~~the ~~must~~rules ~~comply~~applicable ~~with~~to ~~certain~~ roaming relationships ~~regulations~~between ~~regarding~~carriers. ~~the~~The ~~siting,~~rulemaking ~~lighting~~seeks ~~and~~to ~~construction~~develop ofa ~~transmitter~~record on ~~towers and~~the ~~antennas.~~ state Inof ~~addition~~roaming markets, ~~federal~~the ~~environmental~~impact ~~regulations~~of ~~require~~technology, ~~carriers~~the toprice ~~comply~~and ~~with~~quality ~~land~~ of current ~~use~~roaming arrangements, and ~~radio~~whether ~~frequency~~there ~~standards~~is ~~and~~any ~~require~~evidence that ~~wireless~~larger national ~~facilities~~carriers ~~and~~are ~~handsets comply~~engaging ~~with~~in ~~radio~~anti-competitive ~~frequency~~roaming ~~radiation~~practices ~~guidelines~~against smaller carriers. The ~~siting~~FCC’s ~~and~~rules ~~construction~~currently ofrequire ~~wireless facilities~~only ~~may~~that ~~also~~manual roaming be provided ~~subject~~by a carrier to ~~state~~any ~~and~~subscriber ~~local~~in ~~zoning~~good standing with their home market carrier. Automatic roaming agreements, ~~land~~although ~~use~~common ~~and~~throughout ~~other~~the ~~regulatory~~CMRS ~~oversight~~ industry, are not currently mandated by the FCC.

Regulation - Customer Proprietary Network Information (“CPNI”)

The FCC is considering in a pending rulemaking the protection of customer information and call records, including the adequacy of security measures employed by carriers to protect certain customer information. Additional security requirements being considered include customer set passwords, data encryption, audit trails, data retention limitations and customer notices of security breaches. Further, the FCC has initiated an ongoing investigation of carrier practices to protect CPNI.

Regulation - Analog Sunset

Under current FCC rules, a carrier will not be required to offer analog wireless services after February 2008. This analog “sunset” rule is the subject of petitions seeking extension beyond 2008.

ALLTEL Corporation

Form 10-K, Part I

Item 1. Business

~~WIRELINE OPERATIONS~~Regulation - Warn Act/Emergency Alerts

AsOn October ~~previously~~13, ~~noted~~2006, the ~~Company's~~Warn ~~wireline~~Act ~~segment~~was ~~consists~~signed ofinto ~~ALLTEL's ILEC~~law, ~~CLEC~~which ~~and~~provides that carriers ~~Internet~~ may, ~~access~~within ~~operations.~~two ~~The~~years, ~~Company's~~voluntarily ~~wireline~~choose ~~subsidiaries~~to provide ~~local~~emergency ~~telephone~~alerts as ~~service~~ part toof their ~~3.0 million~~service ~~customers~~offerings ~~primarily~~under ~~located~~standards inand ~~rural~~protocols ~~areas~~adopted inby 15the ~~states~~FCC. The ~~wireline~~ FCC ~~subsidiaries~~has ~~also~~convened ~~offer~~the ~~facilities~~industry ~~for~~advisory ~~private~~committee ~~line,~~required ~~data~~under ~~transmission~~the ~~and~~Warn Act ~~other~~to ~~communications~~ begin ~~services.~~consideration ~~Wireline revenues, which consist~~ of ~~local~~technical ~~service,~~standards ~~network access~~ and ~~long-distance and miscellaneous revenues, comprised 29 percent of ALLTEL's total~~ operating ~~revenues from business segments in 2004, compared to 30 percent in both 2003 and 2002~~protocols.

~~Local service operations provide lines from telephone exchange offices to customer premises~~Item ~~for the origination and termination of telecommunications services including basic dial-tone service and dedicated private line facilities for the transport of data and video~~ 1A. ~~ALLTEL~~ Risk also offers various enhanced service features including call waiting, call forwarding, caller identification, three-way calling, no-answer transfer and voicemail. Additional local service revenues are derived from charges for equipment rentals, equipment maintenance contracts, information and directory assistance and public payphone services. The Company also provides cable television service to approximately 36,000 customers in Georgia and Missouri. The cable television properties are not significant to ALLTEL's wireline operating results. Factors

~~Network~~Alltel faces ~~access~~intense ~~and~~competition ~~interconnection~~in ~~services~~its ~~are~~businesses ~~provided~~that bycould ~~ALLTEL~~reduce ~~by connecting the equipment and facilities of~~ its ~~customers to the communications networks of long-distance carriers,~~market ~~CLECs, competitive switched and special access providers, and wireless service providers.~~ share ~~These~~ or ~~companies~~adversely ~~pay~~affect ~~access~~its ~~and~~financial ~~network usage charges to the Company's local exchange subsidiaries for the use of their local networks to originate and terminate their voice and data transmissions~~performance. Network access revenues also include amounts derived from DSL. Miscellaneous revenues primarily consist of revenues derived from the Company's Internet access services, charges for billing and collections services provided to long-distance companies, customer premise equipment sales and directory advertising services.

~~COMPETITION~~Substantial and increasing competition exists in the wireless communications industry. Multiple wireless service providers may operate in the same geographic area, along with any number of resellers that buy bulk wireless services from one of the wireless service providers and resell them to their customers. In January 2003, the FCC lifted its rule imposing limits on the amount of spectrum that can be held by one provider in a specific market. Competition may continue to increase as a result of recent consolidation in the communications industry and to the extent that there are other consolidations in the future involving its competitors. The upcoming 700 MHz spectrum auction could also provide carriers an opportunity to extend operations into new geographic areas, thereby increasing competition and adversely affecting roaming revenues.

~~Many~~A majority of ~~the Company'~~Alltel’s ~~ILEC~~wireless ~~operations~~markets have ~~begun~~multiple tocarriers. ~~experience~~The ~~competition~~presence inof multiple ~~their~~carriers ~~local service~~within ~~areas.~~Alltel's ~~Sources~~wireless markets combined with the effects of aggregate ~~competition~~penetration toof ~~ALLTEL's~~wireless ~~local~~services ~~exchange~~in ~~business~~all ~~include,~~markets ~~but~~has ~~are~~made it ~~not~~ increasingly ~~limited~~difficult to, ~~resellers~~attract ofnew ~~local~~customers ~~exchange~~and ~~services,~~retain ~~interexchange~~existing ~~carriers,~~ones. ~~satellite~~ While the ~~transmission~~recent ~~services,~~consolidation in the wireless ~~communications~~industry ~~providers,~~may ~~cable television~~reduce ~~companies,~~the ~~and~~number ~~competitive~~of carriers ~~access~~in ~~service~~Alltel’s ~~providers~~markets, ~~including~~the ~~those utilizing~~carriers ~~Unbundled~~resulting ~~Network~~from ~~Elements-Platform~~such ~~(''UNE-P''),~~consolidation ~~voice-over-internet-protocol~~ will ~~(''VoIP'')~~be ~~providers~~larger and ~~providers using~~potentially ~~other~~more ~~emerging~~effective ~~technologies~~in their ability to compete with Alltel. ~~Through~~As ~~December 31,~~a ~~2004,~~result ~~this~~of increased competition, ~~has~~Alltel ~~not~~anticipates ~~had~~that athe ~~material~~ price per ~~adverse~~minute ~~effect~~for onwireless ~~the~~voice ~~results~~services ofwill ~~operations~~decline ofwhile ~~ALLTEL's~~costs ~~wireline~~to ~~operations,~~acquire ~~although~~ customers, ~~competition~~including, ~~has~~without ~~adversely~~limitation, ~~affected~~handset ~~the~~subsidies ~~Company's~~and ~~access~~advertising and promotion ~~line~~costs, ~~growth~~may ~~rates~~increase. ~~Customer access~~Alltel’s ~~lines~~ability ~~decreased~~to ~~3 percent~~continue ~~during~~to ~~the~~compete effectively ~~twelve~~will ~~months~~depend ~~ended~~upon ~~December 31,~~its ~~2004.~~ability ~~The Company~~to ~~lost~~anticipate ~~approximately~~and ~~86,000~~respond ~~access~~to ~~lines~~changes in technology, ~~during~~customer ~~2004~~preferences, ~~primarily~~new asservice aofferings ~~result~~(including ~~of the~~bundled ~~effects~~ offerings), ofdemographic ~~wireless~~trends, ~~and~~economic ~~broadband~~conditions ~~substitution~~and ~~for~~competitors’ ~~the~~pricing strategies. ~~Company's~~Failure ~~wireline~~to ~~services.~~successfully ~~The Company~~market ~~expects~~its ~~the~~products ~~number~~and ofservices ~~access~~or ~~lines~~to adequately ~~served~~and bytimely ~~its~~respond ~~wireline~~to ~~operations~~competitive tofactors ~~continue~~could toreduce Alltel’s be market ~~adversely~~share ~~affected~~or byadversely ~~wireless~~affect ~~and~~its ~~broadband~~revenue ~~substitution~~or innet ~~2005~~income.

ToIn the current ~~address~~wireless ~~competition~~market, ~~ALLTEL~~Alltel’s isability ~~focusing~~to ~~its~~compete ~~efforts~~also depends on ~~marketing~~its ~~and~~ability to ~~selling~~offer ~~additional products~~regional and ~~services~~national calling plans to its customers. byAlltel ~~bundling together and offering at competitive~~relies ~~rates~~ on roaming ~~its~~agreements ~~various~~with ~~product~~other ~~offerings,~~wireless ~~including~~carriers ~~long-distance,~~to ~~Internet~~provide ~~and~~roaming ~~DSL services.~~capabilities ~~Deployment~~ in ofareas ~~DSL~~not ~~service~~covered isby anits ~~important strategic initiative for ALLTEL~~network. ~~Currently,~~These ~~DSL service~~agreements isare ~~available~~subject to ~~approximately~~renewal and termination ~~1.9 million,~~if orcertain ~~63 percent,~~events ~~of the Company's wireline customers. During 2004~~occur, ~~the Company added approximately 90~~including,~~000~~ ~~DSL~~without ~~customers~~limitation, ~~continuing~~if anetwork ~~three~~ standards ~~year~~are ~~long~~not ~~trend of strong growth in this service offering~~maintained. ~~For~~If ~~the~~Alltel ~~twelve~~is ~~months ended~~unable ~~December 31, 2004, the number of DSL customers grew by almost 60 percent~~ to ~~approximately~~ ~~243,000~~maintain ~~customers,~~ or ~~12 percent,~~renew ~~of the Company's addressable access lines.~~these ~~During 2004~~ agreements, ~~the~~its ~~growth~~ability ~~rate~~to incontinue ~~the~~to ~~Company's~~provide ~~DSL~~competitive ~~customers~~regional ~~outpaced the rate of decline in~~and ~~customer~~ nationwide ~~access~~wireless ~~lines~~service ~~discussed above. In addition~~ to its ~~marketing~~customers ~~efforts,~~could ~~ALLTEL~~be ~~remains focused~~impaired, ~~on providing improved customer service~~which, ~~increasing operating efficiencies and~~in ~~maintaining~~ turn, would ~~the~~have ~~quality~~an ofadverse ~~its~~impact ~~network.~~on ~~The Company has focused~~ its ~~wireline~~wireless ~~advertising on promoting ALLTEL's brand name while communicating the benefits of product bundling and price offerings~~operations.

~~Although~~Alltel is ~~DSL~~subject ~~services~~to ~~have~~government ~~been~~regulation ~~a source~~ of ~~revenue and access line growth for~~ the Company in 2004, 2003 and 2002, that service offering experiences competition from other broadband service providers, including cable television and satellite transmission service providers. Under the FCC's recent decision in its Triennial Review proceeding, as further discussed below under the caption ''Local Service – Regulation'' on page 14, it appears that the Company's provisioning of broadband DSL services will be largely deregulated. In addition, a number of carriers have begun offering voice telecommunications ~~services utilizing the~~ ~~Internet as the means of transmitting those calls~~ industry. ~~This service, commonly know as VoIP telephony, is~~

As a provider of wireless communication services, Alltel is subject to regulation by the FCC. The FCC has rules governing the construction and operation of wireless communications systems and licensing and technical standards for the provision of wireless communication services. The FCC also regulates the terms under which ancillary services may be provided through wireless facilities. While the FCC has authority to regulate rates for wireless services, it has so far refrained from doing so. States are also permitted to regulate the terms and conditions of wireless services which are unrelated to either rates or market entry. The FCC and various state commissions regulate Alltel’s status as an ETC, which qualifies Alltel to receive support from the Universal Service Fund. In addition, the FCC and FAA regulate the siting, lighting and construction of transmitter towers and antennae. Tower siting and construction is also subject to state and local zoning as well as federal statutes regarding environmental and historic preservation. The future costs to comply with all relevant regulations are to some extent unknown and could result in higher operating expenses in the future, and changes to other regulations (such as those relating to designation as an ETC) could result in loss of revenue in the future.

Licenses granted to Alltel by the FCC to provide wireless communications services were originally issued for 10-year terms and may be renewed for additional 10-year terms subject to FCC approval of the renewal applications. Failure to comply with FCC requirements in a given service area could result in the revocation of its license for that area or in the imposition of fines.

ALLTEL Corporation

Form 10-K, Part I

Item 1 1A. ~~Business~~ Risk Factors (Continued)

~~WIRELINE~~Rapid and ~~OPERATIONS~~significant ~~(continued)~~changes in technology could require Alltel to significantly increase capital investment or could result in reduced demand for its services.

~~COMPETITION~~Technologies for ~~(continued)~~wireless communications are rapidly changing. In the majority of Alltel’s wireless markets, it employs CDMA, which is a second-generation digital technology providing expanded channel capacity and the ability to offer advanced services and functionality. Alltel is currently deploying CDMA 2000, 1XRTT and EV-DO technologies, which are third-generation technologies that increase voice capacity, allow high-speed data services and are capable of addressing more complex data applications. Deployment of third-generation digital technologies will require Alltel to make additional capital investments.

~~challenging~~CDMA-based technologies ~~existing~~currently ~~regulatory~~serve ~~definitions.~~less Asthan ~~further~~20 ~~discussed~~percent ~~below~~of ~~under~~ the ~~caption~~wireless users ~~''Network~~ worldwide, ~~Access~~with ~~Services~~Global –System ~~Regulation''~~for onMobil ~~page 17~~Communications, onor ~~February 12,~~GSM-based technologies ~~2004,~~being the ~~FCC~~predominant ~~adopted~~technology aglobally. ~~Notice~~The ofGSM operators ~~Proposed~~ are deploying ~~Rulemaking~~Universal ~~that~~Mobile ~~will~~Telecommunications ~~consider~~System, ~~the~~or ~~appropriate~~UMTS, ~~regulatory treatment of~~technology ~~Internet-enabled~~ as they ~~communications~~migrate ~~services~~to ~~and~~third-generation ~~address~~networks. ~~which~~If ~~regulatory~~the ~~requirements,~~global market for CDMA-based ~~example,~~ technologies ~~those~~decreases ~~relating~~further and leads to ~~E-911,~~either ~~disability~~higher ~~accessibility,~~prices ~~access~~or ~~charges,~~lower availability ~~and~~of ~~universal~~infrastructure equipment or handsets supporting CDMA-based ~~service~~ technologies, ~~should~~Alltel could be ~~extended~~forced to ~~Internet~~migrate to either GSM-~~enabled~~ ~~services~~or UMTS-based technologies to remain competitive. ~~The~~This ~~results~~would ofrequire ~~the~~Alltel ~~FCC's~~to make extensive ~~proceedings~~ capital ~~related~~investments toand ~~VoIP~~potentially ~~could~~incur ~~have~~asset awrite-downs, ~~significant~~which ~~effect~~could adversely onaffect the Company'’s ~~wireline~~ future results of operations. and cash flows.

~~LOCAL SERVICE – REGULATION~~Item 1B. Unresolved Staff Comments

~~Prior~~No reportable toinformation ~~1996, ALLTEL's wireline subsidiaries provided local telephone service~~ under ~~exclusive~~ ~~franchises~~this ~~granted by state regulatory commissions and subject to regulation by those regulatory commissions~~item. These regulatory commissions have had primary jurisdiction over various matters including local and intrastate toll rates, quality of service, the issuance of securities, depreciation rates, the disposition of public utility property, the issuance of debt, and the accounting systems used by those subsidiaries. The FCC has historically had primary jurisdiction over the interstate toll and access rates of these companies and issues related to interstate telephone service.

~~The 96 Act substantially modified certain aspects of the states' and the FCC's~~Item ~~jurisdictions in the regulation of local exchange telephone companies~~ 2. The 96 Act prohibits state legislative or regulatory restrictions or barriers to entry regarding the provision of local telephone service. The 96 Act also requires ILECs to interconnect with the networks of other telecommunications carriers, unbundle services into network elements, offer their telecommunications services at wholesale rates to allow resale of those services, and allow other telecommunications carriers to locate their equipment on the premises of the incumbent local exchange carriers for the purpose of exchanging traffic. Properties

~~The~~Alltel’s corporate 96headquarters ~~Act~~are ~~also~~located ~~requires~~in ~~all~~Little ~~local~~Rock, ~~exchange~~Arkansas. ~~telephone~~The ~~companies~~Company maintains tocustomer ~~compensate~~care ~~one~~call ~~another~~centers, ~~for~~retail store locations, switching centers, ~~the~~ cell ~~transport~~tower sites and ~~termination~~data centers throughout the United States. Certain of these facilities ~~calls~~are onleased. ~~one~~All ~~another'~~of the Company’s ~~networks~~property is considered to be in good working condition and suitable for its intended purposes. A summary of the Company’s gross investment in property, plant and equipment is presented below.

Except for certain of its subsidiaries in Nebraska, Ohio and the recently acquired property in Kentucky, the Company's local exchange subsidiaries are rural telephone companies, as defined under the 96 Act, and are exempt from certain of the foregoing obligations, unless, in connection with a bona fide request, a state regulatory commission removes that exemption. All of the Company's local exchange subsidiaries may seek specific suspensions or modification of interconnection obligations under the 96 Act as a company that serves less than two percent of the nation's access lines, where such interconnection obligations would otherwise cause undue economic burden or are technically infeasible.

	(Millions)
Land	$	314.9
Buildings and improvements		955.1
Operating plant and equipment		7,933.8
Information processing		1,048.1
Furniture and fixtures		173.8
Total	$	10,425.7

~~In 1996, the FCC issued regulations implementing the local competition provisions of the 96~~Operating ~~Act.~~ plant ~~These~~and ~~regulations~~equipment ~~established~~consists ~~pricing rules for state regulatory commissions to follow with respect to entry by competing carriers into the local, intrastate markets~~ of ~~ILECs and~~cell ~~addressed~~site ~~interconnection~~towers, ~~unbundled network elements (''UNEs'') and resale rates. The FCC's authority to adopt such pricing rules~~switching, ~~including permitting new entrants to ''pick and choose''~~controllers ~~among the terms~~ and ~~conditions of approved interconnection agreements, was appealed all the~~ ~~way~~ other upradio tofrequency ~~the U~~equipment.S. ~~Supreme~~Information ~~Court,~~processing ~~which~~plant ~~remanded~~consists ~~various issues to the federal appellate~~of ~~courts~~ data processing ~~and to the FCC. Ultimately~~equipment, onpurchased ~~May 13,~~software ~~2002, the Supreme Court reversed certain of the federal appellate court's findings~~ and ~~affirmed~~capitalized ~~that~~internal ~~the~~use ~~FCC's rules concerning~~software ~~forward looking economic~~ costs~~, including the total element long-run incremental cost methodology (''TELRIC''), were proper under the 96 Act~~.

In June 2002, the U.S. Court of Appeals for the Second Circuit found that the 96 Act did not create an ''implicit immunity'' for ILECs from antitrust law. This decision differed from an earlier decision from the U.S. Court of Appeals for the Seventh Circuit. The Supreme Court agreed to hear the case in March 2003, and on January 13, 2004, issued its decision holding that the 96 Act provided sufficient regulatory oversight of anti-competitive behavior, and the slight benefits of antitrust intervention were not justified. While antitrust laws remain in effect, this decision holds that broadening them to cover class-action antitrust lawsuits against ILECs for failing to open their networks to competitive carriers is not appropriate.

ALLTEL Corporation

Form 10-K, Part I

Item 1 3. ~~Business~~ Legal Proceedings

~~WIRELINE~~The Company ~~OPERATIONS~~is ~~(continued)~~party to various legal proceedings arising from the ordinary course of business. Although the ultimate resolution of these various proceedings cannot be determined at this time, management of Alltel does not believe that such proceedings, individually or in the aggregate, will have a material adverse effect on the future consolidated results of operations or financial condition of the Company. To the knowledge of Alltel’s management, no material legal proceedings, either private or governmental, currently are contemplated or threatened.

~~LOCAL~~Item 4. Submission of ~~SERVICE~~Matters –to ~~REGULATION~~a ~~(continued)~~ Vote of Security Holders

~~The federal universal service program is under legislative, regulatory and industry~~No ~~participant~~ matters ~~scrutiny~~were assubmitted a result of the recent growth in the fund and structural changes within the telecommunications industry. The structural changes include an increase in the number of ETC's receiving money from the universal service fund and a migration of customers from wireline service to ~~VoIP providers that, today, are not required to contribute to~~ the ~~universal~~ ~~service~~security ~~program.~~holders ~~There~~for ~~are~~ a ~~number~~vote ofduring ~~FCC proceedings underway that are considering changes to~~ the ~~way the universal service programs are funded and the way~~fourth ~~universal~~ quarter ~~service~~of ~~funds are disbursed to program recipients~~2006. ~~The specific proceedings are discussed in greater detail below.~~

InForm May 2001, the FCC adopted the Rural Task Force Order that established an interim universal service mechanism that will govern compensation for rural telephone companies for the ensuing five years. The interim mechanism has allowed rural carriers to continue receiving high10-~~cost funding based on their embedded costs. On June 2~~K, ~~2004,~~Part the FCC asked the Federal/State Joint Board on Universal Service (the ''Joint Board'') to review the FCC's rules as they pertain to rural telephone companies and to determine what changes, if any, should be made to the existing high-cost support mechanism when the current funding program expires in June 2006. The Joint Board sought comment on such a mechanism on August 16, 2004, but has taken no further action. In addition, the Joint Board sought comment on whether companies operating multiple study areas within a state should consolidate them for purposes of calculating universal service support. If the FCC implements this proposal, ALLTEL's universal service revenues would be reduced from their current level by approximately $15.0 million annually. However, the Company cannot estimate the impact of the potential change from embedded cost to another methodology until the specific changes, if any, are adopted. II

~~On November 8, 2002, the FCC requested that the Joint Board review certain of the FCC's rules~~Item ~~relating to the high-cost universal support levels and the process by which carriers are designated as ETCs~~ 5. ~~On February~~ ~~27, 2004, the Joint Board issued its recommended decision~~Market ~~regarding a number of issues related to USF support~~ for ETCs. Among its recommendations, the Joint Board suggested that the FCC should adopt optional federal guidelines to assist with state ETC designations and limit support to a single primary connection per customer. On June 8, 2004, the FCC asked for comments on the Joint BoardRegistrant's ~~recommended~~Common ~~decision~~Equity, ~~but~~Related ~~did~~Stockholder ~~not elaborate~~Matters orand ~~reach~~Issuer ~~tentative conclusions on any~~ Purchases of ~~the~~Equity Joint Board's recommendations. The 2005 Omnibus Appropriations Bill includes a provision that prevents the FCC from enacting a primary line restriction on universal service support recommended to the FCC by the Joint Board. The Company does not expect that the above proceedings will have any material impact on its wireline universal service funding. Securities

As(a) ~~previously~~The ~~discussed~~outstanding ~~under ''Wireless~~shares ~~Operations~~of –Alltel’s ~~Regulation'',~~Common ~~the~~Stock ~~FCC~~are ~~mandated~~listed ~~that, effective~~and ~~October 1,~~traded ~~2004,~~on ~~USAC must begin accounting for~~ the ~~USF~~New ~~program~~York inStock ~~accordance~~Exchange ~~with generally~~and ~~accepted~~trade ~~accounting~~under ~~principles for federal agencies, rather than~~ the ~~accounting rules~~symbol ~~that USAC formerly used~~AT. ~~This~~The ~~accounting~~following ~~method~~table ~~change~~reflects ~~subjected USAC to~~ the ~~ADA,~~range ~~the effect~~ of ~~which~~high, ~~could~~low ~~have caused delays in USF payments to USF program recipients~~ and ~~significantly~~ ~~increase~~closing ~~the~~prices ~~amount~~ of ~~USF~~Alltel’s ~~regulatory~~Common ~~fees~~Stock ~~charged~~as toreported ~~wireline~~by ~~and~~Thomson ~~wireless consumers.~~Financial ~~In December 2004, Congress passed legislation to exempt USAC from the ADA~~ for ~~one year~~each toquarter ~~allow~~in ~~for~~2006 aand ~~more thorough review of the impact the ADA would have on the universal service program.~~ 2005:

On December 20, 2001, the FCC released a notice of proposed rulemaking initiating the first triennial review of the FCC's policies on unbundled network elements (''UNEs'') including UNE-P. UNE-P is created when a competing carrier obtains all the network elements needed to provide service from the ILEC at a discounted rate. On August 21, 2003, the FCC released the text of its Triennial Review Order. The FCC adopted new rules governing the obligations of ILECs to unbundle certain elements of their local networks for use by competitors. As part of the Triennial Review Order the FCC also opened a further notice of proposed rulemaking to consider the ''pick and choose'' rule under which a competing carrier could select from among the various terms of interconnection offered by an ILEC in its various interconnection agreements. On July 13, 2004, the FCC released an order eliminating the ''pick and choose'' rule, replacing it with an ''all-or-nothing'' rule. Under the new rules, a requesting carrier may only adopt an effective interconnection agreement in its entirety, taking all rates, terms and conditions of the adopted agreement. The FCC explained that it eliminated the ''pick and choose'' rule to promote commercial negotiations and produce agreements better tailored to meet carriers' individuals needs.


					Dividend
Year	Qtr.	High	Low	Close	Declared
2006	4th	$62.66	$52.83	$60.48	$.125
	3rd	$65.64	$52.34	$55.50	$.173
	2nd	$66.45	$59.32	$63.83	$.385
	1st	$67.96	$58.80	$64.75	$.385
2005	4th	$68.19	$58.00	$63.10	$.385
	3rd	$66.95	$60.45	$65.11	$.380
	2nd	$62.36	$54.82	$62.28	$.380
	1st	$59.85	$54.20	$54.85	$.380

On March 2, 2004, the D.C. Circuit Court overturned key portions of the FCC's Triennial Review Order. The D.C. Circuit Court's decision vacated the nationwide impairment standard, as well as the FCC's delegation of authority to the states, while generally upholding ILEC broadband relief. The D.C. Circuit Court's decision was to become effective on May 3, 2004.

	As previously discussed, on July 17, 2006, Alltel completed the spin-off of its wireline business to its stockholders. Market prices presented in the table above include the value of the wireline business through the date of the spin-off. Following the spin-off, Alltel lowered its annual dividend rate from $1.54 to $.50 per share. Dividends declared for the third quarter of 2006 included a one-time dividend of $.048 per share related to the spin-off. As of December 31, 2006, the approximate number of stockholders of common stock including an estimate for those holding shares in brokers’ accounts was 181,000.

(b)	Not applicable.

(c)	On January 19, 2006, Alltel’s Board of Directors authorized the Company to repurchase up to $3.0 billion of its outstanding common stock over a three-year period ending December 31, 2008. During the third quarter of 2006, Alltel repurchased 12,847,500 shares of its common stock at a total cost of $709.0 million, or an average cost of $55.19 per share. Alltel did not repurchase any of its common shares during the first six months of 2006. Information pertaining to this authorization for the fourth quarter of 2006 is presented in the table below.

Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans	Maximum Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased Under the Plans
October 1-31, 2006	5,500,000	$56.66	5,500,000	$1,979.4 million
November 1-30, 2006	5,125,000	$55.89	5,125,000	$1,692.9 million
December 1-31, 2006	5,000,000	$57.70	5,000,000	$1,404.4 million
Totals	15,625,000	$56.74	15,625,000

ALLTEL Corporation Form 10-K, Part I II

Item 1 6. Selected Financial ~~Business~~Data

~~WIRELINE~~For information ~~OPERATIONS~~pertaining ~~(continued)~~to Selected Financial Data of Alltel, refer to pages F-28 and F-29 of the Financial Supplement, which is incorporated by reference herein.

~~LOCAL~~Item 7. Management’s Discussion ~~SERVICE~~and –Analysis ~~REGULATION~~of ~~(continued)~~Financial Condition and Results of Operations

OnFor information ~~March 31,~~pertaining ~~2004, the FCC commissioners urged carriers~~ to ~~begin private commercial negotiations to resolve issues surrounding the competitor'~~Management’s ~~access~~Discussion toand ~~unbundled~~Analysis ~~network~~of Financial ~~elements.~~ Condition Toand ~~provide~~Results ~~additional~~of ~~time~~Operations ~~for~~of ~~these negotiations~~Alltel, ~~the~~refer ~~FCC~~to ~~requested~~pages ~~and was granted a 45~~F-~~day~~2 ~~extension~~ to ~~June 15, 2004~~ F-27 of the Financial ~~May 3~~Supplement, ~~2004~~which ~~effective~~is ~~date~~incorporated ofby ~~the~~reference Dherein.~~C. Circuit Court's decision to vacate the UNE rules. The Supreme Court denied all petitions for review.~~

~~On September 13, 2004, the FCC released its Interim UNE Order requiring incumbent ILECs to~~Item ~~maintain the status quo through March 13, 2005 and indicated that it would release permanent rules prior to that date~~ 7A. ~~Under the interim rules, ILECs are required to provide mass-market switching, enterprise market loops and dedicated transport under the same rates, terms and conditions as in effect on June~~ ~~15, 2004. If permanent rules are not adopted by March 13,~~Quantitative ~~2005, UNE rates generally would increase by 15 percent for existing CLEC customers for a six-month period ending September 13, 2005. In both cases, the interim rates would be discarded if~~ and ~~when~~Qualitative ~~the~~Disclosures ~~FCC~~About ~~adopts~~Market permanent UNE rules. Various parties have filed an appeal of the Interim UNE Order and a writ of mandamus to strike down the Interim UNE Order and order the FCC to adopt compliant rules, both of which remain pending before the D.C. Circuit Court. On December 15, 2004, the FCC adopted permanent UNE rules, although the text of the order has not been released. These permanent rules appear to eliminate UNE-P as a CLEC entry strategy by dropping mass market switching from the required list of UNEs and reduce CLEC access to high-capacity loops and transport based on economic conditions in relevant wire centers. These permanent rules apparently will establish a twelve-month transition for most of the UNEs being eliminated. Until these scenarios unfold and the proceeding has worked its way through the courts, the ultimate impact of the Triennial Review proceeding and permanent UNE rules on ALLTEL's ILEC operations cannot be determined, however it is not expected to be material. Risk

OnFor information ~~September 15,~~pertaining ~~2003,~~to the ~~FCC~~Company’s ~~launched~~market ~~its~~risk ~~first~~disclosures, ~~comprehensive~~refer ~~review of the rules that establish wholesale pricing of UNEs. The notice of proposed rulemaking sought comment on a variety of UNE and resale pricing-related issues and on a proposal~~ to ~~make total~~page ~~element long~~ F-~~run~~23 ~~incremental cost methodology (''TELRIC'') rules more closely account for the ''real-world'' attributes~~ of the ~~incumbent~~Financial ~~carrier's network. The FCC has not issued an Order in this proceeding but if this proposal were adopted~~Supplement, ~~the~~which ~~result~~is ~~would~~incorporated ~~likely~~by ~~be increased~~reference ~~UNE prices~~ herein. ~~The potential increases are not expected to have a material increase on the Company's wireline operations.~~

~~Section 251(b) of the Communications Act of 1934 (the~~Item ~~''34 Act''), as amended, requires, in part, that local exchange carriers provide local number portability to any requesting telecommunications carrier~~ 8. Wireless carriers are generally defined as ''telecommunications carriers'' under the 34 Act, and are therefore eligible to port numbers with wireline carriers, which is referred to as ''intermodal porting''. As previously discussed under ''Wireless Operations — Regulation'', on November ~~10, 2003, the FCC released a decision~~Financial ~~providing~~ Statements ~~guidance on intermodal porting issues. The intermodal porting requirement took effect on November 24, 2003 for wireline carriers in the top 100 MSAs~~ and onSupplementary May 24, 2004 for wireline carriers operating in markets below the top 100 MSAs. The majority of the Company's wireline operations are conducted in markets below the top 100 MSAs and were subject to the later May 24, 2004 implementation date for intermodal porting. To date, implementation of intermodal porting has not had a significant impact on the Company's wireline operating results. Data

~~Periodically, the Company's local exchange subsidiaries receive requests from wireless~~For ~~communications~~ information ~~providers~~pertaining ~~for~~to ~~renegotiation~~Financial ofStatements ~~existing transport~~ and ~~termination~~Supplementary ~~agreements. In~~Data ~~these cases~~of Alltel, refer ~~the~~to ~~Company's~~pages ~~local~~F-30 ~~exchange~~to ~~subsidiaries~~F-73 ~~renegotiate~~of the ~~appropriate~~Financial ~~terms and~~Supplement, ~~conditions~~which inis ~~compliance with the 96 Act. The Company's local exchange subsidiaries~~incorporated ~~have~~ by ~~also~~reference ~~executed contracts for transport and termination services with CLECs~~herein.

~~Most states in which ALLTEL's ILEC subsidiaries operate have adopted alternatives to~~Item ~~rate-of-return regulation, either through legislative or state public service commission actions~~ 9. ~~The Company has elected alternative regulation for certain of its ILEC subsidiaries~~ Changes in ~~Alabama, Arkansas, Florida, Georgia, Kentucky, Nebraska, North Carolina, Ohio, Pennsylvania, South Carolina,~~ and ~~Texas.~~Disagreements ~~The~~with ~~staff~~Accountants ofon ~~the~~Accounting Kentucky Public Service Commission has challenged ALLTEL's ability to remain covered by the small company alternative regulation plan under which a portion of the Company's Kentucky operations presently operates. The Kentucky PSC is expected to address the issue in 2005. The Missouri Public Service Commission has ruled that the Company is not eligible for alternative regulation. The Company has appealed that decision, although the Missouri commission's action will not affect the Company's local service and ~~intrastate access rates. ALLTEL continues to evaluate alternative~~Financial ~~regulation options in markets where its ILEC subsidiaries are presently not subject to alternative regulation.~~ Disclosure

15No reportable information under this item.

~~ALLTEL Corporation~~Item ~~Form~~ 9A. ~~10-K, Part I~~Controls and Procedures

~~Item~~ (a) Evaluation of disclosure controls and procedures. The term “disclosure controls and procedures” (defined in SEC Rule 13a-15(e)) refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within required time periods and include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including the company’s principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure. Alltel’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this annual report (the “Evaluation Date”). Based on that evaluation, Alltel’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, such controls and procedures were effective. (b) Management’s report on internal control over financial reporting. Management’s Report on Internal Control Over Financial Reporting, which appears on page F-31 of the Financial Supplement, is incorporated by reference herein. (c) Changes in internal control over financial reporting. As of September 30, 2006, Alltel’s management determined that the Company did not maintain effective controls over its accounting for unusual and complex transactions. Specifically, as described in Alltel’s Current Report on Form 8-K/A filed on November 1, 2006, the Company did not maintain effective controls to ensure that its accounting for its spin-off and merger of its wireline business was accounted for in accordance with generally accepted accounting principles. ~~Business~~ This resulted in an adjustment to retained earnings, additional paid in capital and income from discontinued operations. Accordingly, Alltel’s management determined that the control deficiency constituted a material weakness in the Company’s internal control over financial reporting.

~~WIRELINE OPERATIONS (continued)~~ 15

~~LOCAL~~ALLTEL ~~SERVICE~~Corporation –Form ~~REGULATION~~10-K, ~~(continued)~~ Part II

~~The following summary sets forth a description of the alternative regulation plan for each~~Item ~~of the states in which the Company has elected alternative regulation:~~ 9A. Controls and Procedures (Continued)

•(c) ~~ALLTEL'~~Changes in internal control over financial reporting, continued. In the fourth quarter of 2006, Alltel’s ~~regulated~~management ~~Alabama~~implemented ~~wireline~~changes ~~subsidiary~~to ~~has~~Alltel’s ~~operated~~internal ~~since~~control ~~1996~~over ~~under~~financial areporting ~~Public~~to ~~Service~~reduce ~~Commission~~the ~~(''PSC'')~~likelihood ~~established~~of ~~alternative~~an ~~regulation~~error ~~plan.~~arising ~~Under~~out ~~this~~of ~~plan,~~unusual ~~basic~~and ~~service~~complex ~~rates~~transactions ~~have~~in ~~been~~the ~~capped~~future. ~~Non-basic~~The ~~service~~changes ~~prices~~to ~~may~~Alltel’s beinternal ~~increased~~control ~~annually~~over asfinancial ~~long~~reporting asincluded ~~the~~enhancing ~~aggregate~~roles ~~annual~~and ~~change~~responsibilities isfor 10researching ~~percent~~and orreviewing ~~less.~~the ~~Access~~accounting ~~charges~~treatment ~~are~~and ~~also~~financial ~~capped~~statement ~~under~~presentation ~~this~~of ~~plan~~unusual and complex transactions. ~~The~~With ~~Alabama~~the ~~alternative~~implementation ~~regulation~~of ~~plan~~the ~~will~~above-described bechanges ~~replaced~~to inAlltel’s ~~2005~~internal bycontrol ~~two~~over ~~optional~~financial ~~alternative~~reporting, ~~regulation~~Alltel’s ~~plans~~management ~~approved~~has byconcluded that the ~~PSC.~~material ~~Under~~weakness ~~these~~with ~~optional~~respect ~~plans~~to ~~basic~~accounting ~~local~~for ~~service~~unusual ~~rates~~and ~~will~~complex ~~remain~~transactions ~~capped~~has ~~for~~been afully ~~minimum~~remediated as of ~~two~~December ~~years~~31, 2006. Other ~~rates~~than ~~are~~the ~~granted~~changes ~~pricing~~to ~~flexibility~~internal ~~under~~control ~~one~~over ~~optional~~financial ~~plan~~reporting ~~and~~discussed ~~are~~in ~~capped~~the ~~for~~previous ~~three~~paragraph, ~~years~~there ~~under~~were no changes in Alltel’s internal control over financial reporting that occurred during the ~~other~~period ~~optional~~covered ~~plan.~~by ~~ALLTEL~~this isannual ~~evaluating~~report ~~these~~that ~~plans~~have ~~and~~materially ~~will~~affected, ~~make~~or anare ~~election~~reasonably inlikely ~~2005~~to materially affect, Alltel’s internal control over financial reporting.

~~• ALLTEL's regulated Arkansas wireline subsidiary has operated since 1997 under an alternative regulation plan established by statute~~Item 9B. ~~Under this plan, basic local rates and access rates may be adjusted annually by up to 75 percent of the annual change in the Gross Domestic Product-Price Index (''GDP-PI'').~~ Other ~~local rates may be changed without PSC approval and become effective upon the filing of revised tariffs.~~ Information

•No reportable ~~ALLTEL's~~information ~~regulated Florida wireline subsidiary operates~~ under ~~alternative regulation established by Florida statute. Under~~ this ~~plan, basic local rates may be increased once in any twelve-month period by an amount not to exceed the twelve month change in the GDP-PI less one percent~~item. The Company may increase rates for non-basic services as long as the annual increase for any category does not exceed six percent in any twelve-month period. Non-basic rates can be increased by up to 20 percent annually in exchanges where another local provider is providing service. Intrastate access rates can be increased by the annual change in GDP-PI or three percent, whichever is less, only after access rates reach parity with the Company's interstate rates.

•Form ~~ALLTEL's regulated Georgia wireline subsidiaries operate under an alternative regulation plan established by statute. Under this plan~~10-K, ~~basic~~Part ~~local rates may be increased annually based on the annual change in GDP-PI. Other local rates may be increased by filing revised tariffs.~~III

~~• ALLTEL has two regulated operating subsidiaries in Kentucky~~Item 10. ~~The subsidiary acquired from Verizon is subject to rate of return regulation. The other subsidiary has operated under alternative regulation established by statute beginning in 1998. Under this plan~~ Directors, Executive ~~the~~Officers ~~subsidiary may adjust basic business~~ and ~~residential~~Corporate rates, zone charges and installation once during any 24 month period by an amount not to exceed the sum of the annual percentage change in GDP-PI for the immediately preceding two calendar years multiplied by the existing rate or charge to be adjusted subject to the following limitations: (1) basic business and residence rates may not exceed the average basic rates of the state's largest telephone utility, and (2) rates may not be increased by more than 20 percent. Access charges may not be adjusted if the change would result in intrastate access rates that exceed the company's interstate rates. Other local rates may be adjusted by filing tariffs. The staff of the Kentucky Public Service Commission has challenged ALLTEL's eligibility to remain under this alternative regulation plan. The Kentucky PSC is expected to address this issue in 2005.Governance

•For information ~~ALLTEL's~~pertaining ~~regulated~~to ~~Missouri~~Directors ~~wireline~~of ~~subsidiary~~ALLTEL isCorporation ~~subject~~refer to ~~alternative~~“Election ~~regulation~~of Directors” ~~election~~in ~~established by statute. Under Missouri'~~Alltel’s ~~alternative~~Proxy ~~regulation,~~Statement ~~basic~~for ~~local~~its ~~service~~2007 ~~and~~Annual ~~intrastate~~Meeting ~~access rates are capped at December 13~~of Stockholders, ~~2001~~which ~~levels~~is ~~for~~incorporated aherein ~~period~~by ~~of twelve months~~reference. ~~Rate~~There ~~changes~~have ~~thereafter~~been no material ~~may be changed annually based on~~ changes to the ~~telephone~~procedures ~~service~~by ~~component~~which ofstockholders ~~the~~recommend ~~Consumer~~director candidates ~~Price~~since ~~Index.~~March ~~Prices~~16, ~~for~~2006. ~~non-basic~~For ~~services~~information ~~may~~pertaining ~~be increased up~~ to ~~eight percent per year after~~ the ~~initial~~Audit Committee ~~twelve-month period. The staff~~ of ~~the Missouri PSC has challenged ALLTEL'~~Alltel’s ~~price~~Board ~~cap~~of ~~election.~~Directors ~~The~~and ~~Missouri PSC has ruled that~~ the ~~Company~~audit iscommittee ~~not~~financial expert ~~eligible~~refer to ~~elect~~“Board ~~alternative~~and ~~regulation~~Board inCommittee ~~Missouri.~~Matters” ~~The~~in ~~Company~~Alltel’s ~~has~~Proxy ~~appealed~~Statement for ~~this~~its ~~PSC~~2007 ~~decision~~Annual toMeeting ~~the~~of ~~Cole~~Stockholders, ~~County~~which ~~Circuit~~is ~~Court~~incorporated ~~and~~herein by reference. ~~expects~~Executive aofficers ~~ruling~~of by the ~~court~~Company inare ~~2005.~~as follows:

Name	Age	Position
Scott T. Ford	44	President and Chief Executive Officer
Kevin L. Beebe	47	Group President - Operations
Jeffrey H. Fox	44	Group President - Shared Services
C.J. Duvall Jr.	48	Executive Vice President - Human Resources
Sharilyn S. Gasaway	38	Executive Vice President - Chief Financial Officer
Richard N. Massey	50	Executive Vice President - General Counsel and Secretary
Keith A. Kostuch	44	Senior Vice President - Strategic Planning
Sue P. Mosley	48	Controller
John A. Ebner	37	Treasurer

~~ALLTEL~~There are no ~~Corporation~~arrangements between any officer and any other person pursuant to which ~~Form 10-K~~ he was selected as an officer. Scott T. Ford is the son of Joe T. Ford, ~~Part~~Chairman of Alltel’s IBoard of Directors. Each of the officers named above has been employed by Alltel or a subsidiary for the last five years, except for Richard N. Massey. Prior to joining Alltel in January 2006 and since 2000, Mr. Massey was a managing director at Stephens Inc. of Little Rock, Arkansas, heading up that firm’s information and communications practice and assisting clients with mergers and acquisitions.

Alltel has a code of ethics that applies to all employees and members of the Board of Directors. Alltel’s code of ethics, referred to as the “Working with Integrity” guidelines, is posted on the Investor Relations page of the Company’s web site (www.alltel.com) under “corporate governance”. Alltel will disclose in the corporate governance section of the Investor Relations page on its web site amendments and waivers with respect to the code of ethics that would otherwise be required to be disclosed under Item 1 5.05 ~~Business~~of Form 8-K. Alltel will provide to any stockholder a copy of the foregoing information, without charge, upon written request to Director-Investor Relations, ALLTEL Corporation, One Allied Drive, Little Rock, Arkansas 72202.

~~WIRELINE OPERATIONS (continued)~~ 16

~~LOCAL~~ALLTEL ~~SERVICE~~Corporation –Form ~~REGULATION~~10-K, ~~(continued)~~ Part III

~~• ALLTEL's regulated Nebraska operations are subject to alternative regulation established by statute~~Item 11. (Nebraska law exempts telecommunications companies from rate-of-return regulation.) In exchanges where competition exists, companies are required to file rate lists, which are effective after 10 days notice to the PSC. In exchanges where competition does not exist, companies file rate lists for all services except basic local with 10 days notice to the PSC and basic local rates may be increased after 90 days notice to affected subscribers. Basic local rate increases are reviewed by the PSC only if rates are increased more than 10 percent in twelve consecutive months or in response to a formal complaint signed by two percent of affected subscribers. Executive Compensation

•For information ~~ALLTEL's~~pertaining ~~regulated~~to ~~North~~Executive ~~Carolina~~Compensation, ~~subsidiary~~refer ~~has~~to ~~operated~~“Compensation Discussion ~~since~~and ~~1998~~Analysis” ~~under~~in ~~alternative~~Alltel’s ~~regulation~~Proxy ~~plan~~Statement ~~approved~~for byits ~~the~~2007 ~~State~~Annual ~~Utility~~Meeting of ~~Commission.~~Stockholders, ~~Local~~which ~~rates~~is ~~are~~incorporated ~~adjusted~~herein ~~annually~~ by ~~the annual change in GDP-PI less two percent~~reference. ~~Rate~~For ~~changes~~information pertaining ~~are~~to ~~effective upon 14 days notice. Under~~ the ~~revised~~Compensation ~~North~~Committee ~~Carolina~~of ~~statute~~Alltel’s ~~adopted~~Board inof ~~2003~~Directors, ~~this~~refer to ~~plan~~“Compensation ~~will~~Committee ~~remain~~Report” in ~~place~~Alltel’s ~~unless~~Proxy ~~ALLTEL~~Statement ~~and~~for ~~the~~its ~~State~~2007 Annual ~~Utility~~Meeting ~~Commission~~of ~~agree~~Stockholders, towhich ~~modify~~is ~~the~~incorporated ~~existing~~herein ~~plan~~by reference.

~~• ALLTEL's regulated Ohio wireline subsidiaries began in 2004, to operate under an alternative regulation plan established by the Ohio Public Utility Commission~~Item 12. Security Ownership ~~Under~~of ~~this~~Certain ~~plan,~~Beneficial ~~basic~~Owners ~~service~~and ~~rates~~Management ~~have~~and ~~been~~Related ~~capped. Non-basic service rates are subject to limited pricing flexibility.~~Stockholder Matters

•For information ~~ALLTEL's~~pertaining ~~regulated~~to ~~Pennsylvania~~beneficial ~~subsidiary~~ownership ~~has operated under the Alternative Form~~ of ~~Regulation~~Alltel ~~and Network Modernization Plan (the ''Plan'') established by the Pennsylvania Public Utility Commission (''PUC''). Under the Plan~~securities, ~~rates~~refer to “Security ofOwnership ~~competitive services are not regulated, but the PUC retains authority over the quality~~ of ~~these~~Certain ~~services.~~Beneficial ~~Rate~~Owners ~~changes~~and ~~for~~Management” ~~noncompetitive~~in ~~services~~Alltel’s Proxy ~~are~~Statement ~~restricted to the GDP-PI less two percent. Revenue neutral rate rebalancing is also permitted~~ for ~~noncompetitive~~its ~~services.~~2007 ~~Under~~Annual ~~the~~Meeting ~~plan, the total amount~~ of anStockholders, ~~increase~~which inis incorporated ~~the~~herein ~~basic rates cannot exceed $3.50 annually. The Pennsylvania statute that authorized the PUC to establish this Plan has been modified~~ by ~~the state legislature to provide additional regulatory options~~reference.

•Set forth below ~~ALLTEL's~~is ~~regulated~~additional ~~South~~information ~~Carolina~~as operations are subject to alternative regulation established by statute. Local rates for residential and single line business service cannot exceed the statewide average local service rate for a period of ~~two~~December ~~years. After this two-year period~~31, ~~these~~2006 ~~rates~~about ~~can~~shares beof ~~adjusted~~the Company’s ~~pursuant~~common tostock anthat ~~inflation-based index. All other service rates~~ may be ~~increased~~issued ~~subject~~upon tothe aexercise ~~complaint process for abuse~~ of ~~market~~options ~~position.~~under ~~The~~the Company’s ~~PSC~~existing ~~has~~equity ~~determined~~compensation ~~that~~plans, ~~any~~segregated ~~allegations~~between ofplans ~~abuse~~approved by ofAlltel’s ~~market~~stockholders ~~position~~and ~~will~~plans benot ~~investigated~~submitted onto athe ~~case-by-case~~stockholders ~~basis~~for approval. ~~Rate increases become effective 14 days after filing.~~

• The Company has two operating subsidiaries in Texas. These subsidiaries are subject to alternative regulation established by statute. All rates are capped for the duration of the plan.

	(a)		(b)		(c)
(Thousands, except per share amounts)	Number of securities to be issued upon exercise of outstanding options (2)		Weighted-average exercise price of outstanding options		Number of securities available for future issuance under equity compensation plans, excluding securities reflected in column (a)
Equity compensation plans approved
by security holders (1)		15,807.1		$47.23		13,812.0
Equity compensation plans not approved
by security holders		-		-		-
Totals		15,807.1		$47.23		13,812.0

NETWORK ACCESS SERVICES – REGULATION

(1)	Includes the ALLTEL Corporation 1991 Stock Option Plan, ALLTEL Corporation 1994 Stock Option Plan for Employees, ALLTEL Corporation 1994 Stock Option Plan for Nonemployee Directors, ALLTEL Corporation 1998 Equity Incentive Plan, and the ALLTEL Corporation 2001 Equity Incentive Plan.

(2)	Does not include 369,159 stock options with a weighted-average exercise price of $27.57, which were assumed by Alltel in connection with the Company’s mergers with 360° Communications Company in 1998 and Western Wireless Corporation in 2005. These options were issued under the Amended and Restated 360° Communications Company 1996 Equity Incentive Plan, 360° Communications Company 1996 Replacement Stock Option Plan, Western Wireless Corporation 2005 Long-Term Equity Incentive Plan and the Amended and Restated 1994 Management Incentive Stock Option Plan of Western Wireless Corporation. These plans have been frozen since the merger dates, with respect to the granting of any additional options.

~~The Company's local exchange subsidiaries currently receive compensation from other~~Item ~~telecommunications~~ 13. Certain Relationships ~~providers, including long-distance companies, for origination~~ and ~~termination~~ ofRelated ~~inter-exchange~~Transactions ~~traffic through access charges or toll settlements that are established in accordance with state~~ and ~~federal laws.~~Director Independence

~~A number of carriers have begun offering voice telecommunications services utilizing Internet~~For ~~protocol~~ information aspertaining ~~the~~to ~~underlying~~Certain ~~means~~Relationships ~~for transmitting those calls. This service, commonly known as VoIP telephony, is challenging existing regulatory definitions~~ and ~~raises~~Related ~~questions as to how such services should be regulated~~Transactions, ~~if at all. Several state commissions have~~ ~~attempted~~ refer to ~~assert~~“Certain ~~jurisdiction~~Transactions” ~~over VoIP services, but federal courts~~ in ~~New~~Alltel’s ~~York~~Proxy ~~and Minnesota~~Statement ~~have~~for ~~indicated~~its ~~that~~2007 ~~the FCC preempts the states with respect to jurisdiction. On~~Annual ~~March 10,~~ Meeting ~~2004, the FCC released a notice~~ of ~~proposed~~Stockholders, ~~rulemaking~~which ~~seeking~~is ~~comment~~incorporated onherein ~~the appropriate~~by ~~regulatory treatment of IP-enabled communications services~~reference. ~~The proposed~~For ~~rulemaking~~ information ~~sought~~pertaining ~~comment~~to onDirector ~~the~~Independence, ~~differences~~refer ~~between~~to ~~IP-enabled~~“Board ~~services~~ and ~~traditional~~Board ~~telephony~~ Committee ~~services,~~Matters” ~~and~~in ~~the~~Alltel’s ~~distinctions~~Proxy ~~between~~Statement ~~different~~for ~~types~~its of2007 ~~IP-enabled~~Annual ~~services.~~Meeting ~~The FCC indicated that the cost~~ of ~~the public switched telephone network should be borne~~ ~~equitably among those that use it and seeks comment on the specific regulatory requirements that should be extended to IP-enabled service providers~~ Stockholders, ~~including~~which ~~requirements~~is ~~relating~~incorporated ~~to E-911,~~herein ~~disability~~by ~~accessibility, access charges, and universal service~~reference.

17Item 14. Principal Accountant Fees and Services

~~ALLTEL~~For information ~~Corporation~~pertaining to fees paid to the Company’s principal accountant and ~~Form 10~~ the Audit Committee’s pre-Kapproval policy and procedures with respect to such fees, ~~Part~~refer Ito “Audit and Non-Audit Fees” in Alltel’s Proxy Statement for its 2007 Annual Meeting of Stockholders, which is incorporated herein by reference.

~~Item 1. Business~~ 17

~~WIRELINE~~ALLTEL ~~OPERATIONS~~Corporation ~~(continued)~~ Form 10-K, Part IV

~~NETWORK ACCESS SERVICES – REGULATION (continued)~~Item 15. Exhibits and Financial Statement Schedules

Although the FCC's rulemaking regarding IP-enabled services remains pending, the FCC has adopted three orders establishing broad parameters for the regulation of such services. Specifically, on February 12, 2004, the FCC released an order declaring Pulver.com's ''free'' IP-based, peer-to-peer service that requires specialized telephone equipment or software for computers is not (a ~~telecommunications service, but rather was an unregulated information~~) ~~service subject to federal jurisdiction. On April 21, 2004, the FCC denied a waiver petition filed by AT&T requesting that its IP telephony service be exempt from access charges.~~ The ~~FCC~~ ~~ruled~~ following ~~that~~documents ~~AT&T's~~are IP telephony service, which converted voice calls to IP format for some portion of the routing over the public switched telephone network prior to converting the calls back to their original format, is a regulated telecommunications service subject to interstate access charges. On November 12, 2004, the FCC ruled that Internet-based service provided by Vonage Holdings Corporation should be subject to federal rather than state jurisdiction. Several state commissions have filed ~~appeals~~as of the FCC's Vonage decision to various federal appellate courts. Other aspects of the Vonage petition for declaratory ruling, including how the service should be classified for regulatory purposes, remain pending. Also pending at the FCC is a ~~petition~~part filed by Level 3 Communications Inc. asking the FCC to forbear from imposing interstate or intrastate access charges on Internet-based calls that originate or terminate on the public switched telephone network. In 2004, the FCC initiated a rulemaking regarding the regulatory framework for implementing CALEA and tentatively concluded that CALEA should apply to VoIP services. If the FCC determines that IP-enabled services are not subject to similar levels of ~~regulatory~~this requirements, including contributions to federal and state universal service programs, other federal and state tax obligations and quality of service metrics, the Company's regulated local exchange operations will be at a competitive disadvantage. Until the FCC issues its decision in these proceedings, the Company cannot estimate the impact on its operations. report:

On October 8, 2004, the FCC granted in part and denied in part a petition filed by Core Communications requesting that the FCC forbear from enforcing provisions of the FCC's 2001 Internet Service Provider (''ISP'') Remand Order. The FCC granted forbearance from the ISP Remand Order's growth caps and new market rule finding they were no longer in the public interest. The FCC denied forbearance from the ISP Remand Order's rate cap and mirroring rules. Various parties have filed for reconsideration with the FCC and appeals have been filed with the D.C. Circuit Court. If the FCC's decision in this Order is upheld, the Company is likely to incur an operating expense for delivering ISP-bound traffic to competitive wireline service providers that it has not had before. The Company is not able to estimate the amount of this additional expense because ISP-bound minutes traversing its network are not presently recorded, although it is very likely that the negative impact to operating margin would be less than $10.0 million annually.


1.	Financial Statements: The following Consolidated Financial Statements of ALLTEL Corporation and subsidiaries for the year ended December 31, 2006, included in the Financial Supplement, which is incorporated by reference herein:
		Financial Supplement Page Number
	Management’s Report on Internal Control Over Financial Reporting	F-31
	Report of Independent Registered Public Accounting Firm	F-32 - F-33
	Consolidated Balance Sheets - as of December 31, 2006 and 2005	F-34
	Consolidated Statements of Income - for the years ended December 31, 2006, 2005 and 2004	F-35
	Consolidated Statements of Cash Flows -
	for the years ended December 31, 2006, 2005 and 2004	F-36
	Consolidated Statements of Shareholders’ Equity -
	for the years ended December 31, 2006, 2005 and 2004	F-37
	Notes to Consolidated Financial Statements	F-38 - F-73

		Form 10-K
2.	Financial Statement Schedules:	Page Number
	Report of Independent Registered Public Accounting Firm	20
	Schedule II. Valuation and Qualifying Accounts	21

3.	Exhibits:
	Exhibit Index	22-29

~~In April 2001, the FCC released a notice of proposed rulemaking addressing inter-carrier~~Separate ~~compensation.~~ condensed ~~Under~~financial ~~this~~statements ~~rulemaking, the FCC asked for comment on a ''bill and keep'' compensation method that would significantly modify the existing rules governing reciprocal compensation and access charges. A number~~ of ~~state~~ALLTEL ~~proceedings~~Corporation have ~~also~~ been ~~initiated~~omitted bysince ~~various wireline companies to address compensation with respect to traffic that originates or~~ the ~~terminates~~ Company ~~with~~meets ~~wireless carriers or competitive wireline service providers. The outcome of~~ the ~~FCC~~tests ~~and~~set ~~state~~forth ~~proceedings~~in ~~could~~Regulation ~~change~~S-X ~~the~~Rule ~~way~~4-08(e)(3). ~~ALLTEL receives compensation from, and~~All ~~remits compensation to,~~ other ~~carriers and its end users. Several industry associations have~~ ~~presented~~ schedules ~~proposals~~are toomitted ~~the~~since ~~FCC for~~ the ~~reform~~required ofinformation ~~inter-carrier compensation and universal service collection and distribution mechanisms. The FCC~~ is ~~expected~~not topresent ~~issue~~or ~~a further notice~~is of not present ~~proposed rulemaking seeking comment on these proposals~~ in ~~2005.~~amounts ~~Until~~sufficient ~~this~~to ~~proceeding concludes~~require ~~and~~submission ~~the~~of ~~changes to~~ the ~~existing rules are established~~schedule, ifor ~~any, ALLTEL cannot~~because ~~estimate~~ the ~~potential~~information ~~impact~~required ~~the~~is ~~proposed~~included ~~changes~~in ~~would~~the ~~have~~consolidated onfinancial ~~its ILEC revenues and~~statements ~~expenses,~~ and ~~nor~~notes ~~the timing of the potential changes~~thereto.

During the first quarter of 2002, the FCC initiated a rulemaking to evaluate the appropriate framework for broadband access to the Internet over wireline facilities. In the notice of proposed rulemaking, the FCC tentatively concluded that wireline broadband Internet access should be classified as an ''information service'' rather than a telecommunications service and, therefore, should not be subject to common carrier regulation. The FCC sought comments on their tentative conclusion, but has not reached a final order. In a related proceeding released March 15, 2002, the FCC issued a declaratory ruling concluding that cable modem service was an interstate ''information service'' and not a cable service or a telecommunications service. The FCC sought comment on whether there are legal or policy reasons why it should reach different conclusions with respect to wireline broadband Internet access and cable modem service, but has not reached a final order. On October 6, 2003, the U.S. Court of Appeals for the Ninth Circuit (the ''Ninth Circuit Court'') rejected the FCC's classification of cable modem service as solely an unregulated ''information service'', finding a portion of the service to be a telecommunications service. The FCC requested a rehearing before the full Ninth Circuit Court, but the request was denied on March 31, 2004. 18

18 SIGNATURES

~~ALLTEL~~Pursuant to ~~Corporation~~the requirements of Section 13 or 15(d) of the Securities Exchange Act ~~Form 10-K~~ of 1934, ~~Part~~the Iregistrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Item 1. Business

ALLTEL Corporation
Registrant

By	/s/ Scott T. Ford	Date: February 20, 2007
Scott T. Ford, President and Chief Executive Officer

~~WIRELINE~~Pursuant to ~~OPERATIONS~~the ~~(continued)~~requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

NETWORK ACCESS SERVICES – REGULATION (continued)

By	/s/ Sharilyn S. Gasaway	Date: February 20, 2007
Sharilyn S. Gasaway, Executive Vice President -
Chief Financial Officer
(Principal Financial Officer)

By	/s/ Scott T. Ford
Scott T. Ford, President, Chief Executive Officer and Director
		By	/s/ Sharilyn S. Gasaway
*Sue P. Mosley, Controller (Principal Accounting Officer)		* (Sharilyn S. Gasaway, Attorney-in-fact)
		Date: February 20, 2007
*Joe T. Ford, Chairman and Director

*John R. Belk, Director

*Peter A. Bridgman, Director

*William H. Crown, Director

*Lawrence L. Gellerstedt III, Director

*Emon A. Mahony, Jr., Director

*John P. McConnell, Director

*Josie C. Natori, Director

*John W. Stanton, Director

*Warren A. Stephens, Director

*Ronald Townsend, Director

The Ninth Circuit Court ruling was scheduled to become effective April 8, 2004, but the Ninth Circuit Court stayed the ruling pending appeal to the U. S. Supreme Court. On December 3, 2004, the Supreme Court agreed to hear the case and a ruling is expected in the summer of 2005. It remains uncertain whether cable modem service will ultimately fall under common carrier regulation of the 96 Act and whether cable companies will be required to provide nondiscriminatory access to their networks. At this time, ALLTEL cannot estimate what impact, if any, these broadband proceedings may have on its ILEC operations. 19

~~On October 11, 2001, the FCC adopted~~Report ~~rate-~~ of~~-return~~ ~~access~~Independent ~~charge~~Registered ~~reform~~Public ~~and~~Accounting ~~initiated~~Firm a further round of rulemaking to consider other rate-of-return carrier issues. The order lowered traffic sensitive switched access rates, increased the subscriber line charge (''SLC'') over time to bring it in line with SLCs adopted for price cap carriers and phased out carrier common line charges in favor of a new portable ''Interstate Common Line Support'' universal service mechanism, and retained the authorized 11.25 percent rate of return. on

~~TECHNOLOGY~~Financial Statement Schedule

~~The Company believes~~ To the ~~local exchange business is in transition from circuit switched~~ ~~technology,~~ Board ~~which forms the basis~~ of ~~the~~Directors ~~conventional landline telephone network, to digital packet-switched technology, which form the basis~~ of ~~the Internet Protocols (''IP'') used over the Internet.~~ ALLTEL is addressing this challenge with a strategy of providing data service to both business and residential customers through deployment of an IP packet data network, broadband access services like DSL, and targeted VoIP deployments in selected markets. Corporation:

~~ALLTEL's~~Our audits ~~backbone~~of ~~fiber~~the ~~network~~consolidated ~~provides~~financial ~~the~~statements, ~~basis~~of ~~for~~management’s assessment of the ~~transport~~effectiveness of ~~data~~internal ~~traffic.~~control ~~ALLTEL~~over ~~has deployed~~financial ~~almost~~reporting ~~14,000~~and ~~sheath~~of ~~miles~~the effectiveness of ~~fiber~~internal ~~optic~~control ~~cable~~over ~~across~~financial ~~its~~reporting ~~service~~referred ~~areas~~to ~~and~~in ~~continues~~ our report todated ~~increase~~February ~~the~~20, ~~capacity~~2007 ofappearing ~~its~~in ~~networks~~this ~~utilizing~~2006 ~~dense~~Annual ~~wave~~Report ~~division~~on ~~multiplexing~~Form in 10-K of ~~both~~ the ~~core~~Company ~~and~~also ~~metropolitan~~included ~~rings~~an ~~that~~audit ~~serve~~of ~~both~~the ~~ALLTEL's~~financial ~~wireline~~statement ~~and wireless~~schedule ~~markets.~~ listed in ~~Although~~Item ~~the~~15(a)(2) ~~Company~~of ~~believes~~this ~~that~~Form ~~significant~~10-K. ~~capital~~In ~~expenditures~~our ~~will~~opinion, bethis ~~required~~financial statement to schedule ~~continue~~presents ~~increasing~~fairly, ~~the~~in ~~scope~~all ofmaterial ~~its data and fiber optic networks~~respects, ~~ALLTEL~~the ~~believes~~information ~~its~~set forth ~~networks~~ therein ~~are~~when ~~well~~read ~~positioned~~in toconjunction ~~meet~~with the ~~increasing~~related ~~demand~~consolidated ~~for data services.~~financial statements.

~~CLEC OPERATIONS~~/s/ PricewaterhouseCoopers LLP

~~ALLTEL has authority to provide competitive local exchange services in 17 states. As of~~Little ~~December 31~~ Rock, 2004, the Company provided these services in six markets on both a facilities-based and resale basis, and, where necessary, has negotiated interconnection agreements with the appropriate incumbent local exchange carriers. ALLTEL's strategy is to provide local service in combination with other services provided by subsidiaries of the Company, including long-distance, wireless and Internet services. ALLTEL's primary focus for marketing and selling its CLEC services is directed toward the business customer segment through the offering of competitively priced and reliable services. The Company continues to evaluate the profitability of its existing CLEC operations in all markets. Arkansas

~~Generally, CLECs are required to obtain certificates of public convenience and necessity. In~~February ~~addition~~ 20, CLECs are required to file interstate access tariffs with the FCC and in most states, intrastate tariffs with the state public utility commissions. CLECs, however, are subject to significantly less regulation than ILECs. For example, CLECs are not subject to direct rate regulation (such as rate-of-return or price cap regulation). On April 26, 2001 the FCC established a benchmark to govern the interstate access charges imposed by CLECs. The FCC established a three-year transition process to phase down access prices charged by CLECs to rates comparable to their ILEC competitors. Since the end of this transition, CLEC access charges have been capped at the rate charged by the ILEC competitor operating in the CLEC's market. The FCC also adopted an exception that would permit rural CLECs competing with non-rural ILECs to charge access rates above those charged by the ILEC in certain circumstances. The Company is currently evaluating the effects on its CLEC operations of the FCC's Triennial Review and inter-carrier compensation proceedings discussed above. 2007

19 20

ALLTEL ~~Corporation~~ ~~Form 10-K, Part I~~ CORPORATION

~~Item 1. Business~~SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

~~COMMUNICATIONS SUPPORT SERVICES~~(Dollars in Millions)

Communications support services consist of the Company's long-distance and network management services, product distribution, directory publishing and telecommunications information services operations. Revenues and sales from communications support services comprised 11 percent of ALLTEL's total operating revenues from business segments in 2004, compared to 12 percent in 2003 and 13 percent in 2002.

Column A	Column B	Column C			Column D		Column E
		Additions
	Balance at	Charged to		Charged			Balance at
	Beginning	Cost and		to Other	Deductions		End of
Description	of Period	Expenses		Accounts	Describe		Period
Allowance for doubtful accounts,
customers and other:
For the years ended:
December 31, 2006	$70.6	$227.3		$ -	$243.0	(A)	$54.9
December 31, 2005	$37.0	$192.5		$ -	$158.9	(A)	$70.6
December 31, 2004	$29.5	$146.5		$ -	$139.0	(A)	$37.0

Valuation allowance for deferred tax assets:
For the years ended:
December 31, 2006	$14.2	$ 4.6		$ -	$ -		$18.8
December 31, 2005	$16.2	$ 2.6		$ 0.7	$ 5.3	(B)	$14.2
December 31, 2004	$13.5	$ 2.7		$ -	$ -		$16.2

Accrued liabilities related to restructuring
and other charges:
For the years ended:
December 31, 2006	$ 0.2	$ 13.7	(C)	$ -	$ 13.8	(D)	$ 0.1
December 31, 2005	$ 0.7	$ 23.0	(E)	$ -	$ 23.5	(F)	$ 0.2
December 31, 2004	$ 0.5	$ 39.3	(G)	$ -	$ 39.1	(H)	$ 0.7

LONG-DISTANCE AND NETWORK MANAGEMENT OPERATIONS

Notes:
(A)	Accounts charged off net of recoveries of amounts previously written off.

(B)	Reduction in valuation allowance due to utilization of state net operating loss carryforwards.

(C)	During 2006, Alltel recorded integration expenses of $13.7 million related to its acquisition of Western Wireless Corporation (“Western Wireless”) in 2005 and the acquisitions of Midwest Wireless Holdings and wireless properties in Illinois, Texas and Virginia completed during 2006.

(D)	Included cash outlays of $13.8 million for expenses paid in 2006, primarily consisting of branding, signage and computer system conversion costs related to the acquisitions discussed in Note (C).

(E)	During 2005, Alltel recorded integration expenses of $23.0 million in connection with its exchange of wireless assets with Cingular Wireless LLC (“Cingular”), merger with Western Wireless and the acquisition of wireless properties in Alabama and Georgia.

(F)	Included cash outlays of $8.5 million for expenses paid in 2005 and non-cash charges of $15.0 million, primarily consisting of handset subsidies incurred to migrate the customer base to CDMA handsets in the markets acquired from Cingular and those acquired in Alabama and Georgia. The handset subsidies were included in the total amount of integration expenses discussed in Note (E).

(G)	During 2004, the Company recorded restructuring and other charges of $14.5 million related to a planned workforce reduction and the reorganization of its operations and support teams. Alltel also recorded a write-down in the carrying value of certain corporate and regional facilities to fair value in conjunction with the proposed leasing or sale of those facilities of $24.8 million.

(H)	Included cash outlays of $14.1 million for expenses paid in 2004 and non-cash charges of $25 million, primarily consisting of the carrying value of certain corporate and regional facilities discussed in Note (G).

	See Note 10 on pages F-64 to F-65 of the Financial Supplement, which is incorporated herein by reference, for additional information regarding the restructuring and other charges recorded by Alltel in 2006, 2005 and 2004.

Long-distance telecommunications services are provided on both a facilities-based and resale basis by ALLTEL subsidiaries. During 2004, approximately 73 percent of ALLTEL's long-distance traffic was transported on its own fiber optic networks. ALLTEL provides long-distance service in all of the states in which the Company provides local exchange service. In addition, ALLTEL offers long-distance service outside its ILEC service areas. As of December 31, 2004, ALLTEL provided long-distance service to nearly 1.8 million customers. The long-distance marketplace is extremely competitive and continues to receive relaxed regulation from both the FCC and state regulatory commissions. To meet the competitive demands of the long-distance industry, ALLTEL has created several business and residential service offerings to attract potential customers, such as volume price discounts, calling cards and simplified one-rate plans. As a long-distance service provider, ALLTEL's intrastate long-distance business is subject to limited regulation by state regulatory commissions, and its interstate business is subject to limited regulation by the FCC. State regulatory commissions currently require long-distance service providers to obtain a certificate of operating authority, and the majority of states also require long-distance service providers to file tariffs. 21

~~Network management services are currently marketed to business customers in select areas.~~EXHIBIT ~~These services are ancillary service offerings and are not significant components of ALLTEL's communications operations.~~ INDEX

PRODUCT DISTRIBUTION

Number and Name

(3)(a)(1)	Amended and Restated Certificate of Incorporation of ALLTEL Corporation (incorporated herein by reference to Exhibit B to Proxy Statement, dated March 9, l990).	*

(a)(2)	Amendment No. 1 to Amended and Restated Certificate of Incorporation of ALLTEL Corporation (incorporated herein by reference to Annex F of ALLTEL Corporation Registration Statement (File No. 333-51915) on Form S-4 dated May 6, 1998).	*

(b)	Bylaws of ALLTEL Corporation (As amended as of January 29, 1998) (incorporated herein by reference to Exhibit 3(b) to Form 10-K for the fiscal year ended December 31, 1997).	*

(4)(a)	Rights Agreement dated as of January 30, l997, between ALLTEL Corporation and First Union National Bank of North Carolina (incorporated herein by reference to Form 8-K dated February 3, 1997, filed with the Commission on February 4, 1997).	*

(a)(1)	Amendment No. 1 to January 30, 1997 Rights Agreement dated as of February 2, 2005 between ALLTEL Corporation and Computershare Investor Services, LLC (incorporated herein by reference to Exhibit 4(a)(1) to Form 10-Q for the period ended March 31, 2005).	*

(b)	The Company agrees to provide to the Commission, upon request, copies of any agreement defining rights of long-term debt holders.	*

(c)	Indenture dated as of March 7, 1996, between 360° Communications Company and Citibank, N.A., as Trustee (the “1996 360° Indenture”) (incorporated herein by reference to Exhibit 4.2 to 360° Communications Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1995).	*

(d)	First Supplemental Indenture dated as of February 1, 1999, among 360° Communications Company, ALLTEL Corporation and Citibank, N.A. as trustee (incorporated herein by reference to Exhibit 4(e) to Form 10-Q for the period ended March 31, 2003).	*

(e)	Indenture dated as of March 1, 1997, between 360° Communications Company and Citibank, N.A., as Trustee (the “1997 360° Indenture”) (incorporated herein by reference to Exhibit 4.6 to 360° Communications Company’s Current Report on Form 8-K dated March 17, 1997).	*

(f)	Form of 7.60% Senior Note Due 2009 issued under the 1997 360° Indenture (incorporated herein by reference to Exhibit 4.7 to 360° Communications Company’s Current Report on Form 8-K dated March 17, 1997).	*

(g)	Form of 6.65% Senior Note Due 2008 issued under the 1997 360° Indenture (incorporated herein by reference to Exhibit 4.8 to 360° Communications Company’s Current Report on Form 8-K dated January 13, 1998).	*

(h)	First Supplemental Indenture dated as of February 1, 1999, among 360° Communications Company, ALLTEL Corporation and Citibank, N.A. as trustee (incorporated herein by reference to Exhibit 4(i) to Form 10-Q for the period ended March 31, 2003).	*

(10)(a)	Five Year Revolving Credit Agreement dated as of July 28, 2004, between ALLTEL Corporation and Bank of America, N.A., JPMorgan Chase Bank, Banc of America Securities LLC and J.P. Morgan Securities Inc., Citicorp USA, Inc., KeyBank National Association, Wachovia Bank, National Association, and Barclays Bank PLC (incorporated herein by reference to Form 10-Q for the period ended June 30, 2004).	*

~~The Company's product distribution subsidiary, ALLTEL Communications Products, Inc.~~* Incorporated ~~(''Communications~~ herein ~~Products''),~~by ~~operates~~reference ~~four~~as ~~warehouses and four counter-sales showrooms across the United States~~indicated. Communications Products is a distributor of telecommunications equipment and materials. Communications Products supplies equipment to affiliated and non-affiliated communications companies, business systems suppliers, railroads, governments, and retail and industrial companies. Communications Products offers a large variety of telecommunications-related products for sale. Certain of these products are inventoried including single and multi-line telephone sets, wireless handsets, local area networks, switching equipment modules, interior cable, pole line hardware, and various other telecommunications supply items. The Company has not encountered any material shortages or delays in delivery of products from their suppliers.

Communications Products experiences substantial competition throughout its sales territories from other distribution companies and from direct sales by manufacturers. Competition is based primarily on quality, product availability, service, price, and technical assistance. Since other competitors offer similar products, Communications Products also offers other services including expert technical assistance, maintaining wide-ranging inventories in strategically located warehouses and counter-sales showrooms to facilitate single supplier sourcing and ''just-in-time'' delivery, maintaining (a ~~full range of product lines, and by~~) Filed ~~providing staging, assembly and other services~~ herewith. ~~The Company periodically evaluates its product and service offerings to meet customer expectations and position Communications Products in the market as a quality, customer-focused distributor.~~

~~DIRECTORY PUBLISHING~~ 22

~~ALLTEL Publishing Corporation (''ALLTEL Publishing'') coordinates advertising, sales, printing,~~EXHIBIT ~~and distribution for 395 telephone directory contracts in 37 states. ALLTEL Publishing now provides all directory publishing services~~ INDEX, ~~except printing. The services provided by ALLTEL~~ Publishing includes directory yellow page advertising sales, contract management, production, billing, and marketing. Both Verizon Directories and Quebecor World Printers performed printing services for the directories published in 2004 under two separate service agreements that expire in 2007 and 2008, respectively. Continued

Number and Name

(10)(b)(1)	Agreement by and between ALLTEL Corporation and Joe T. Ford effective as of July 26, 2001 (incorporated herein by reference to Exhibit 10(b)(4) to Form 10-K for the fiscal year ended December 31, 2001).	*

(b)(1)(a)	Amendment, effective as of May 8, 2006, to Agreement by and between ALLTEL Corporation and Joe T. Ford effective as of July 26, 2001 (incorporated herein by reference to Exhibit 10(a) to Form 10-Q for the period ended March 31, 2006).	*

(c)(1)	Employment Agreement by and between ALLTEL Corporation and Scott T. Ford effective as of July 24, 2003 (incorporated herein by reference to Exhibit 10(c)(9) to Form 10-Q for the period ended September 30, 2003).	*

(c)(1)(a)	Amendment, effective as of May 8, 2006, to Employment Agreement by and between ALLTEL Corporation and Scott T. Ford effective as of July 24, 2003 (incorporated herein by reference to Exhibit 10(b) to Form 10-Q for the period ended March 31, 2006).	*

(c)(2)	Employment Agreement by and between Alltel Corporation and Scott T. Ford effective as of May 5, 2006 (incorporated herein by reference to Exhibit 10(c) to Form 10-Q for the period ended March 31, 2006).	*

(c)(3)	Employment Agreement by and between Alltel Corporation and Kevin L. Beebe effective as of May 5, 2006 (incorporated herein by reference to Exhibit 10(d) to Form 10-Q for the period ended March 31, 2006).	*

(c)(4)	Employment Agreement by and between Alltel Corporation and Jeffrey H. Fox effective as of May 5, 2006 (incorporated herein by reference to Exhibit 10(e) to Form 10-Q for the period ended March 31, 2006).	*

(c)(5)	Employment Agreement by and between Alltel Corporation and C.J. Duvall Jr. effective as of May 5, 2006 (incorporated herein by reference to Exhibit 10(f) to Form 10-Q for the period ended March 31, 2006).	*

(c)(6)	Employment Agreement by and between Alltel Corporation and Sharilyn S. Gasaway effective as of May 5, 2006 (incorporated herein by reference to Exhibit 10(g) to Form 10-Q for the period ended March 31, 2006).	*

(c)(7)	Employment Agreement by and between Alltel Corporation and Richard N. Massey effective as of May 5, 2006 (incorporated herein by reference to Exhibit 10(h) to Form 10-Q for the period ended March 31, 2006).	*

(c)(8)	Employment Agreement by and between Alltel Corporation and Keith A. Kostuch effective as of May 5, 2006 (incorporated herein by reference to Exhibit 10(i) to Form 10-Q for the period ended March 31, 2006).	*

(c)(9)	Employment Agreement by and between Alltel Corporation and Sue P. Mosley effective as of May 5, 2006 (incorporated herein by reference to Exhibit 10(j) to Form 10-Q for the period ended March 31, 2006).	*

(c)(10)	Employment Agreement by and between Alltel Corporation and John A. Ebner effective as of May 5, 2006 (incorporated herein by reference to Exhibit 10(k) to Form 10-Q for the period ended March 31, 2006).	*

(d)(1)	Alltel Corporation Supplemental Executive Retirement Plan, as amended and restated effective November 1, 2006 (incorporated herein by reference to Exhibit 10.1 to Current Report on Form 8-K dated November 1, 2006 and filed with the Commission on November 3, 2006).	*

~~ALLTEL Corporation Form~~* ~~10-K,~~Incorporated herein ~~Part~~by I reference as indicated.

~~Item~~(a) ~~1. Business~~Filed herewith.

~~COMMUNICATIONS SUPPORT SERVICES (continued)~~ 23

~~TELECOMMUNICATIONS INFORMATION SERVICES~~EXHIBIT INDEX, Continued

As previously discussed, in December 2003, the Company sold to Convergys certain assets and related liabilities, including selected customer contracts and capitalized software development costs. The sold customer contracts represented approximately 48 percent of the total revenues and sales reported by the telecommunications information services operations in 2003. During 2004, the Company also lost one of its remaining unaffiliated wireline services customers. The remaining telecommunications information services operations are not significant to ALLTEL's consolidated results of operations.

Number and Name

(10)(e)(1)	Executive Deferred Compensation Plan of ALLTEL Corporation, as amended and restated effective October 1, 1993 (incorporated herein by reference to Exhibit 10(e) to Form 10-K for the fiscal year ended December 31, 1993).	*

(e)(2)	Amendment No. 1 to Executive Deferred Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement) effective January 29, 1998 (incorporated herein by reference to Exhibit 10(f)(2) to Form 10-K for the fiscal year ended December 31, 1997).	*

(e)(3)	Amendment No. 2 to Executive Deferred Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement) effective April 23, 1998 (incorporated herein by reference to Exhibit 10(f)(3) to Form 10-K for the fiscal year ended December 31, 2002).	*

(e)(4)	Amendment No. 3 to Executive Deferred Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement) effective January 28, 1999 (incorporated herein by reference to Exhibit 10(f)(4) to Form 10-K for the fiscal year ended December 31, 2002).	*

(e)(5)	Amendment No. 4 to Executive Deferred Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement) effective April 21, 1999 (incorporated herein by reference to Exhibit 10(f)(5) to Form 10-K for the fiscal year ended December 31, 2002).	*

(e)(6)	Amendment No. 5 to Executive Deferred Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement) effective April 25, 2002 (incorporated herein by reference to Exhibit 10(f)(6) to Form 10-K for the fiscal year ended December 31, 2002).	*

(e)(7)	Amendment No. 6 to Executive Deferred Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement) effective December 8, 2005 (incorporated herein by reference to Exhibit 10(e)(7) to Form 10-K for the fiscal year ended December 31, 2005).	*

(e)(8)	Amendment No. 7 to Executive Deferred Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement) effective November 1, 2006 (incorporated herein by reference to Exhibit 10.3 to Current Report on Form 8-K dated November 1, 2006 and filed with the Commission on November 3, 2006).	*

(e)(9)	Deferred Compensation Plan for Directors of ALLTEL Corporation, as amended and restated effective October 1, 1993 (incorporated herein by reference to Exhibit 10(f) to Form 10-K for the fiscal year ended December 31, 1993).	*

(e)(10)	Amendment No. 1 to Deferred Compensation Plan for Directors of ALLTEL Corporation (October 1, 1993 Restatement) (incorporated herein by reference to Exhibit 10(f)(3) to Form 10-K for the fiscal year ended December 31, 1996).	*

(e)(11)	Amendment No. 2 to Deferred Compensation Plan for Directors of ALLTEL Corporation (October 1, 1993 Restatement) effective April 25, 2002 (incorporated herein by reference to Exhibit 10(f)(9) to Form 10-K for the fiscal year ended December 31, 2002).	*

(e)(12)	ALLTEL Corporation 1999 Nonemployee Directors Stock Compensation Plan (as Amended and Restated effective January 22, 2004) (incorporated herein by reference to Exhibit (f)(10) to Form 10-K for the fiscal year ended December 31, 2003).	*

(e)(13)	ALLTEL Corporation 1998 Management Deferred Compensation Plan, effective June 23, 1998 (incorporated herein by reference to Exhibit 10(f)(5) to Form 10-Q for the period ended June 30, 1998).	*

(e)(14)	Amendment No. 1 to the ALLTEL Corporation 1998 Management Deferred Compensation Plan effective June 23, 1998 (incorporated herein by reference to Exhibit 10(f)(11) to Form 10-K for the fiscal year ended December 31, 2002).	*

~~INVESTMENTS~~* Incorporated herein by reference as indicated.

~~On April~~(a) ~~1, 2003, in connection with the sale of the Company's financial services division~~Filed ~~previously discussed, ALLTEL received shares of Fidelity National common stock~~ herewith. ~~As of January 31, 2005, ALLTEL owned approximately 11.2 million shares of Fidelity National common stock, representing an approximate six percent interest in Fidelity National.~~

21 24

~~ALLTEL Corporation~~EXHIBIT ~~Form 10-K~~ INDEX, ~~Part I~~ Continued

Item 2. Properties

Number and Name

(10)(e)(15)	Amendment No. 2 to the ALLTEL Corporation 1998 Management Deferred Compensation Plan effective April 25, 2002 (incorporated herein by reference to Exhibit 10(f)(12) to Form 10-K for the fiscal year ended December 31, 2002).	*

(e)(16)	Amendment No. 3 to the ALLTEL Corporation 1998 Management Deferred Compensation Plan effective December 8, 2005 (incorporated herein by reference to Exhibit 10(e)(15) to Form 10-K for the fiscal year ended December 31, 2005).	*

(e)(17)	Amendment No. 4 to the ALLTEL Corporation 1998 Management Deferred Compensation Plan effective July 16, 2006 (incorporated herein by reference to Exhibit 10.7 to Current Report on Form 8-K dated July 17, 2006 and filed with the Commission on July 21, 2006).	*

(e)(18)	ALLTEL Corporation 1998 Directors’ Deferred Compensation Plan, effective June 23, 1998 (incorporated herein by reference to Exhibit 10(f)(6) to Form 10-Q for the period ended June 30, 1998).	*

(e)(19)	Amendment No. 1 to the ALLTEL Corporation 1998 Directors’ Deferred Compensation Plan, effective April 25, 2002 (incorporated herein by reference to Exhibit 10(f)(14) to Form 10-K for the fiscal year ended December 31, 2002).	*

(f)(1)	ALLTEL Corporation 1991 Stock Option Plan (incorporated herein by reference to Exhibit A to Proxy Statement, dated March 8, 1991).	*

(f)(2)	First Amendment to ALLTEL Corporation 1991 Stock Option Plan (incorporated herein by reference to Exhibit 10(g)(3) to Form 10-K for the fiscal year ended December 31, 2000).	*

(f)(3)	ALLTEL Corporation 1994 Stock Option Plan for Employees (incorporated herein by reference to Exhibit A to Proxy Statement dated March 4, 1994).	*

(f)(4)	First Amendment to ALLTEL Corporation 1994 Stock Option Plan for Employees (incorporated herein by reference to Exhibit 10(g)(5) to Form 10-K for the fiscal year ended December 31, 2000).	*

(f)(5)	ALLTEL Corporation Amended and Restated 1994 Stock Option Plan for Nonemployee Directors, effective November 1, 2006 (incorporated herein by reference to Exhibit 10.2 to Current Report on Form 8-K dated November 1, 2006 and filed with the Commission on November 3, 2006).	*

(f)(6)	ALLTEL Corporation 1998 Equity Incentive Plan (incorporated herein by reference to Annex G of ALLTEL Corporation Registration Statement (File No. 333-51915) on Form S-4 dated May 6, 1998).	*

(f)(7)	First and Second Amendments to ALLTEL Corporation 1998 Equity Incentive Plan (incorporated herein by reference to Exhibit 10(g)(9) to Form 10-K for the fiscal year ended December 31, 2000).	*

(f)(8)	ALLTEL Corporation 2001 Equity Incentive Plan (incorporated herein by reference to Appendix C to Proxy Statement dated March 5, 2001).	*

(g)(1)	Amended and Restated 360° Communications Company 1996 Equity Incentive Plan (incorporated herein by reference to Form S-8 (File No. 333-88923) of ALLTEL Corporation filed with the Commission on October 13, 1999).	*

(g)(2)	Western Wireless Corporation 2005 Long-Term Equity Incentive Plan (incorporated herein by reference to Form S-8 (File No. 333-127081) of ALLTEL Corporation filed with the Commission on August 1, 2005).	*

~~The~~* Incorporated herein ~~Company's properties do not provide a basis for description~~ by ~~character~~reference oras ~~location of principal units~~indicated. All of the Company's property is considered to be in good working condition and suitable for its intended purposes. A summary of the Company's investment in property, plant and equipment segregated between the Company's regulated wireline operations and all other non-regulated business operations is presented below.

~~WIRELINE PROPERTY~~(a) Filed herewith.

The Company's wireline subsidiaries own property in their respective operating territories which consists primarily of land and buildings, central office equipment, telephone lines, and related equipment. The telephone lines include aerial and underground cable, conduit, poles and wires. Central office equipment includes digital switches and peripheral equipment. The gross investment by category in wireline property as of December 31, 2004, was as follows: 25

	(Millions)
Land		$	18.3
Buildings and leasehold improvements			296.4
Central office equipment			2,850.6
Outside plant			3,424.0
Furniture, fixtures, vehicles and other			167.4
Total		$	6,756.7

EXHIBIT INDEX, Continued

Certain properties of the wireline subsidiaries are pledged as collateral on $5.1 million of long-term debt.

Number and Name

(10)(g)(3)	Amended and Restated 1994 Management Incentive Stock Option Plan of Western Wireless Corporation (incorporated herein by reference to Form S-8 (File No. 333-127081) of ALLTEL Corporation filed with the Commission on August 1, 2005).	*

(h)(1)	Alltel Corporation Performance Incentive Compensation Plan, as amended and restated effective as of January 1, 2006 (incorporated herein by reference to Exhibit 10.1 to Current Report on Form 8-K dated April 20, 2006 and filed with the Commission on April 26, 2006).	*

(i)(1)	Alltel Corporation Long-Term Performance Incentive Compensation Plan, as amended and restated effective January 1, 2006 (incorporated herein by reference to Exhibit 10.2 to Current Report on Form 8-K dated April 20, 2006 and filed with the Commission on April 26, 2006).	*

(j)(1)	ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(k) to Form 10-K for the fiscal year ended December 31, 2001).	*

(j)(2)	Amendment No. 1 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(k)(1) to Form 10-Q for the period ended September 30, 2002).	*

(j)(3)	Amendment No. 2 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(k)(3) to Form 10-K for the fiscal year ended December 31, 2002).	*

(j)(4)	Amendment No. 3 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(k)(4) to Form 10-Q for the period ended June 30, 2003).	*

(j)(5)	Amendment No. 4 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(k)(9) to Form 10-Q for the period ended June 30, 2004).	*

(j)(6)	Amendment No. 5 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(k)(5) to Form 10-K for the fiscal year ended December 31, 2003).	*

(j)(7)	Amendment No. 6 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(k)(6) to Form 10-K for the fiscal year ended December 31, 2003).	*

(j)(8)	Amendment No. 7 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(k)(7) to Form 10-K for the fiscal year ended December 31, 2003).	*

(j)(9)	Amendment No. 8 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(k)(8) to Form 10-K for the fiscal year ended December 31, 2003).	*

(j)(10)	Amendment No. 9 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(k)(10) to Form 10-K for the fiscal year ended December 31, 2004).	*

(j)(11)	Amendment No. 10 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(k)(11) to Form 10-K for the fiscal year ended December 31, 2004).	*

~~OTHER PROPERTY~~* Incorporated herein by reference as indicated.

Other properties in service consist primarily of property, plant and equipment used in providing wireless communications services and information processing. Wireless plant consists of cell site towers, switching, controllers and other radio frequency equipment. Non-regulated wireline plant and equipment consists of aerial and underground cable, switches, and other peripheral equipment used in the provisioning of Internet, long-distance and competitive local access services. Information processing plant consists of data processing equipment, purchased software and capitalized internal use software costs. Properties of the product distribution and directory publishing operations mainly consist of office and warehouse facilities to support the business units in the distribution of telecommunications products and publication of telephone directories. The total investment by category for the non-wireline operations of the Company as of December(a) ~~31, 2004, was as follows:~~Filed herewith.

	(Millions)
Land		$	259.8
Buildings and leasehold improvements			838.4
Wireless plant and equipment			5,764.0
Data processing equipment and computer software			1,048.4
Non-regulated wireline plant and equipment			461.2
Furniture, fixtures, vehicles and other			322.5
Total		$	8,694.3

~~Item 3. Legal Proceedings~~EXHIBIT INDEX, Continued

The Company is party to various other legal proceedings arising from the ordinary course of business. Although the ultimate resolution of these various proceedings cannot be determined at this time, management of ALLTEL does not believe that such proceedings, individually or in the aggregate, will have a material adverse effect on the future consolidated results of operations or financial condition of the Company.

Number and Name

(10)(j)(12)	Amendment No. 11 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(k)(12) to Form 10-K for the fiscal year ended December 31, 2004).	*

(j)(13)	Amendment No. 12 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(k)(13) to Form 10-Q for the period ended September 30, 2005).	*

(j)(14)	Amendment No. 13 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(j)(14) to Form 10-K for the fiscal year ended December 31, 2005).	*

(j)(15)	Amendment No. 14 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(j)(15) to Form 10-K for the fiscal year ended December 31, 2005).	*

(j)(16)	Amendment No. 15 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(j)(16) to Form 10-Q for the period ended June 30, 2006).	*

(k)(1)	ALLTEL Corporation Profit Sharing Plan (January 1, 2002 Restatement) (incorporated herein by reference to Exhibit 10(l) to Form 10-Q for the period ended March 31, 2002).	*

(k)(2)	Amendment No. 1 to ALLTEL Corporation Profit Sharing Plan (January 1, 2002 Restatement) (incorporated herein by reference to Exhibit 10(l)(2) to Form 10-K for the fiscal year ended December 31, 2002).	*

(k)(3)	Amendment No. 2 to ALLTEL Corporation Profit Sharing Plan (January 1, 2002 Restatement) (incorporated herein by reference to Exhibit 10(I)(3) to Form 10-K for the fiscal year ended December 31, 2003).	*

(k)(4)	Amendment No. 3 to ALLTEL Corporation Profit Sharing Plan (January 1, 2002 Restatement) (incorporated herein by reference to Exhibit 10(I)(4) to Form 10-K for the fiscal year ended December 31, 2003).	*

(k)(5)	Amendment No. 4 to ALLTEL Corporation Profit Sharing Plan (January 1, 2002 Restatement) (incorporated herein by reference to Exhibit 10(I)(5) to Form 10-K for the fiscal year ended December 31, 2003).	*

(k)(6)	Amendment No. 5 to ALLTEL Corporation Profit Sharing Plan (January 1, 2002 Restatement) (incorporated herein by reference to Exhibit (10)(l)(6) to Form 10-K for the fiscal year ended December 31, 2004).	*

(k)(7)	Amendment No. 6 to ALLTEL Corporation Profit Sharing Plan (January 1, 2002 Restatement). (incorporated herein by reference to Exhibit (10)(l)(7) to Form 10-Q for the period ended September 30, 2005).	*

(k)(8)	Amendment No. 7 to ALLTEL Corporation Profit Sharing Plan (January 1, 2002 Restatement) (incorporated herein by reference to Exhibit (10)(k)(8) to Form 10-K for the fiscal year ended December 31, 2005).	*

(k)(9)	Amendment No. 8 to ALLTEL Corporation Profit Sharing Plan (January 1, 2002 Restatement) (incorporated herein by reference to Exhibit (10)(k)(9) to Form 10-Q for the period ended June 30, 2006).	*

~~To the knowledge of ALLTEL's management, no material legal proceedings, either private or~~* Incorporated ~~governmental,~~ herein ~~currently~~by ~~are~~reference ~~contemplated~~as ~~or threatened~~indicated.

~~Item 4. Submission of Matters to~~ (a ~~Vote of Security Holders~~) Filed herewith.

~~No matters were submitted to the security holders for a vote during the fourth quarter of 2004.~~ 27

22EXHIBIT INDEX, Continued

ALLTEL Corporation Form 10-K, Part II

Number and Name

(10)(k)(10)	Amendment No. 9 to ALLTEL Corporation Profit Sharing Plan (January 1, 2002 Restatement) (incorporated herein by reference to Exhibit (10)(k)(10) to Form 10-Q for the period ended June 30, 2006).	*

(k)(11)	Amendment No. 10 to ALLTEL Corporation Profit Sharing Plan (January 1, 2002 Restatement).	(a)

(k)(12)	Amendment No. 11 to ALLTEL Corporation Profit Sharing Plan (January 1, 2002 Restatement).	(a)

(k)(13)	Amendment No. 12 to ALLTEL Corporation Profit Sharing Plan (January 1, 2002 Restatement).	(a)

(l)(1)	ALLTEL Corporation Benefit Restoration Plan (January 1, 1996 Restatement) (incorporated herein by reference to Exhibit 10(m) to Form 10-K for the fiscal year ended December 31, 1995).	*

(l)(2)	Amendment No. 1 to ALLTEL Corporation Benefit Restoration Plan (January 1, 1996 Restatement).	(a)

(l)(3)	Amendment No. 2 to ALLTEL Corporation Benefit Restoration Plan (January 1, 1996 Restatement).	(a)

(l)(4)	Amendment No. 3 to ALLTEL Corporation Benefit Restoration Plan (January 1, 1996 Restatement) (incorporated herein by reference to Exhibit 10.5 to Current Report on Form 8-K dated July 17, 2006 and filed with the Commission on July 21, 2006).	*

(l)(5)	Amendment No. 4 to ALLTEL Corporation Benefit Restoration Plan (January 1, 1996 Restatement).	(a)

(m)(1)	ALLTEL Corporation Comprehensive Plan of Group Insurance (January 1, 2006 Restatement).	(a)

(n)(1)	Amended and Restated ALLTEL Corporation Supplemental Medical Expense Reimbursement Plan (incorporated herein by reference to Exhibit 10(p) to Form 10-K for the fiscal year ended December 31, 1990).	*

(n)(2)	First Amendment to ALLTEL Corporation Supplemental Medical Expense Reimbursement Plan (incorporated herein by reference to Exhibit 10(n)(1) to Form 10-K for the fiscal year ended December 31, 2001).	*

(n)(3)	Amendment No. 2 to ALLTEL Corporation Supplemental Medical Expense Reimbursement Plan (incorporated herein by reference to Exhibit 10.8 to Current Report on Form 8-K dated July 17, 2006 and filed with the Commission on July 21, 2006).	*

(o)(1)	ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(o) to Form 10-K for the fiscal year ended December 31, 2001).	*

(o)(2)	Amendment No. 1 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(o)(2) to Form 10-K for the fiscal year ended December 31, 2002).	*

(o)(3)	Amendment No. 2 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(o)(3) to Form 10-K for the fiscal year ended December 31, 2002).	*

(o)(4)	Amendment No. 3 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(o)(4) to Form 10-Q for the period ended June 30, 2003).	*

(o)(5)	Amendment No. 4 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(o)(5) to Form 10-K for the fiscal year ended December 31, 2003).	*

(o)(6)	Amendment No. 5 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(o)(6) to Form 10-K for the fiscal year ended December 31, 2003).	*

~~Item~~* 5.Incorporated herein ~~Market~~by ~~for~~reference ~~the~~as ~~Registrant's Common Equity and Related Stockholder Matters~~ indicated.

(a) ~~The outstanding shares of ALLTEL's Common Stock are listed and traded on the New York Stock Exchange and the Pacific Exchange and trade under the symbol AT~~ Filed herewith. ~~The following table reflects the range of high, low and closing prices of ALLTEL's Common Stock as reported by Dow Jones & Company, Inc. for each quarter in 2004 and 2003:~~

					Dividend
Year	Qtr.	High	Low	Close	Declared
2004	4th	$60.62	$53.40	$58.76	$.38
	3rd	$55.80	$49.23	$54.91	$.37
	2nd	$51.95	$48.63	$50.62	$.37
	1st	$53.28	$46.65	$49.89	$.37
2003	4th	$49.98	$43.75	$46.58	$.37
	3rd	$50.31	$44.51	$46.34	$.35
	2nd	$49.68	$43.62	$48.22	$.35
	1st	$56.22	$40.68	$44.76	$.35

	As of January 31, 2005, the approximate number of stockholders of common stock including an estimate for those holding shares in brokers' accounts was 200,000.
(b)	Not applicable.
(c)	On January 23, 2004, ALLTEL announced a $750.0 million stock repurchase plan that expires on December 31, 2005. During the first nine months of 2004, the Company repurchased 9,675,600 shares of its common stock at a total cost of $506.9 million, or an average cost of $52.39 per share. Information pertaining to this plan for the fourth quarter of 2004 is presented in the table below.

EXHIBIT INDEX, Continued

Maximum Number of

Number and Name

Shares (or

(10)(o)(7)

Amendment No. 6 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(o)(7) to Form 10-Q for the period ended June 30, 2004).

Total Number of

Approximate Dollar

(o)(8)

Amendment No. 7 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(o)(8) to Form 10-K for the fiscal year ended December 31, 2004).

Shares Purchased as

Value) that May Yet

(o)(9)

Amendment No. 8 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(o)(9) to Form 10-Q for the period ended September 30, 2005).

Total Number of

Average Price Paid

Part of Publicly

Be Purchased Under

(o)(10)

Amendment No. 9 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(n)(10) to Form 10-K for the fiscal year ended December 31, 2005).

Period

Shares Purchased

per Share

Announced Plans

the Plans

(o)(11)

Amendment No. 10 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(n)(11) to Form 10-Q for the period ended June 30, 2006).

October 1-30, 2004

–

$ –

–

$243.1 million

(o)(12)

Amendment No. 11 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(n)(12) to Form 10-Q for the period ended June 30, 2006).

November 1-30, 2004

1,571,900

56.25

1,571,900

$154.7 million

(o)(13)

Amendment No. 12 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(n)(13) to Form 10-Q for the period ended June 30, 2006).

December 1-31, 2004

–

$154.7 million

(o)(14)

Amendment No. 13 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement).

(a)

Total

1,571,900

$ 56.25

1,571,900

(o)(15)

Amendment No. 14 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement).

(a)

(11)

Statement Re: Computation of per share earnings.

(a)

(12)

Statement Re: Computation of ratios.

(a)

(21)

Subsidiaries of ALLTEL Corporation.

(a)

(23)

Consent of PricewaterhouseCoopers LLP.

(a)

(24)

Powers of attorney.

(a)

31(a)

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(a)

31(b)

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(a)

32(a)

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(a)

32(b)

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(a)

~~Item~~* 6.Incorporated herein ~~Selected~~by ~~Financial~~reference ~~Data~~ as indicated.

~~For information pertaining to Selected Financial Data of ALLTEL Corporation, refer to pages~~(a) Filed ~~F-37 and F-38 of the Financial Supplement, which is incorporated by reference herein~~ herewith.

~~Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations~~ 29

~~For information pertaining to Management's Discussion and Analysis of Financial Condition and Results of Operations of~~ ALLTEL ~~Corporation, refer to pages F-2 to F-36 of the~~ ~~Financial Supplement, which is incorporated by reference herein.~~ CORPORATION

~~Item 7A. Quantitative and Qualitative Disclosures About Market Risk~~FINANCIAL SUPPLEMENT

~~For information pertaining to the Company's market risk disclosures, refer to page F-34 of~~TO ~~the~~ ANNUAL ~~Financial~~REPORT ~~Supplement,~~ON ~~which~~FORM ~~is incorporated by reference herein.~~ 10-K

~~Item 8.~~FOR THE ~~Financial~~YEAR ~~Statements~~ENDED ~~and~~DECEMBER ~~Supplementary~~31, ~~Data~~ 2006

~~For information pertaining to Financial Statements and Supplementary Data of~~ ALLTEL ~~Corporation, refer to pages F-41 to F-77 of the Financial Supplement, which is incorporated by reference herein.~~ CORPORATION

23INDEX TO FINANCIAL SUPPLEMENT

~~ALLTEL Corporation~~TO ~~Form~~ ANNUAL REPORT ON FORM 10-K~~, Part II~~

~~Item 9.~~FOR THE ~~Changes~~YEAR inENDED ~~and~~DECEMBER ~~Disagreements~~31, ~~with Accountants on Accounting and Financial Disclosure~~ 2006

No reportable information under this item.

Management’s Discussion and Analysis of Financial Condition
and Results of Operations	F-2 - F-27

Selected Financial Data	F-28 - F-29

Management’s Responsibility for Financial Statements	F-30

Management’s Report on Internal Control Over Financial Reporting	F-31

Report of Independent Registered Public Accounting Firm	F-32 - F-33

Annual Financial Statements:

Consolidated Balance Sheets
as of December 31, 2006 and 2005	F-34

Consolidated Statements of Income
for the years ended December 31, 2006, 2005 and 2004	F-35

Consolidated Statements of Cash Flows
for the years ended December 31, 2006, 2005 and 2004	F-36

Consolidated Statements of Shareholders’ Equity
for the years ended December 31, 2006, 2005 and 2004	F-37

Notes to Consolidated Financial Statements	F-38 - F-73

~~Item 9(A). Controls and Procedures~~ F-1

~~(a)~~MANAGEMENT’S DISCUSSION ~~Evaluation~~AND ofANALYSIS ~~disclosure~~OF ~~controls~~FINANCIAL ~~and~~CONDITION ~~procedures.~~AND ~~The~~RESULTS OF term "disclosure controls and procedures" (defined in SEC Rule 13a-15(e)) refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported within required time periods. ALLTEL's management, with the participation of the Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this annual report (the "Evaluation Date"). Based on that evaluation, ALLTEL's Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, such controls and procedures were effective. (b) Management's report on internal control over financial reporting. Management's Report on Internal Control Over Financial Reporting, which appears on page F-40 of the Financial Supplement, is incorporated by reference herein. (c) Changes in internal controls. The term "internal control over financial reporting" (defined in SEC Rule 13a-15(f)) refers to the process of a company that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. ALLTEL's management, with the participation of the Chief Executive Officer and Chief Financial Officer, have evaluated any changes in the Company's internal control over financial reporting that occurred during the period covered by this annual report, and they have concluded that there was no change to ALLTEL's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, ALLTEL's internal control over financial reporting.OPERATIONS

~~Item 9(B). Other Information~~Executive Summary

NoAs further ~~reportable~~discussed ~~information~~below, ~~under~~on ~~this~~July ~~item~~17, 2006, ALLTEL Corporation (“Alltel” or the “Company”) completed the spin-off of its wireline telecommunications business to its stockholders and merger of that wireline business with Valor Communications Group, Inc. (“Valor”), creating a new entity, Windstream Corporation (“Windstream”). The spin-off included the majority of Alltel’s communications support services, including directory publishing, information technology outsourcing services, retail long-distance and the wireline sales portion of communications products. Following the spin-off, Alltel provides wireless communications services to nearly 12 million customers in 36 states. Among the highlights in 2006:

~~Form 10~~· Revenues and sales increased 20 percent over 2005 driven by postpay customer growth, increased revenues derived from data services and additional Eligible Telecommunications Carrier (“ETC”) support. Growth in revenues and sales in 2006 also reflected the effects of Alltel’s August 1, 2005 acquisition of Western Wireless Corporation (“Western Wireless”). Average monthly revenue per customer and monthly retail revenue per customer increased year-Kover-year 2 percent and 1 percent to $52.68 and $47.02, ~~Part~~respectively, ~~III~~ as the growth in data and ETC revenues discussed above was partially offset by decreases in voice revenues per customer. Average revenue per customer for 2006 also reflected additional wholesale transport revenues earned from charging third parties, principally Windstream, for use of Alltel’s fiber-optic network.

~~Item 10~~· Gross customer additions were 3.8 ~~Directors~~million in 2006, and ~~Executive~~net ~~Officers~~customer additions were 1.2 million. Excluding the effects of acquisitions and dispositions, gross customer additions were 3.3 million in 2006, a 17 percent increase from a year ago, while net customer additions were 640,000, an 87 percent increase from 2005. Alltel added 379,000 net postpay customers and 261,000 net prepaid customers during 2006. The net gain in prepaid customers included the ~~Registrant~~ addition of 102,000 net customers in the fourth quarter of 2006, driven by continued success of both Alltel’s “U” prepaid service and Simple Freedom, Alltel’s phone-in-the-box prepay service that is sold primarily through Wal-Mart. Postpay churn decreased 20 basis points from 2005 to 1.57 percent, while total churn, which includes prepay customer losses, declined 17 basis points year-over-year to 2.00 percent.

~~For~~· ~~information~~Operating ~~pertaining~~income toincreased ~~Directors~~20 ofpercent ~~ALLTEL~~from ~~Corporation~~a ~~refer~~year ~~to ''Election of Directors'' in ALLTEL's Proxy Statement for its 2005 Annual Meeting of Stockholders~~ago, ~~which~~primarily isreflecting ~~incorporated herein by reference. For information pertaining to~~ the ~~audit~~growth ~~committee~~in ~~financial~~revenues ~~expert refer to ''Board~~ and ~~Board~~sales ~~Committee~~noted ~~Matters''~~above. Growth in ~~ALLTEL's~~operating ~~Proxy~~income ~~Statement~~was ~~for~~affected ~~its~~by ~~2005~~additional ~~Annual~~customer ~~Meeting of~~acquisition ~~Stockholders,~~costs ~~which~~due isto ~~incorporated~~the ~~herein~~significant byincrease ~~reference.~~in ~~Executive~~gross ~~officers~~customer ofadditions ~~the~~noted ~~Company are as follows:~~ above.

Name	Age		Position
Scott T. Ford		42	President and Chief Executive Officer
Kevin L. Beebe		45	Group President — Operations
Jeffrey H. Fox		42	Group President — Operations
C.J. Duvall Jr.		46	Executive Vice President — Human Resources
Francis X. Frantz		51	Executive Vice President- External Affairs, General Counsel and Secretary
Jeffery R. Gardner		45	Executive Vice President — Chief Financial Officer
Keith A. Kostuch		42	Senior Vice President — Strategic Planning
Sharilyn S. Gasaway		36	Controller
Scott H. Settelmyer		36	Treasurer

During 2006, Alltel signed a 10-year roaming agreement with Sprint Nextel Corporation (“Sprint”) and extended its GSM roaming agreement with Cingular Wireless LLC (“Cingular”) until 2012. The Sprint roaming agreement provides for voice, 1xRTT and EV-DO roaming and expands on Alltel’s existing roaming relationship with Sprint, while the Cingular roaming agreement provides for the opportunity to expand GSM roaming services. During 2006, Alltel also expanded its opportunities for selling additional wireless data service through the launch of an EV-DO BlackBerry® device and several new data applications. During 2007, Alltel expects to continue to launch new data applications and products to take advantage of its expanded EV-DO coverage, resulting from the Company’s network build-out, as well as the extension of its EV-DO footprint with the Sprint roaming agreement discussed above. The Company also launched its “My Circle” offering, which enables Alltel customers, on select rate plans, to make and receive unlimited calls to up to ten phone numbers connected to any wireless or wireline network.

~~There~~During 2007, ~~are~~Alltel nowill ~~arrangements~~continue ~~between~~to ~~any~~face ~~officer~~significant challenges resulting from competition in the wireless industry and ~~any~~changes ~~other~~in ~~person~~the ~~pursuant~~regulatory environment, including the effects of potential changes to ~~which~~the herules ~~was~~governing ~~selected~~universal service asand aninter-carrier ~~officer~~compensation. ~~Scott~~In T.addressing ~~Ford~~these ischallenges, ~~the~~Alltel will ~~son~~continue ofto ~~Joe~~focus T.its ~~Ford~~efforts on improving customer service, enhancing ~~Chairman~~ the quality of ~~ALLTEL's~~its ~~Board~~networks, ofexpanding ~~Directors.~~its ~~Each~~product ofand ~~the~~service ~~officers~~offerings, ~~named~~and conducting ~~above~~advocacy ~~has been~~efforts ~~employed~~in byfavor ~~ALLTEL~~of orgovernmental apolicies ~~subsidiary~~that ~~for~~will ~~the~~benefit Alltel’s ~~last~~business ~~five~~and ~~years~~its customers.

24 F-2

~~ALLTEL Corporation Form 10~~SPIN-K,OFF OF ~~Part~~WIRELINE ~~III~~ TELECOMMUNICATIONS BUSINESS

~~Item 10~~On July 17, 2006, Alltel completed the spin-off of its wireline telecommunications business to its stockholders and the merger of that wireline business with Valor. ~~Directors~~Pursuant to the plan of distribution and ~~Executive~~immediately ~~Officers~~prior to the effective time of the ~~Registrant~~merger with Valor described below, Alltel contributed all of the assets of its wireline telecommunications business to ALLTEL Holding Corp. (~~continued~~“Alltel Holding” or “Spinco”), a wholly owned subsidiary of the Company, in exchange for: (i) the issuance to Alltel of Spinco common stock that was distributed on a pro rata basis to Alltel’s stockholders as a tax free stock dividend, (ii) the payment of a special dividend to Alltel in the amount of $2.3 billion and (iii) the distribution by Spinco to Alltel of certain Spinco debt securities, consisting of $1,746.0 million aggregate principal amount of 8.625 percent senior notes due 2016 (the “Spinco Securities”). The Spinco Securities were issued at a discount, and, at the date of distribution to Alltel, the Spinco Securities had a carrying value of $1,703.2 million (par value of $1,746.0 million less discount of $42.8 million). Alltel also transferred to Spinco $260.8 million of long-term debt that had been issued by the Company’s wireline subsidiaries.

~~ALLTEL~~Immediately after ~~has~~the aconsummation ~~code~~ of ~~ethics~~the ~~that~~spin-off, ~~applies~~Alltel toHolding ~~all~~merged ~~employees~~with and ~~members~~into Valor, ofwith Valor continuing as the ~~Board~~surviving ~~of Directors~~corporation. ~~ALLTEL's~~As ~~code~~a result of ~~ethics~~the merger, ~~referred~~all toof as the ~~''Ethics~~issued inand ~~the~~outstanding ~~Workplace''~~shares ~~guidelines, is~~of ~~posted~~Spinco oncommon stock were converted into the ~~Investor~~right ~~Relations~~to ~~page~~receive ofan ~~the~~aggregate ~~Company's~~number ~~web~~of ~~site~~shares ~~(www.alltel.com)~~of ~~under~~common ~~''corporate~~ stock ~~governance''~~of Valor. ~~ALLTEL~~Valor ~~will~~issued ~~disclose~~ in the ~~corporate~~aggregate ~~governance~~approximately ~~section~~403 ofmillion ~~the~~shares ~~Investor~~ of ~~Relations~~common ~~page~~stock onto ~~its~~Alltel ~~web~~stockholders ~~site~~pursuant ~~amendments~~to ~~and~~the ~~waivers~~merger, ~~with~~or ~~respect~~1.0339267 shares toof ~~the~~Valor ~~code~~common stock for each share of ~~ethics~~ ~~that~~Spinco ~~would~~common ~~otherwise~~stock beoutstanding as ~~required~~of tothe beeffective ~~disclosed~~time ~~under~~of ~~Item 5~~the merger.05 Upon completion of ~~Form~~the ~~8-K.~~merger, ~~ALLTEL~~Alltel ~~will~~ stockholders ~~provide~~owned toapproximately ~~any~~85 ~~stockholder~~percent aof ~~copy~~the outstanding equity interests of the ~~foregoing~~surviving ~~information~~corporation, ~~without charge~~Windstream, and ~~upon~~the ~~written~~ stockholders ~~request~~of toValor ~~Vice~~owned ~~President-Investor~~the ~~Relations,~~remaining ~~ALLTEL~~15 ~~Corporation,~~percent ~~One~~of ~~Allied~~such ~~Drive,~~equity ~~Little Rock, Arkansas 72202~~ interests.

~~Item~~As further discussed below, following the spin-off of the wireline business, Alltel completed a tax-free debt exchange 11in which Alltel transferred the Spinco Securities to two investment banks in exchange for approximately $1.7 billion ~~Executive~~of ~~Compensation~~Alltel debt securities. In addition, proceeds from the special cash dividend were used during 2006 to fund Alltel’s repurchase of approximately 28.5 million of its common shares at a total cost of $1,595.6 million and to fund a portion of the repurchase of $1.0 billion of long-term debt.

~~For~~ACQUISITIONS COMPLETED ~~information~~DURING ~~pertaining to Executive Compensation~~2006, ~~refer to ''Management Compensation'' in ALLTEL's Proxy Statement for its~~ 2005 ~~Annual~~AND ~~Meeting of Stockholders, which is incorporated herein by reference.~~ 2004

~~Item 12~~Alltel positioned its wireless business for future growth opportunities as a result of the Company’s October 3, 2006 acquisition of Midwest Wireless Holdings of Mankato, Minnesota (“Midwest Wireless”) for $1.083 ~~Security~~billion ~~Ownership~~in cash. The final purchase price included $8.3 million of ~~Certain~~working ~~Beneficial~~capital ~~Owners~~adjustments. In connection with this acquisition, Alltel added approximately 450,000 wireless customers and ~~Management~~expanded its wireless operations in Minnesota, Iowa and ~~Related~~Wisconsin. ~~Stockholder~~ As ~~Matters~~a condition of receiving approval for this acquisition from the Federal Communications Commission (“FCC”) and the U.S. Department of Justice (“DOJ”), Alltel agreed to divest four rural markets in Minnesota. On December 13, 2006, Alltel announced a definitive agreement to sell these markets to Rural Cellular Corporation (“Rural Cellular”) for cash. The transaction is expected to close by the end of the first quarter of 2007.

~~For~~During the ~~information~~second ~~pertaining~~quarter toof ~~beneficial~~2006, ~~ownership~~Alltel ofpurchased ~~ALLTEL~~for ~~securities~~$218.2 million in cash wireless properties covering approximately 727,000 ~~refer~~potential tocustomers (“POPs”) in ~~''Security~~ Illinois, Texas and Virginia. On March 16, 2006, Alltel purchased from Palmetto ~~Ownership~~ MobileNet, ofL.P. ~~Certain~~(“Palmetto ~~Beneficial~~MobileNet”) ~~Owners~~for ~~and~~$456.3 ~~Management''~~million in ~~ALLTEL's~~cash ~~Proxy~~the ~~Statement~~remaining ownership ~~for~~interests ~~its~~in ten wireless partnerships that cover approximately 2.0 ~~2005~~ million ~~Annual~~POPs ~~Meeting~~in ofNorth ~~Stockholders~~and South Carolina. Prior to this transaction, ~~which~~Alltel owned isa ~~incorporated~~50 ~~herein~~percent byinterest ~~reference.~~in each of the ten wireless partnerships.

~~Set~~On August 1, ~~forth~~2005, ~~below~~Alltel isand ~~additional~~Western ~~information~~Wireless ascompleted the merger of ~~December 31,~~Western ~~2004,~~Wireless with ~~about~~and ~~shares~~into a wholly-owned subsidiary of Alltel. In the merger, each share ~~Company's~~ of Western Wireless common stock ~~that~~was ~~may~~exchanged befor ~~issued~~0.535 ~~upon~~shares ~~the~~of ~~exercise~~Alltel ofcommon stock ~~options~~and ~~under~~$9.25 in cash unless the ~~Company's existing~~shareholder ~~equity~~made ~~compensation~~an ~~plans~~all-cash election, ~~divided~~in which ~~between~~case ~~plans~~the ~~approved~~shareholder byreceived ~~ALLTEL's~~$40 ~~stockholders~~in cash. Western Wireless shareholders ~~and~~ making ~~plans~~an ~~not~~all-stock ~~submitted~~election were subject to proration and received approximately 0.539 shares of Alltel common stock and $9.18 in cash. In the aggregate, ~~stockholders~~Alltel ~~for~~issued ~~approval~~approximately 54.3 million shares of stock valued at $3,430.4 million and paid approximately $933.4 million in cash. Through its wholly-owned subsidiary that merged with Western Wireless, Alltel also assumed debt of approximately $2.1 billion. As a result of the merger, Alltel added approximately 1.3 million domestic wireless customers in 19 midwestern and western states.

(Thousands, except per share amounts)

(a)

(b)

(c)

Number of securities

available for future

Number of securities

issuance under equity

to be issued upon

Weighted-average

compensation plans,

exercise of

exercise price of

excluding securities

outstanding options (2)

outstanding options

reflected in column (a)

Equity compensation plans approved by security holders (1)

15,502.9

$56.21

16,819.4

Equity compensation plans not approved by security holders

–

Totals

15,502.9

$56.21

16,819.4

F-3

As a condition of receiving approval for the merger from the DOJ and FCC, Alltel agreed to divest certain wireless operations of Western Wireless in 16 markets in Arkansas, Kansas and Nebraska, as well as the “Cellular One” brand. On December 19, 2005, Alltel completed an exchange of wireless properties with United States Cellular Corporation (1“U.S. Cellular”) ~~Includes~~that included a substantial portion of the ~~ALLTEL~~divestiture ~~Corporation~~requirements ~~1991~~related ~~Stock~~to ~~Option~~the ~~Plan~~merger. In the exchange, Alltel ~~ALLTEL~~acquired ~~Corporation~~approximately ~~1994~~90,000 ~~Stock~~customers ~~Option~~in ~~Plan~~two rural markets in Idaho and received $48.2 million in cash in exchange for ~~Employees~~15 rural markets in Kansas and Nebraska owned by Western Wireless. In December 2005, ~~ALLTEL~~Alltel ~~Corporation~~sold ~~1994~~the ~~Stock~~Cellular One ~~Option~~brand ~~Plan~~and in March 2006, Alltel completed the sale of the remaining market in Arkansas. During 2005, Alltel completed the sale of Western Wireless’ international operations in Georgia, Ghana and Ireland for ~~Nonemployee~~$570.3 ~~Directors~~million in cash, ~~ALLTEL~~and ~~Corporation~~during ~~1998~~the ~~Equity~~second ~~Incentive~~quarter ~~Plan~~of 2006, Alltel completed the sales of the Western Wireless international operations in Austria, Bolivia, Côte d’Ivoire, Haiti and Slovenia for approximately $1.7 billion in cash. Accordingly, the acquired ~~ALLTEL~~international ~~Corporation~~operations ~~2001~~and ~~Equity~~interests ~~Incentive~~of ~~Plan~~Western Wireless and the domestic markets required to be divested by Alltel in Arkansas, Kansas, Minnesota and Nebraska have been classified as discontinued operations in the accompanying consolidated financial statements.

~~(2)~~On April 15, ~~Does~~2005, ~~not~~Alltel ~~include~~and ~~419~~Cingular exchanged certain wireless assets. Under the terms of the agreement,~~492~~ ~~stock~~Alltel ~~options~~acquired ~~with~~former aAT&T ~~weighted-average~~Wireless ~~exercise~~properties, ~~price~~including licenses, ofnetwork ~~$31.57~~assets, ~~which~~and ~~were~~approximately ~~assumed~~212,000 bycustomers, ~~ALLTEL~~in selected markets in ~~connection~~Kentucky, ~~with~~Oklahoma, ~~the~~Texas, ~~Company's~~Connecticut ~~mergers~~and ~~with~~Mississippi ~~360°~~representing approximately ~~Communications~~2.7 ~~Company~~million inPOPs. ~~1998~~Alltel also acquired spectrum and ~~Aliant~~network ~~Communications~~assets in ~~Inc.~~Kansas and wireless spectrum in ~~1999~~Georgia and Texas. ~~These~~Alltel ~~options~~and ~~were~~Cingular ~~issued~~also exchanged ~~under~~partnership ~~the~~interests, ~~Amended~~with Cingular receiving interests in markets in Kansas, Missouri and ~~Restated~~Texas, ~~360°~~and ~~Communications~~Alltel ~~Company~~receiving ~~1996~~more ~~Equity~~ownership ~~Incentive~~in majority-owned ~~Plan~~markets it managed in Michigan, ~~360°~~Louisiana ~~Communications~~and ~~Company~~Ohio. ~~1996~~Alltel ~~Replacement~~also paid ~~Stock~~Cingular ~~Option~~approximately ~~Plan~~$153.0 million in cash. In connection with this transaction, ~~360°~~Alltel ~~Communications~~recorded ~~Company~~a ~~Amended~~pretax ~~and~~gain ~~Restated~~of ~~Director~~approximately ~~Equity~~$127.5 ~~and~~million in the ~~Deferred~~second ~~Compensation~~quarter ~~Plan~~of 2005 and ~~the~~an ~~Lincoln~~additional ~~Telecommunications~~pretax ~~Company~~gain ~~1989~~of ~~Stock~~$30.5 ~~and~~million ~~Incentive~~in the third ~~Stock~~quarter ~~Plan~~of 2005. ~~These~~On ~~plans~~February ~~have~~28, ~~been~~2005, ~~frozen~~Alltel ~~since~~purchased ~~the~~wireless properties, ~~merger~~representing ~~dates~~approximately 900,000 ~~with~~POPs ~~respect~~in toAlabama and Georgia, for $48.1 million in cash. Through the ~~granting~~completion of ~~any~~this transaction, Alltel added approximately 54,000 customers. During 2005, Alltel also acquired additional ownership ~~options~~interests in wireless properties in Michigan, Ohio and Wisconsin in which the Company owned a majority interest. In connection with these acquisitions, the Company paid $15.7 million in cash.

~~Item 13~~On December 1, 2004, Alltel completed the purchase of certain wireless assets from U.S. ~~Certain~~Cellular ~~Relationships~~and TDS Telecommunications Corporation for $148.2 million in cash, acquiring wireless properties with a potential service area covering approximately 584,000 POPs in Florida and ~~Related~~Ohio. ~~Transactions~~The Company also purchased partnership interests in seven Alltel-operated markets in Georgia, Mississippi, North Carolina, Ohio and Wisconsin. Prior to this acquisition, Alltel owned an approximate 42 percent interest in the Georgia market, with a potential service area covering approximately 229,000 POPs, and Alltel owned a majority interest in the Mississippi, North Carolina, Ohio and Wisconsin markets. On November 2, 2004, the Company purchased for $35.6 million in cash wireless properties with a potential service area covering approximately 275,000 POPs in south Louisiana. Through these transactions, Alltel added approximately 92,000 wireless customers.

~~For~~The accounts ~~information~~and ~~pertaining~~results toof ~~Certain~~operations ~~Relationships~~of ~~and~~the ~~Related~~acquired ~~Transactions,~~wireless ~~refer~~properties todiscussed ~~''Certain Transactions''~~ above inare ~~ALLTEL's~~included ~~Proxy~~in ~~Statement~~the ~~for~~accompanying ~~its~~consolidated ~~2005~~financial ~~Annual~~statements ~~Meeting~~from the date of ~~Stockholders,~~acquisition. ~~which~~(See isNote 3 to the consolidated financial statements ~~incorporated~~ for ~~herein~~additional byinformation ~~reference~~regarding these acquisitions. )

~~Item 14. Principal Accountant Fees and Services For information pertaining to fees paid to the Company's principal accountant and the Audit Committee's pre~~F-approval policy and procedures with respect to such fees, refer to ''Audit and Non-Audit Fees'' in ALLTEL's Proxy Statement for its 2005 Annual Meeting of Stockholders, which is incorporated herein by reference. 4

CUSTOMER AND OTHER OPERATING STATISTICS
(Thousands, except per customer amounts)	2006	2005	2004
Customers	11,823.9	10,662.3	8,626.5
Average customers	11,120.8	9,550.8	8,295.9
Gross customer additions (a)	3,825.4	4,523.2	2,812.7
Net customer additions (a)	1,161.6	2,035.8	603.1
Market penetration	15.0%	14.0%	13.8%
Postpay customer churn	1.57%	1.77%	1.74%
Total churn	2.00%	2.17%	2.23%
Retail minutes of use per customer per month (b)	634	597	494
Retail revenue per customer per month (c)	$47.02	$46.68	$44.39
Average revenue per customer per month (d)	$52.68	$51.69	$48.47
Cost to acquire a new customer (e)	$346	$332	$310

~~ALLTEL Corporation~~ Notes:

~~Form 10-K,~~(a) ~~Part IV~~Includes the effects of acquisitions. Excludes reseller customers for all periods presented. (b) Represents the average monthly minutes that Alltel’s customers use on both the Company’s network and while roaming on other carriers’ networks. (c) Retail revenue per customer is calculated by dividing wireless retail revenues by average customers for the period. A reconciliation of the revenues used in computing retail revenue per customer per month was as follows for the years ended December 31:

Item 15. Exhibits, Financial Statement Schedules


(Millions)	2006			2005			2004
Service revenues	$	7,029.8		$	5,924.5		$	4,826.0
Less wholesale roaming revenues		(654.3	)		(545.1	)		(372.4	)
Less wholesale transport revenues		(100.3	)		(29.4	)		(34.8	)
Total retail revenues	$	6,275.2		$	5,350.0		$	4,418.8

(a) The following documents are filed as a part of this report:

(d)	Average revenue per customer per month is calculated by dividing wireless service revenues by average customers for the period.

(e)	Cost to acquire a new customer is calculated by dividing the sum of product sales, cost of products sold and sales and marketing expenses (included within “Selling, general, administrative and other”), as reported in the consolidated statements of income, by the number of internal gross customer additions in the period. Customer acquisition costs exclude amounts related to the Company’s customer retention efforts. A reconciliation of the revenues, expenses and customer additions used in computing cost to acquire a new customer was as follows for the years ended December 31:

1. Financial Statements: The following Consolidated Financial Statements of ALLTEL Corporation and subsidiaries for the year ended December 31, 2004, included in the Financial Supplement, which is incorporated by reference herein:


(Millions, customers in thousands)	2006			2005			2004
Product sales	$	(606.4	)	$	(497.5	)	$	(396.0	)
Cost of products sold		699.1			564.9			492.6
Sales and marketing expense		1,051.8			871.4			745.6
Total costs incurred to acquire new customers	$	1,114.6		$	938.8		$	842.2
Gross customer additions, excluding acquisitions		3,303.9			2,830.1			2,720.3
Cost to acquire a new customer		$346			$332			$310

				Financial
				Supplement
				Page Number
		Management's Report on Internal Control Over Financial Reporting		F-40
		Report of Independent Registered Public Accounting Firm		F-41 - F-42
		Consolidated Statements of Income - for the years ended December 31, 2004, 2003 and 2002		F-43
		Consolidated Balance Sheets — as of December 31, 2004 and 2003		F-44
		Consolidated Statements of Cash Flows - for the years ended December 31, 2004, 2003 and 2002		F-45
		Consolidated Statements of Shareholders' Equity - for the years ended December 31, 2004, 2003 and 2002		F-46
		Notes to Consolidated Financial Statements		F-47 - F-77

During 2006, the total number of customers served by Alltel increased by nearly 1.2 million customers, or 11 percent. As previously discussed, during the fourth quarter of 2006, Alltel completed the acquisition of Midwest Wireless and during 2006 also acquired wireless properties in Illinois, Texas and Virginia. The acquired properties accounted for approximately 562,000 of the overall increase in customers during 2006. Net customer additions for 2006 also reflect the pending disposition of four rural markets in Minnesota that are required to be divested as a condition of Alltel receiving regulatory approval for its acquisition of Midwest Wireless previously discussed. Excluding the effects of acquisitions and dispositions, Alltel added 379,000 net postpay customers and added 261,000 net prepaid customers during 2006. The non-acquisition-related increase in net customer additions in 2006 was driven primarily by lower churn, as further discussed below, and growth in the “My Circle” service offering.

		Form 10-K
2.	Financial Statement Schedules:	Page Number
	Report of Independent Registered Public Accounting Firm	28
	Schedule II. Valuation and Qualifying Accounts	29
3.	Exhibits:
	Exhibit Index	30-36

F-5

~~Separate~~The net gain ~~condensed~~in ~~financial~~prepaid ~~statements~~customers ofincluded ~~ALLTEL~~the ~~Corporation~~addition ~~have~~of ~~been~~102,000 ~~omitted~~net ~~since~~customers in the fourth ~~Company~~quarter ~~meets~~of ~~the~~2006, ~~tests~~driven ~~set~~by ~~forth~~continued insuccess ~~Regulation S-X~~of ~~Rule 4-08(e)(3).~~both ~~All~~Alltel’s ~~other~~“U” prepaid ~~schedules~~ service, ~~are~~which ~~omitted~~was ~~since~~launched during the ~~required~~first ~~information~~quarter isof ~~not~~2006, ~~present~~and orSimple Freedom, isAlltel’s ~~not present~~ phone-in-the-box ~~amounts~~prepay ~~sufficient~~service tothat ~~require~~is ~~submission~~sold ofprimarily ~~the~~through Wal-Mart. ~~schedule~~Overall, orthe ~~because~~Company’s ~~the~~wireless market penetration rate (number of ~~information~~ customers ~~required~~as isa ~~included~~percent inof the ~~consolidated~~total ~~financial~~population ~~statements~~in ~~and~~Alltel’s ~~notes~~service areas) ~~thereto~~ increased to 15. 0 percent as of December 31, 2006.

26Comparatively, during 2005, the total number of wireless customers served by Alltel increased by more than 2.0 million customers, or 24 percent, compared to an annual growth rate in customers of 8 percent in 2004. As previously discussed, on August 1, 2005, Alltel completed the acquisition of Western Wireless. During 2005, Alltel also exchanged certain wireless properties with Cingular and U.S. Cellular and purchased wireless properties in Alabama and Georgia. The acquired properties accounted for approximately 1.7 million of the overall increase in wireless customers during 2005. Excluding the effects of acquisitions, Alltel added 344,000 net postpay wireless customers and 91,000 net prepaid customers during 2005. The net gain in prepaid customers reflected the addition of 90,000 net customers in the fourth quarter of 2005, driven by significant success of Simple Freedom. In the Western Wireless markets, net customer additions were 46,000, which included the addition of 25,000 customers resulting from conforming these markets to Alltel’s disconnect policies. Conversely, in the markets acquired in Alabama, Georgia and from Cingular, the Company incurred net losses of 138,000 customers primarily due to transition issues, as further discussed below. Excluding the effects of acquisitions, net wireless customer additions were 511,000 in 2004, substantially all of which were on postpay plans. As previously discussed, in the fourth quarter of 2004, the Company purchased wireless properties in Florida, Georgia, Louisiana, Mississippi, North Carolina, Ohio and Wisconsin. The acquired properties accounted for approximately 92,000 of the overall increase in wireless customers that occurred during 2004.

~~SIGNATURES~~The level of customer growth for 2007 will be dependent upon the Company’s ability to attract new customers and retain existing customers in a highly competitive marketplace. Alltel will continue to focus its efforts on sustaining value-added customer growth by improving service quality and customer satisfaction, managing its distribution channels and customer segments, offering attractively priced rate plans, launching new or enhanced product offerings, selling additional services to existing customers, integrating acquired operations, and pursuing strategic acquisitions.

~~Pursuant~~Alltel continues to ~~the~~focus ~~requirements~~its ofefforts ~~Section 13~~on orlowering 15customer churn (d)average monthly rate of ~~the~~customer ~~Securities~~disconnects). ~~Exchange~~To ~~Act~~improve customer retention, Alltel continues to of upgrade ~~1934~~its telecommunications network in order to offer expanded network coverage and quality and to provide enhanced service offerings to its customers. Alltel believes that its improvements in customer service levels, digital network expansion, proactive retention efforts and the ~~registrant~~success ~~has~~of ~~duly~~the ~~caused~~“My Circle” ~~this~~offering ~~report~~contributed to bethe ~~signed~~decrease onin ~~its~~postpay ~~behalf~~customer bychurn in 2006 compared to the same period a year ago. Primarily due to improvements in postpay ~~undersigned~~ customer churn, ~~thereunto~~as ~~duly~~well ~~authorized.~~as improvements in prepay churn rates, total churn also decreased in 2006 compared to 2005.

ALLTEL Corporation
Registrant
By	/s/ Scott T. Ford	Date: February 10, 2005
	Scott T. Ford, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By	/s/ Jeffery R. Gardner	Date: February 10, 2005
	Jeffery R. Gardner, Executive Vice President - Chief Financial Officer (Principal Financial Officer)
*Scott T. Ford, President, Chief Executive Officer and Director
		By /s/ Jeffery R. Gardner
*Sharilyn S. Gasaway, Controller		* (Jeffery R. Gardner,
	(Principal Accounting Officer)	Attorney-in-fact)
		Date: February 10, 2005

Retail revenue per customer per month and average revenue per customer per month both increased slightly in 2006 compared to the same period a year ago, reflecting growth in data revenues and additional ETC support. Retail revenue per customer per month increased to $47.02 in 2006 from $46.68 in 2005, while average revenue per customer per month increased to $52.68 from $51.69 in 2005. Average revenue per customer for 2006 also reflected additional wholesale transport revenues earned from charging third parties, principally Windstream, for use of Alltel’s fiber-optic network. Growth in both retail and average revenue per customer per month in 2006 was affected by increased sales of family and prepay rate plans, decreased voice revenues per customer and limited ETC revenue growth, trends which Alltel expects to continue in 2007. Accordingly, growth in service revenues and sustaining average revenue per customer per month in 2007 will depend upon Alltel’s ability to maintain market share in a competitive marketplace by adding new customers, retaining existing customers, increasing customer usage, and continuing to sell data services.

*JoeCompared to T2004, average revenue per customer per month increased 7 percent in 2005 to $51.69 ~~Ford~~and retail revenue per customer per month increased 5 percent in 2005 to $46.68. Excluding the acquired Cingular and Western Wireless markets, ~~Chairman~~both average revenue per customer and ~~Director~~retail revenue per customer increased 5 percent from the same period a year ago to $50.69 and $46.49, respectively, reflecting Alltel’s continued focus on quality customer growth, improvements in data revenues and additional ETC support.

*John R. Belk, Director F-6

*WilliamThe cost to Hacquire a new wireless customer represents sales, marketing and advertising costs and the net equipment cost, if any, for each new customer added. ~~Crown~~The increase in cost to acquire a new customer in 2006 primarily reflected additional advertising and commissions costs, ~~Director~~as further discussed below. In addition, net equipment cost also increased $25.3 million in 2006 compared to 2005, consistent with the growth in non-acquisition-related gross customer additions and the selling of higher-cost wireless handsets that offer advanced features and capabilities. The increase in cost to acquire a new customer in 2005 primarily reflected additional advertising and commissions costs, incremental expenses related to Alltel’s rebranding initiative and increased promotional activities in the acquired Cingular and Western Wireless markets. The increase in cost to acquire a new customer in 2005 attributable to these factors were partially offset by improved margins on the sales of wireless handsets, reflecting the favorable effects of selling higher-priced phones, and to a lesser extent, vendor rebates. During 2006, approximately 58 percent of the gross customer additions came from Alltel’s internal distribution channels, compared to approximately 59 percent in 2005 and 66 percent in 2004. Alltel’s internal distribution channels include Company retail stores and kiosks located in shopping malls, other retail outlets and mass merchandisers. Incremental sales costs at a Company retail store or kiosk are significantly lower than commissions paid to dealers. Although Alltel intends to manage the costs of acquiring new customers during 2007 by continuing to enhance its internal distribution channels, the Company will also continue to utilize its large dealer network.

*Dennis E. Foster, Director

CONSOLIDATED RESULTS OF OPERATIONS
(Millions, except per share amounts)	2006			2005			2004
Revenues and sales:
Service revenues	$	7,029.8		$	5,924.5		$	4,826.0
Product sales		854.2			648.0			472.9
Total revenues and sales		7,884.0			6,572.5			5,298.9
Costs and expenses:
Cost of services		2,340.6			1,959.9			1,552.6
Cost of products sold		1,176.9			941.8			743.6
Selling, general, administrative and other		1,755.3			1,518.8			1,268.6
Depreciation and amortization		1,239.9			994.8			775.9
Integration expenses, restructuring and other charges		13.7			23.0			39.3
Total costs and expenses		6,526.4			5,438.3			4,380.0
Operating income		1,357.6			1,134.2			918.9
Non-operating income, net		97.5			121.5			9.7
Interest expense		(282.5	)		(314.5	)		(333.1	)
Gain on exchange or disposal of assets and other		126.1			218.8			-
Income from continuing operations before income taxes		1,298.7			1,160.0			595.5
Income taxes		475.0			424.5			183.4
Income from continuing operations		823.7			735.5			412.1
Income from discontinued operations, net of tax		305.7			603.3			634.1
Income before cumulative effect of accounting change, net of tax		1,129.4			1,338.8			1,046.2
Cumulative effect of accounting change		-			(7.4	)		-
Net income	$	1,129.4		$	1,331.4		$	1,046.2
Basic earnings per share:
Income from continuing operations		$2.15			$2.16			$1.34
Income from discontinued operations		.80			1.77			2.06
Cumulative effect of accounting change		-			(.02	)		-
Net income		$2.95			$3.91			$3.40
Diluted earnings per share:
Income from continuing operations		$2.14			$2.14			$1.34
Income from discontinued operations		.79			1.75			2.05
Cumulative effect of accounting change		-			(.02	)		-
Net income		$2.93			$3.87			$3.39

*LawrenceTotal revenues Land sales increased 20 percent, or $1,311.5 ~~Gellerstedt~~million, ~~III~~and service revenues increased by 19 percent, ~~Director~~or $1,105.3 million, in 2006 compared to the prior year. The acquisitions completed in 2006 combined with the effects of including a full year of revenues and sales for the markets acquired in 2005 from Western Wireless and Cingular previously discussed accounted for approximately $867.6 million and $904.0 million of the overall increases in service revenues and total revenues and sales in 2006, respectively. In addition to the effects of the acquisitions, service revenues also reflected growth in access revenues, which increased $75.5 million in 2006 from the same period a year ago. The increase in access revenues in 2006 was primarily driven by non-acquisition-related growth

*Emon A. Mahony, Jr., Director F-7

*Johnin Alltel’s Ppostpay customer base including revenues derived from the Company’s Simple Freedom and ”U” prepaid service offerings. ~~McConnell~~Service revenues for 2006 also reflected growth in revenues derived from data services, ~~Director~~including text and picture messaging and downloadable applications, such as music, games, ringtones, wall paper and other office applications. Alltel has increased demand for its wireless data services by allowing customers to combine video, picture and text messaging services for one flat rate through its All Axcess Pass plan offering. Compared to 2005, revenues from data services increased $163.5 million, or 71 percent, in 2006, reflecting strong demand for these services. Service revenues also included increased regulatory and other fee revenues of $41.5 million in 2006 compared to a year ago, primarily due to additional Universal Service Fund (“USF”) support received by Alltel, reflecting an increase in the contribution factor and additional revenues attributable to Alltel’s certification in 24 states as an ETC, which accounted for $38.1 million of the overall increases in regulatory and other fees in 2006. Revenues from the sale of equipment protection plans also increased $39.0 million in 2006 compared to 2005, reflecting customer growth and continued demand for these plans. Compared to 2005, wholesale revenues increased $43.4 million, primarily due to growth in CDMA minutes of use and additional transport revenues earned from charging third parties, principally Windstream, for use of Alltel’s fiber-optic network, partially offset by the effects of other carriers migrating traffic to their own networks. Wholesale revenues also reflected the effects of migrating Sprint and Cingular roaming traffic to lower rates in exchange for the long-term roaming agreements with each carrier previously discussed, as well as migrating traffic in the former Western Wireless markets to Alltel’s roaming agreements and rates.

*JosieService revenues Cincreased $1,098.5 ~~Natori~~million, ~~Director~~or 23 percent, in 2005 compared to 2004. The acquisitions completed in 2005 and during the fourth quarter of 2004 previously discussed accounted for approximately $615.7 million of the overall increase in service revenues in 2005. In addition to the effects of the acquisitions, service revenues increased due to non-acquisition-related growth in Alltel’s customer base and the corresponding increase in access revenues, which increased $254.3 million from 2004. Revenues from data services increased 125 percent, or $127.6 million, in 2005 compared to 2004, reflecting strong demand for these services and the effects of a large-scale promotion surrounding Super Bowl XXXIX and the “Txt2Win $1 Million Home Sweepstakes” promotion completed in July 2005, both aimed at increasing text messaging usage. Service revenues also included increases in regulatory and other fees of $126.6 million compared to 2004 due to additional USF support received by Alltel reflecting an increase in the contribution factor, and additional revenues attributable to Alltel’s certification in twelve states as an ETC, which accounted for $69.1 million of the overall increase in regulatory fees in 2005. Growth in revenues from the sale of wireless equipment protection plans and automotive roadside assistance services also contributed to the growth in service revenues during 2005. Revenues from these services increased $37.5 million in 2005 compared to 2004, reflecting continued demand for these services. Wholesale wireless revenues also increased $37.0 million in 2005 compared to 2004, primarily due to strong growth in CDMA minutes of use and stability in the volumes of TDMA and analog minutes of use by other carriers’ customers roaming on Alltel’s wireless network.

*GregoryThe above increases Win service revenues in both 2006 and 2005 were partially offset by lower wireless airtime and retail roaming revenues. ~~Penske~~Compared to the prior year periods, ~~Director~~wireless airtime and retail roaming revenues decreased $121.0 million in 2006 and $66.5 million in 2005. In addition, revenues derived from sales of enhanced features, including caller identification, call waiting and voice mail, decreased by $30.7 million in 2005 as compared to 2004. The decrease in airtime, retail roaming and feature revenues primarily reflected the effects of customers migrating to rate plans with a larger number of packaged minutes that, for a flat monthly service fee, provide customers with a specified number of airtime minutes and include at no extra charge unlimited weekend, nighttime and mobile-to-mobile minutes and certain enhanced features at no extra charge.

*FrankProduct sales Eincreased $206.2 ~~Reed~~million, ~~Director~~or 32 percent, in 2006 and $175.1 million, or 37 percent, in 2005. The increases in product sales in both 2006 and 2005 were primarily driven by growth in non-acquisition-related gross customer additions, increased sales to resellers and other distributors and higher retail prices realized on the sale of wireless handsets that include advanced features, such as picture messaging, and that are capable of downloading games, entertainment content, weather and office applications. In addition, the wireless property acquisitions previously discussed accounted for $36.4 million and $15.4 million of the overall increases in product sales in 2006 and 2005, respectively.

*WarrenCost of services Aincreased $380.7 ~~Stephens~~million, ~~Director~~or 19 percent, in 2006 and $407.3 million, or 26 percent, in 2005. The acquisitions discussed above accounted for $238.5 million and $200.5 million of the overall increases in cost of services in 2006 and 2005, respectively. Cost of services also increased in both years due to increases in network-related costs and customer service expenses. Compared to the prior year periods, network-related costs increased $116.2 million in 2006 and $61.6 million in 2005, reflecting increased network traffic due to non-acquisition-related customer growth, increased minutes of use and expansion of network facilities.

*Ronald Townsend, Director F-8

Cost of services for 2006 and 2005 also reflected increases in customer service expenses of $27.4 million and $31.6 million, respectively, primarily reflecting additional costs associated with Alltel’s retention efforts focused on improving customer satisfaction and reducing postpay churn. Compared to the same prior year periods, payments to data content providers increased $33.5 million in 2006 and $32.9 million in 2005, consistent with the growth in revenues derived from data services discussed above. Cost of services for 2005 also reflected increased bad debt expense of $27.5 million primarily due to non-acquisition growth in customers and write-offs associated with early termination fees. In addition to the factors discussed above, cost of services for 2005 also reflected an increase in wireless regulatory fees of $21.7 million compared to 2004, principally related to an increase in the contribution factor applicable to universal service funding. Cost of services for 2005 also included $17.5 million of incremental costs associated with Hurricane Katrina and three other storms, consisting of increased long-distance and roaming expenses due to providing these services to affected customers at no charge for a three-month period, system maintenance costs to restore network facilities and additional losses from bad debts. These incremental costs also included Company donations to support the hurricane relief efforts. In addition, cost of services for 2005 also included $19.7 million of incremental costs primarily related to a change in accounting for operating leases. Certain of Alltel’s operating lease agreements for cell sites and for office and retail locations include scheduled rent escalations during the initial lease term and/or during succeeding optional renewal periods. Prior to January 1, 2005, Alltel had not recognized the scheduled increases in rent expense on a straight-line basis in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 13, “Accounting for Leases”, and Financial Accounting Standards Board (“FASB”) Technical Bulletin No. 85-3, “Accounting for Operating Leases with Scheduled Rent Increases”. The effects of this change were not material to Alltel’s previously reported consolidated results of operations, financial position or cash flows.

~~Report~~ Cost of products ~~Independent~~sold ~~Registered~~increased ~~Public~~$235.1 ~~Accounting~~million, ~~Firm~~or on25 percent, in 2006 and $198.2 ~~Financial~~ million, ~~Statement~~or ~~Schedule~~27 percent, in 2005. The increases in both years were consistent with the overall growth in product sales noted above and reflected the sales of higher-priced wireless handsets and increased sales to resellers and other distributors. In addition, the wireless property acquisitions previously discussed accounted for $100.9 million and $57.3 million of the overall increases in cost of products sold in 2006 and 2005, respectively.

ToSelling, general, administrative and other operating expenses increased $236.5 million, or 16 percent, in 2006 and $250.2 million, or 20 percent, in 2005. The acquisitions accounted for $203.0 million and $138.3 million of the ~~Board~~overall increases in selling, general, administrative and other expenses in 2006 and 2005, respectively. In addition to the effects of ~~Directors~~the acquisitions, selling, general, administrative and other operating expenses in 2006 also reflected increased commission costs of ~~ALLTEL~~$24.7 ~~Corporation:~~million, consistent with the significant growth in gross customer additions that occurred in 2006. Compared to 2005, selling, general, administrative and other expenses in 2006 also included increased advertising costs of $19.0 million primarily attributable to promoting the “My Circle” service offering, as well as the Company’s continued efforts to promote the Alltel brand. Selling, general, administrative and other expenses in 2006 also reflected incremental stock-based compensation expense of $29.3 million primarily related to Alltel’s adoption of SFAS No. 123(R), “Share-Based Payment”, effective January 1, 2006, as more fully discussed in Note 2 to the consolidated financial statements.

~~Our~~In addition ~~audits~~to the effects of the ~~consolidated~~acquisitions, ~~financial~~selling, ~~statements~~general, administrative of and ~~management's~~other ~~assessment~~operating ofexpenses ~~the~~in ~~effectiveness~~2005, when compared to 2004, also reflected increased advertising costs of ~~ALLTEL~~$20.0 ~~Corporation's~~million ~~(the~~primarily due to two large-scale ~~"Company")~~ promotions ~~internal~~aimed ~~control~~at ~~over~~increasing ~~financial~~text ~~reporting~~messaging ~~and~~usage, ofas well as additional costs associated with Alltel’s rebranding initiative. During the ~~effectiveness~~second quarter of 2005, Alltel launched a rebranding initiative that involved changing the Company' logo, improving the design in Alltel’s ~~internal~~retail ~~control~~stores ~~over~~to ~~financial~~be ~~reporting~~more ~~referred~~customer friendly and initiating an advertising campaign highlighting Alltel’s commitment to incustomer ~~our~~satisfaction. Alltel incurred $13.8 million of incremental expenses ~~report~~ associated ~~dated~~with ~~February~~the 10rebranding initiative and the redesign of its retail stores. The increase in selling, ~~2005~~general, ~~appearing~~administrative and other expenses in ~~this~~2005 was also ~~2004~~due ~~Annual~~to ~~Report~~higher oncosts ~~Form~~in ~~10-K~~administering Alltel’s wireless equipment protection of plans, consistent with the ~~Company~~associated ~~also~~increase ~~included~~in anrevenues ~~audit~~discussed ofabove. Also contributing to the ~~financial~~increase ~~statement~~in ~~schedule~~selling, ~~listed~~general, administrative and other costs in ~~Item~~2005 ~~15(a)(2)~~was ofincreased ~~this~~commission ~~Form~~expense ~~10-K~~of $9. In5 ~~our~~million, ~~opinion~~primarily reflecting a higher mix of postpay gross additions, ~~this~~as ~~financial~~compared ~~statement~~to 2004. Increased insurance ~~schedule~~ premiums ~~presents~~related ~~fairly,~~to inthe ~~all~~Company’s ~~material~~employee ~~respects~~medical and dental plans, additional costs associated with write-offs identified as a result of system improvements in the ~~information~~Company’s ~~set~~cash ~~forth~~processing ~~therein~~procedures and higher audit fees and internal ~~when~~ staffing ~~read~~costs inincurred ~~conjunction~~to comply with the ~~related~~Section ~~consolidated~~404 ~~financial~~internal ~~statements.~~control reporting requirements of the Sarbanes-Oxley Act of 2002 also contributed to the increase in selling, general, administrative and other operating expenses in 2005, when compared to 2004.

~~/s/ PricewaterhouseCoopers LLP~~ F-9

~~Little~~Pension expense, ~~Rock~~which is included in both cost of services and selling, ~~Arkansas~~general, ~~February 10~~ administrative and other expenses, decreased $14.1 million in 2006 and increased $7.3 million in 2005, when compared to the prior year periods. The decrease in pension expense in 2006 primarily reflected a reduction in service cost resulting from the cessation of future benefit accruals for certain employees. In December 2005, Alltel amended its qualified defined benefit pension plan such that future benefit accruals for all eligible non-bargaining employees ceased as of December 31, 2005 (December 31, 2010 for employees who had attained age 40 with two years of service as of December 31, 2005). Conversely, the increase in pension expense in 2005 primarily reflected a reduction in the discount rates used, which decreased to 6.0 percent in 2005 compared to 6.4 percent in 2004. See “Pension Plans” below for an additional discussion of the factors affecting the Company’s annual pension costs.

28Depreciation expense increased $173.4 million, or 19 percent, in 2006 and $167.0 million, or 23 percent, in 2005. The increases in depreciation expense in both 2006 and 2005 primarily reflected the effects of the wireless property acquisitions, which accounted for $129.9 million and $71.6 million of the overall increases in depreciation expense in 2006 and 2005, respectively. Additionally, growth in plant in service consistent with Alltel’s plans to expand and upgrade its network facilities also contributed to the overall increases in depreciation expense in both 2006 and 2005. In addition to the effects of acquisitions and growth in plant in service, the increase in depreciation expense in 2005 also reflected the impact of a third quarter 2004 prospective change in the depreciable lives of certain wireless telecommunications equipment. The depreciable lives were shortened in response to the rapid pace of technological development and the increasing demands of Alltel’s customers for new products and services. Compared to the same prior year periods, amortization expense increased $71.7 million in 2006 and $51.9 million in 2005 due to acquisitions and the adverse effects of using an accelerated amortization method for customer list intangible assets acquired in those acquisitions.

~~ALLTEL~~Operating income ~~CORPORATION~~increased $223.4 million, or 20 percent, in 2006 and $215.3 million, ~~SCHEDULE~~ or 23 IIpercent, —in ~~VALUATION~~2005. ~~AND~~The ~~QUALIFYING~~increases ~~ACCOUNTS~~in both 2006 and 2005 primarily reflected ~~(Dollars~~ the effects of the acquisitions, which accounted for $141.3 million and $110.8 million of the overall increases in ~~Millions)~~operating income in 2006 and 2005, respectively. Operating income comparisons for both 2006 and 2005 also include the effects of integration expenses, restructuring and other charges, as further discussed below. In addition, operating income for 2005 included the effects of the incremental operating expenses of $17.5 million associated with Hurricane Katrina and three other storms and $19.7 million of incremental costs associated with Alltel’s change in accounting for certain operating leases, as previously discussed.

Column A	Column B		Column C						Column D				Column E
			Additions
	Balance at		Charged to				Charged						Balance at
	Beginning		Cost and				to Other		Deductions				End of
Description	of Period		Expenses				Accounts		Describe				Period
Allowance for doubtful accounts, customers and other:
For the years ended:
December 31, 2004	$	46.3	$	184.9			$	–	$	177.6	(A	)	$	53.6
December 31, 2003	$	68.4	$	184.7			$	–	$	206.8	(A	)	$	46.3
December 31, 2002	$	49.7	$	265.9			$	–	$	247.2	(A	)	$	68.4
Valuation allowance for deferred tax assets:
For the years ended:
December 31, 2004	$	13.5	$	2.7			$	–	$	–			$	16.2
December 31, 2003	$	6.0	$	7.5			$	–	$	–			$	13.5
December 31, 2002	$	3.9	$	2.1			$	–	$	–			$	6.0
Accrued liabilities related to restructuring and other charges:
For the years ended:
December 31, 2004	$	3.8	$	50.9	(B	)	$	–	$	54.0	(C	)	$	0.7
December 31, 2003	$	13.1	$	19.0	(D	)	$	–	$	28.3	(E	)	$	3.8
December 31, 2002	$	13.8	$	69.9	(F	)	$	–	$	70.6	(G	)	$	13.1

Integration Expenses, Restructuring and Other Charges

~~Notes:~~Integration expenses, restructuring and other charges recorded during the year ended December 31, 2006 were as follows:

(A) Accounts charged off net of recoveries of amounts previously written off. (B) During 2004, the Company recorded restructuring and other charges of $28.4 million related to a planned workforce reduction and the exit of its competitive local exchange carrier operations in the Jacksonville, Florida market. In addition, the Company recorded a $2.3 million reduction in the liabilities associated with various restructuring activities initiated prior to 2003. The Company also recorded a write-down in the carrying value of certain corporate and regional facilities to fair value in conjunction with the proposed leasing or sale of those facilities of $24.8 million. (C) Includes cash outlays of $28.4 million for expenses paid in 2004 and non-cash charges of $25.6 million, primarily consisting of the carrying value of certain corporate and regional facilities discussed in Note (B). (D) During 2003, the Company recorded restructuring and other charges of $8.5 million in connection with the restructuring of the Company's call center operations. The Company also recorded a $2.7 million reduction in the liabilities associated with various restructuring activities initiated prior to 2003, and ALLTEL also wrote off $13.2 million of capitalized software development costs that had no alternative future use or functionality. (E) Includes cash outlays of $13.1 million for expenses paid in 2003 and non-cash charges of $15.2 million, primarily consisting of the write-off of capitalized computer software development costs discussed in Note (D). (F) These charges included a write-down in the carrying value of certain cell site equipment of $7.1 million and integration expenses totaling $28.8 million incurred in connection with the acquisition of wireline properties in Kentucky and wireless properties from CenturyTel. The integration expenses included branding and signage costs and costs to convert the acquired properties to the Company's internal billing and operations support systems. In addition, the Company also recorded charges of $34.0 million in connection with the restructuring of the Company's CLEC, call center, retail and product distribution operations. (G) Includes cash outlays of $58.0 million for expenses paid in 2002 and non-cash charges of $12.6 million, primarily consisting of the write-downs in the carrying value of capitalized computer software costs and cell site equipment discussed in Note (F).


(Millions)
Rebranding and signage costs	$	9.3
Computer system conversion and other integration expenses		4.4
Total integration expenses, restructuring and other charges	$	13.7

~~See~~During the ~~Note~~fourth quarter of 2006, Alltel incurred $2.9 onmillion ~~pages~~of ~~F-66~~integration expenses related to ~~F-68~~its recent purchase of ~~the~~Midwest ~~Financial~~Wireless ~~Supplement,~~completed ~~which~~on isOctober ~~incorporated~~3, ~~herein~~ 2006 and byits ~~reference~~acquisitions of wireless properties in Illinois, ~~for~~Texas ~~additional~~and ~~information~~Virginia completed ~~regarding~~during the ~~restructuring~~second quarter of 2006. These expenses consisted of rebranding and ~~other~~signage costs of $1.0 million and computer system conversion ~~charges~~ and other ~~recorded~~integration byexpenses of $1.9 million. In the ~~Company~~first inquarter ~~2004~~of 2006, ~~2003~~the Company incurred $10.8 million of integration expenses related to its acquisition of Western Wireless. These expenses consisted of $8.3 million of rebranding and ~~2002~~signage costs and $2.5 million of system conversion and other integration costs. The system conversion and other integration expenses included internal payroll and employee benefit costs, contracted services, relocation expenses and other programming costs incurred in converting Western Wireless’ customer billing and operational support systems to Alltel’s internal systems, a process which was completed during March 2006.

29The integration expenses, restructuring and other charges recorded during the year ended December 31, 2005 were as follows:

EXHIBIT INDEX


(Millions)
Computer system conversion and other integration expenses	$	22.3
Relocation costs		0.7
Total integration expenses, restructuring and other charges	$	23.0

~~Number and Name~~ F-10

(2)(a)	Agreement and Plan of Merger, dated as of January 9, 2005, by and among ALLTEL Corporation, Western Wireless Corporation and Wigeon Acquisition LLC (incorporated herein by reference to Exhibit 2 to Current Report on Form 8-K, dated January 11, 2005).	*
(3)(a)(1)	Amended and Restated Certificate of Incorporation of ALLTEL Corporation (incorporated herein by reference to Exhibit B to Proxy Statement, dated March 9, l990).	*
(a)(2)	Amendment No. 1 to Amended and Restated Certificate of Incorporation of ALLTEL Corporation (incorporated herein by reference to Annex F of ALLTEL Corporation Registration Statement (File No. 333-51915) on Form S-4 dated May 6, 1998).	*
(b)	Bylaws of ALLTEL Corporation (As amended as of January 29, 1998) (incorporated herein by reference to Exhibit 3(b) to Form 10-K for the fiscal year ended December 31, 1997).	*
(4)(a)	Rights Agreement dated as of January 30, l997, between ALLTEL Corporation and First Union National Bank of North Carolina (incorporated herein by reference to Form 8-K dated February 3, 1997, filed with the Commission on February 4, 1997).	*
(b)	The Company agrees to provide to the Commission, upon request, copies of any agreement defining rights of long-term debt holders.	*
(c)	Indenture dated as of March 7, 1996, between 360° Communications Company and Citibank, N.A., as Trustee (the ''1996 360° Indenture'') (incorporated herein by reference to Exhibit 4.2 to 360° Communications Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995).	*
(d)	Form of 7 1/2% Senior Note Due 2006 issued under the 1996 360° Indenture (incorporated herein by reference to Exhibit 4.1 to 360° Communications Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995).	*
(e)	First Supplemental Indenture dated as of February 1, 1999, among 360° Communications Company, ALLTEL Corporation and Citibank, N.A. as trustee (incorporated herein by reference to Exhibit 4(e) to Form 10-Q for the period ended March 31, 2003).	*
(f)	Indenture dated as of March 1, 1997, between 360° Communications Company and Citibank, N.A., as Trustee (the ''1997 360° Indenture'') (incorporated herein by reference to Exhibit 4.6 to 360° Communications Company's Current Report on Form 8-K dated March 17, 1997).	*
(g)	Form of 7.60% Senior Note Due 2009 issued under the 1997 360° Indenture (incorporated herein by reference to Exhibit 4.7 to 360° Communications Company's Current Report on Form 8-K dated March 17, 1997).	*
(h)	Form of 6.65% Senior Note Due 2008 issued under the 1997 360° Indenture (incorporated herein by reference to Exhibit 4.8 to 360° Communications Company's Current Report on Form 8-K dated January 13, 1998).	*
(i)	First Supplemental Indenture dated as of February 1, 1999, among 360° Communications Company, ALLTEL Corporation and Citibank, N.A. as trustee (incorporated herein by reference to Exhibit 4(i) to Form 10-Q for the period ended March 31, 2003).	*
(10)(a)(1)	Five Year Revolving Credit Agreement dated as of July 28, 2004, between ALLTEL Corporation and Bank of America, N.A., JPMorgan Chase Bank, Banc of America Securities LLC and J.P. Morgan Securities Inc., Citicorp USA, Inc., KeyBank National Association, Wachovia Bank, National Association, and Barclays Bank PLC (incorporated herein by reference to Form 10-Q for the period ended June 30, 2004).	*

In terms of the markets acquired in Alabama, Georgia and from Cingular, Alltel, as expected, experienced customer losses during 2005, which primarily resulted from transition issues, such as rebranding and deploying a CDMA network to replace the existing GSM/TDMA network in those markets, because Alltel’s use of the existing Cingular GSM/TDMA network was discontinued as of December 31, 2005. By year-end 2005, Alltel had completed deployment of a CDMA network in all of the acquired Cingular markets and transitioned the entire customer base to CDMA handsets. In completing these integration efforts, Alltel incurred $18.5 million of integration expenses, primarily consisting of handset subsidies incurred to migrate the acquired customer base to CDMA handsets.

*During 2005, ~~Incorporated~~Alltel ~~herein~~also byincurred ~~reference~~$4.5 asmillion ~~indicated~~of integration expenses related to its acquisition of Western Wireless, primarily consisting of computer system conversion and other integration costs. (These expenses included internal payroll and employee benefit costs, contracted services, relocation expenses and other programming costs incurred in converting Western Wireless’ customer billing and operational support systems to Alltel’s internal systems, a) ~~Filed~~process ~~herewith~~which was completed during the first quarter of 2006, as discussed above. Of the total integration expenses recorded, $14.3 million were incurred in the third quarter of 2005 and $8.7 million were incurred in the fourth quarter of 2005.

30The integration expenses, restructuring and other charges recorded during the year ended December 31, 2004 were as follows:

EXHIBIT INDEX, Continued


(Millions)
Severance and employee benefit costs	$	10.9
Relocation costs		2.8
Lease termination and other exit costs		0.8
Write-down in the carrying value of certain facilities		24.8
Total integration expenses, restructuring and other charges	$	39.3

~~Number~~In 2004, Alltel reorganized its operations and ~~Name~~support teams. In connection with these activities, the Company recorded a restructuring charge of $14.5 million consisting of severance and employee benefit costs related to a planned workforce reduction, employee relocation expenses and lease termination and other exit costs. The severance and employee benefit costs included a $1.2 million payment to a former employee of the Company’s sold financial services division that became payable in the first quarter of 2004 pursuant to the terms of a change in control agreement between the employee and Alltel. As of December 31, 2004, the Company had paid $14.1 million in severance and employee-related expenses, and all of the employee reductions and relocations had been completed. During 2004, Alltel also recorded a write-down in the carrying value of certain corporate and regional facilities to fair value in conjunction with the 2004 organizational changes and the 2003 sale of the Company’s financial services division to Fidelity National Financial Inc. (“Fidelity National”).

(10)(b)(1)	Agreement by and between ALLTEL Corporation and Joe T. Ford effective as of July 26, 2001 (incorporated herein by reference to Exhibit 10(b)(4) to Form 10-K for the fiscal year ended December 31, 2001).	*
(b)(2)	Employment Agreement by and between ALLTEL Corporation and Scott T. Ford effective as of July 24, 2003 (incorporated herein by reference to Exhibit 10(c)(9) to Form 10-Q for the period ended September 30, 2003).	*
(c)(1)	Change in Control Agreement by and between the Company and Scott T. Ford effective as of April 25, 1996 (incorporated herein by reference to Exhibit 10(c)(6) to Form 10-Q for the period ended June 30, 1996).	*
(c)(1)(a)	Amendment to Change in Control Agreement by and between the Company and Scott T. Ford effective as of July 24, 2003 (incorporated herein by reference to Exhibit 10(c)(10) to Form 10-Q for the period ended September 30, 2003).	*
(c)(2)	Change in Control Agreement by and between the Company and Kevin L. Beebe effective as of July 23, 1998 (incorporated herein by reference to Exhibit 10(c)(2) to Form 10-K for the fiscal year ended December 31, 1998).	*
(c)(2)(a)	Amendment to Change in Control Agreement by and between the Company and Kevin L. Beebe effective as of October 23, 2003 (incorporated herein by reference to Exhibit 10(c)(2)(a) to Form 10-K for the fiscal year ended December 31, 2003).	*
(c)(3)	Change in Control Agreement by and between the Company and Jeffrey H. Fox effective as of January 30, 1997 (incorporated herein by reference to Exhibit 10(c)(4) to Form 10-K for the fiscal year ended December 31, 1998).	*
(c)(3)(a)	Amendment to Change in Control Agreement by and between the Company and Jeffrey H. Fox effective as of October 23, 2003 (incorporated herein by reference to Exhibit 10(c)(3)(a) to Form 10-K for the fiscal year ended December 31, 2003).	*
(c)(4)	Change in Control Agreement by and between the Company and Francis X. Frantz effective as of October 24, 1994 (incorporated herein by reference to Exhibit 10(c)(4) to Form 10-K for the fiscal year ended December 31, 1994).	*
(c)(4)(a)	Amendment to Change in Control Agreement by and between the Company and Francis X. Frantz effective as of October 23, 2003 (incorporated herein by reference to Exhibit 10(c)(4)(a) to Form 10-K for the fiscal year ended December 31, 2003).	*
(c)(5)	Change in Control Agreement by and between the Company and Jeffery R. Gardner effective as of January 28, 1999 (incorporated herein by reference to Exhibit 10(c)(8) to Form 10-K for the fiscal year ended December 31, 1998).	*
(c)(5)(a)	Amendment to Change in Control Agreement by and between the Company and Jeffery R. Gardner effective as of October 23, 2003 (incorporated herein by reference to Exhibit 10(c)(5)(a) to Form 10-K for the fiscal year ended December 31, 2003).	*
(c)(6)	Change in Control Agreement by and between the Company and Keith A. Kostuch effective as of February 15, 2001 (incorporated herein by reference to Exhibit 10(c)(9) to Form 10-K for the fiscal year ended December 31, 2000).	*
(c)(7)	Change in Control Agreement by and between the Company and C.J. Duvall Jr. effective as of January 22, 2004 (incorporated herein by reference to Exhibit 10(c)(7)(a) to Form 10-Q for the period ended June 30, 2004).	*

The integration expenses, restructuring and other charges decreased net income $8.4 million in 2006, $14.0 million in 2005 and $24.0 million in 2004. At December 31, 2006, the remaining unpaid liability related to Alltel’s integration and restructuring activities consisted of lease and contract termination costs of $0.1 million. Cash outlays for the remaining unpaid liability will be disbursed over the next 12 months and will be funded from operating cash flows. (See Note 10 to the consolidated financial statements for additional information regarding these charges.)

* Incorporated herein by reference as indicated. (a) Filed herewith.

Non-Operating Income, Net
(Millions)	2006			2005			2004
Equity earnings in unconsolidated partnerships	$	60.1		$	43.4		$	68.5
Minority interest in consolidated partnerships		(46.6	)		(69.1	)		(80.1	)
Other income, net		84.0			147.2			21.3
Non-operating income, net	$	97.5		$	121.5		$	9.7

31As indicated in the table above, non-operating income, net decreased $24.0 million in 2006 and increased $111.8 million in 2005. The increase in equity earnings in unconsolidated partnerships in 2006 of $16.7 million primarily reflected improved operating results in those markets in which the Company owns a minority interest. Conversely, the decrease in equity earnings of $25.1 million in 2005 primarily reflected the effects of the property exchange with Cingular and Alltel’s December 1, 2004 acquisition of a majority ownership interest in a Georgia market in which the Company previously owned a minority interest. The decrease in minority interest expense of $22.5 million in 2006 primarily reflected the effects of Alltel’s acquisitions during the first quarter of 2006 of the remaining ownership interests in wireless properties in North Carolina and South Carolina.

~~EXHIBIT INDEX, Continued~~ F-11

~~Number~~Comparatively, minority interest expense decreased $11.0 million in 2005 primarily due to the effects of Alltel’s acquisitions during the fourth quarter of 2004 and ~~Name~~2005 of additional ownership interests in wireless properties in Louisiana, Michigan, Mississippi, North Carolina, Ohio and Wisconsin in which the Company owned a majority interest.

(10)(c)(8)	Change in Control Agreement by and between the Company and Sharilyn S. Gasaway effective as of January 22, 2004 (incorporated herein by reference to Exhibit 10(c)(8)(a) to Form 10-Q for the period ended June 30, 2004).	*
(c)(9)	Change in Control Agreement by and between the Company and Scott H. Settelmyer effective as of January 22, 2004 (incorporated herein by reference to Exhibit 10(c)(9)(a) to Form 10-Q for the period ended June 30, 2004).	*
(d)	Split-dollar Life Insurance Agreement by and between the Company and Francis X. Frantz effective as of March 1, 1994 (incorporated herein by reference to Exhibit 10(d)(2) to Form 10-K for the fiscal year ended December 31, 1994).	*
(e)(1)	Amended and Restated ALLTEL Corporation Supplemental Executive Retirement Plan (incorporated herein by reference to Exhibit 10(e)(1) to Form 10-K for the fiscal year ended December 31, 2001).	*
(e)(2)	Amendment No. 1 to Amended and Restated ALLTEL Corporation Supplemental Executive Retirement Plan effective October 23, 2003 (incorporated herein by reference to Exhibit (e)(2) to Form 10-K for the fiscal year ended December 31, 2003).	*
(f)(1)	Executive Deferred Compensation Plan of ALLTEL Corporation, as amended and restated effective October 1, 1993 (incorporated herein by reference to Exhibit 10(e) to Form 10-K for the fiscal year ended December 31, 1993).	*
(f)(2)	Amendment No. 1 to Executive Deferred Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement) effective January 29, 1998 (incorporated herein by reference to Exhibit 10(f)(2) to Form 10-K for the fiscal year ended December 31, 1997).	*
(f)(3)	Amendment No. 2 to Executive Deferred Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement) effective April 23, 1998 (incorporated herein by reference to Exhibit 10(f)(3) to Form 10-K for the fiscal year ended December 31, 2002).	*
(f)(4)	Amendment No. 3 to Executive Deferred Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement) effective January 28, 1999 (incorporated herein by reference to Exhibit 10(f)(4) to Form 10-K for the fiscal year ended December 31, 2002).	*
(f)(5)	Amendment No. 4 to Executive Deferred Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement) effective April 21, 1999 (incorporated herein by reference to Exhibit 10(f)(5) to Form 10-K for the fiscal year ended December 31, 2002).	*
(f)(6)	Amendment No. 5 to Executive Deferred Compensation Plan of ALLTEL Corporation (October 1, 1993 Restatement) effective April 25, 2002 (incorporated herein by reference to Exhibit 10(f)(6) to Form 10-K for the fiscal year ended December 31, 2002).	*
(f)(7)	Deferred Compensation Plan for Directors of ALLTEL Corporation, as amended and restated effective October 1, 1993 (incorporated herein by reference to Exhibit 10(f) to Form 10-K for the fiscal year ended December 31, 1993).	*
(f)(8)	Amendment No. 1 to Deferred Compensation Plan for Directors of ALLTEL Corporation (October 1, 1993 Restatement) (incorporated herein by reference to Exhibit 10(f)(3) to Form 10-K for the fiscal year ended December 31, 1996).	*
(f)(9)	Amendment No. 2 to Deferred Compensation Plan for Directors of ALLTEL Corporation (October 1, 1993 Restatement) effective April 25, 2002 (incorporated herein by reference to Exhibit 10(f)(9) to Form 10-K for the fiscal year ended December 31, 2002).	*

Compared to 2005, other income, net included additional tax-exempt interest income earned on the Company’s cash and short-term investments of $58.0 million in 2006, due to significant growth in Alltel’s available cash on hand following the spin-off of the wireline business and the sales of the international operations in Austria, Haiti and Bolivia completed during the second quarter of 2006. Comparatively, other income, net in 2005 included a special cash dividend received on the Company’s investment in Fidelity National common stock. On March 9, 2005, Fidelity National declared a special $10 per share cash dividend to Fidelity National stockholders. The special cash dividend of $111.0 million was paid to Alltel on March 28, 2005. As further discussed below, during the second quarter of 2005, Alltel sold all of its shares of Fidelity National common stock. Compared to 2004, other income, net for 2005 also included additional interest income earned on the Company’s cash and short-term investments of $12.7 million due to significant growth in Alltel’s available cash on hand following the May 17, 2005 issuance of common stock to settle the purchase contract obligation related to the Company’s equity units. As more fully discussed in Note 5 to the consolidated financial statements, during 2002, Alltel issued 27.7 million equity units which included a purchase contract that obligated the holder to purchase, and obligated Alltel to sell, on May 17, 2005, a variable number of newly-issued Alltel common shares at a price of $50 per share. Upon settlement of the purchase contract obligation, Alltel issued 24.5 million common shares and received proceeds of $1,385.0 million. Other income, net for 2005 also included $5.0 million of insurance proceeds received to offset expenses incurred by the Company related to Hurricane Katrina, as previously discussed, as well as a $2.4 million gain on the sale of investments in certain limited partnerships.

* Incorporated herein by reference as indicated. (a) Filed herewith.Interest Expense

Interest expense decreased $32.0 million, or 10 percent in 2006 and $18.6 million, or 6 percent, in 2005. The decrease in interest expense in 2006 primarily reflected the favorable effects on interest costs resulting from a reduction in Alltel’s long-term debt balance of $2.9 billion that occurred during the year. As previously discussed, on August 25, 2006, Alltel repurchased prior to maturity $1.0 billion of long-term debt, and on July 17, 2006, Alltel completed a $1.7 billion tax-free debt exchange with two investment banks. In addition, on November 1, 2006, Alltel repaid, at maturity, a $186.3 million, 9.0 percent senior unsecured note. The decrease in interest expense in 2006 attributable to the $2.9 billion debt reduction was partially offset by higher interest costs related to commercial paper borrowings, reflecting an increase in both the weighted average borrowings outstanding and applicable interest rates, when compared to the prior year. Interest expense for 2006 was also affected by an increase in variable interest rates compared to 2005, the effects of which resulted in a year-over-year increase in interest costs of $17.3 million attributable to Alltel’s interest rate swap agreements.

~~EXHIBIT~~The decrease ~~INDEX~~in interest expense in 2005 primarily reflected the effects of the April 8, ~~Continued~~2005 redemption of $450.0 million, 7.50 percent senior notes, as further discussed below. Interest expense for 2005 also reflected the effects of the February 17, 2005 remarketing of the senior note portion of Alltel’s equity units that reset the annual interest rate on the notes to 4.656 percent from 6.25 percent for periods subsequent to February 17, 2005. Interest expense for 2005 was also favorably affected by the April 1, 2004 repayment of a $250.0 million, 7.25 percent senior unsecured note. The decrease in interest expense in 2005 attributable to the repayment of senior notes and resetting the annual interest rate on the equity units was partially offset by additional interest costs resulting from $1.0 billion of incremental commercial paper borrowings incurred by Alltel to finance a portion of the repayment of Western Wireless’ long-term debt subsequent to the merger and the cash portion of the merger consideration, as further discussed below under “Cash Flows from Financing Activities - Continuing Operations”.

~~Number~~Gain on Exchange or Disposal of Assets and ~~Name~~ Other

(10)(f)(10)	ALLTEL Corporation 1999 Nonemployee Directors Stock Compensation Plan (as Amended and Restated effective January 22, 2004)(incorporated herein by reference to Exhibit (f)(10) to Form 10-K for the fiscal year ended December 31, 2003).	*
(f)(11)	ALLTEL Corporation 1998 Management Deferred Compensation Plan, effective June 23, 1998 (incorporated herein by reference to Exhibit 10(f)(5) to Form 10-Q for the period ended June 30, 1998).	*
(f)(12)	Amendment No. 1 to the ALLTEL Corporation 1998 Management Deferred Compensation Plan effective June 23, 1998 (incorporated herein by reference to Exhibit 10(f)(11) to Form 10-K for the fiscal year ended December 31, 2002).	*
(f)(13)	Amendment No. 2 to the ALLTEL Corporation 1998 Management Deferred Compensation Plan effective April 25, 2002 (incorporated herein by reference to Exhibit 10(f)(12) to Form 10-K for the fiscal year ended December 31, 2002).	*
(f)(14)	ALLTEL Corporation 1998 Directors' Deferred Compensation Plan, effective June 23, 1998 (incorporated herein by reference to Exhibit 10(f)(6) to Form 10-Q for the period ended June 30, 1998).	*
(f)(15)	Amendment No. 1 to the ALLTEL Corporation 1998 Directors' Deferred Compensation Plan, effective April 25, 2002 (incorporated herein by reference to Exhibit 10(f)(14) to Form 10-K for the fiscal year ended December 31, 2002).	*
(g)(1)	ALLTEL Corporation 1991 Stock Option Plan (incorporated herein by reference to Exhibit A to Proxy Statement, dated March 8, 1991).	*
(g)(2)	First Amendment to ALLTEL Corporation 1991 Stock Option Plan (incorporated herein by reference to Exhibit 10(g)(3) to Form 10-K for the fiscal year ended December 31, 2000).	*
(g)(3)	ALLTEL Corporation 1994 Stock Option Plan for Employees (incorporated herein by reference to Exhibit A to Proxy Statement dated March 4, 1994).	*
(g)(4)	First Amendment to ALLTEL Corporation 1994 Stock Option Plan for Employees (incorporated herein by reference to Exhibit 10(g)(5) to Form 10-K for the fiscal year ended December 31, 2000).	*
(g)(5)	ALLTEL Corporation 1994 Stock Option Plan for Nonemployee Directors (incorporated herein by reference to Exhibit B to Proxy Statement dated March 4, 1994).	*
(g)(6)	First Amendment to ALLTEL Corporation 1994 Stock Option Plan for Nonemployee Directors (incorporated herein by reference to Exhibit 10(g)(5) to Form 10-K for the fiscal year ended December 31, 1996).	*
(g)(7)	Second, Third and Fourth Amendments to ALLTEL Corporation 1994 Stock Option Plan for Nonemployee Directors (incorporated herein by reference to Exhibit 10(g)(8) to Form 10-K for the fiscal year ended December 31, 2000).	*
(g)(8)	ALLTEL Corporation 1998 Equity Incentive Plan (incorporated herein by reference to Annex G of ALLTEL Corporation Registration Statement (File No. 333-51915) on Form S-4 dated May 6, 1998).	*
(g)(9)	First and Second Amendments to ALLTEL Corporation 1998 Equity Incentive Plan (incorporated herein by reference to Exhibit 10(g)(9) to Form 10-K for the fiscal year ended December 31, 2000).	*

On August 25, 2006, Alltel repurchased prior to maturity $1.0 billion of long-term debt, consisting of $664.3 million of 4.656 percent equity unit notes due 2007, $61.0 million of 6.65 percent unsecured notes due 2008, $147.0 million of 7.60 percent unsecured notes due 2009 and $127.7 million of 8.00 percent notes due 2010 pursuant to cash tender offers announced by Alltel on July 31, 2006. Concurrent with the debt repurchase, Alltel also terminated the related pay variable/receive fixed, interest rate swap agreement that had been designated as a fair value hedge against the 6.65 percent notes due 2008. In connection with the early termination of the debt and interest rate swap agreement, Alltel incurred net pretax termination fees of $23.0 million. Following the spin-off of the wireline business, Alltel completed a tax-free debt exchange with two investment banks. On July 17, 2006, Alltel transferred to the investment banks the Spinco debt securities received in the spin-off transaction in exchange for certain Alltel debt securities, consisting of $988.5 million of outstanding commercial paper borrowings and $685.1 million of 4.656

* Incorporated herein by reference as indicated. (a) Filed herewith.F-12

33percent equity unit notes due 2007. In completing the tax-free debt exchange, Alltel incurred a loss of $27.5 million. These transactions decreased net income $38.8 million in 2006.

~~EXHIBIT~~On November ~~INDEX~~10, ~~Continued~~2005, federal legislation was enacted that included provisions to dissolve and liquidate the assets of the Rural Telephone Bank (“RTB”). In connection with the dissolution and liquidation, during April 2006, the RTB redeemed all outstanding shares of its Class C stock. As a result, the Company received liquidating cash distributions of $198.7 million in exchange for its $22.1 million investment in RTB Class C stock and recognized a pretax gain of $176.6 million. This transaction increased net income $107.6 million in 2006.

~~Number~~As previously discussed, on April 15, 2005, Alltel and ~~Name~~Cingular exchanged certain wireless assets. Primarily as a result of certain minority partners’ rights-of-first-refusal, three of the wireless partnership interests to be exchanged between Alltel and Cingular were not completed until July 29, 2005. As a result of completing the exchange transactions, Alltel recorded pretax gains of $127.5 million in the second quarter of 2005 and $30.5 million in the third quarter of 2005. On April 6, 2005, Alltel completed the sale of all of its shares of Fidelity National common stock for approximately $350.8 million and recognized a pretax gain of approximately $75.8 million. Proceeds from the stock sale were used to fund a substantial portion of the cost to redeem, on April 8, 2005, all of the issued and outstanding 7.50 percent senior notes due March 1, 2006, representing an aggregate principal amount of $450.0 million. Concurrent with the debt redemption, Alltel also terminated the related pay variable/receive fixed, interest rate swap agreement that had been designated as a fair value hedge against the $450.0 million senior notes. In connection with the early termination of the debt and interest rate swap agreement, Alltel incurred net pretax termination fees of approximately $15.0 million. These transactions increased net income $136.7 million in 2005.

(10)(g)(10)	ALLTEL Corporation 2001 Equity Incentive Plan (incorporated herein by reference to Appendix C to Proxy Statement dated March 5, 2001).	*
(h)(1)	Amended and Restated 360° Communications Company 1996 Equity Incentive Plan (incorporated herein by reference to Form S-8 (File No. 333-88923) of ALLTEL Corporation filed with the Commission on October 13, 1999).	*
(h)(2)	Lincoln Telecommunications Company 1989 Stock and Incentive Stock Plan (incorporated herein by reference to Form S-8 (File No. 333-88907) of ALLTEL Corporation filed with the Commission on October 13, 1999).	*
(i)(1)	ALLTEL Corporation Performance Incentive Compensation Plan as amended, effective January 1, 1993 (Exhibit 10(i) to Form SE dated February 17, 1993).	*
(i)(2)	Amendment No. 1 to ALLTEL Corporation Performance Incentive Compensation Plan, effective January 29, 1998 (incorporated herein by reference to Exhibit 10(i)(1) to Form 10-K for the fiscal year ended December 31, 1997).	*
(j)(1)	ALLTEL Corporation Long-Term Performance Incentive Compensation Plan, as amended and restated effective January 1, 1993 (Exhibit 10(j) to Form SE dated February 17, 1993).	*
(j)(2)	Amendment No. 1 to ALLTEL Corporation Long-Term Performance Incentive Compensation Plan as amended and restated effective January 1, 1993 (incorporated herein by reference to Exhibit 10(j)(1) to Amendment No. 1 to Form 10-K for the fiscal year ended December 31, 1993).	*
(j)(3)	Amendment No. 2 to ALLTEL Corporation Long-Term Performance Incentive Compensation Plan (January 1, 1993 Restatement), effective January 29, 1998 (incorporated herein by reference to Exhibit 10(j)(2) to Form 10-K for the fiscal year ended December 31, 1997).	*
(k)(1)	ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(k) to Form 10-K for the fiscal year ended December 31, 2001).	*
(k)(2)	Amendment No. 1 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(k)(1) to Form 10-Q for the period ended September 30, 2002).	*
(k)(3)	Amendment No. 2 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(k)(3) to Form 10-K for the fiscal year ended December 31, 2002).	*
(k)(4)	Amendment No. 3 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(k)(4) to Form 10-Q for the period ended June 30, 2003).	*
(k)(5)	Amendment No. 4 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(k)(9) to Form 10-Q for the period ended June 30, 2004).	*
(k)(6)	Amendment No. 5 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(k)(5) to Form 10-K for the fiscal year ended December 31, 2003).	*
(k)(7)	Amendment No. 6 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(k)(6) to Form 10-K for the fiscal year ended December 31, 2003).	*

Income Taxes

*Income tax ~~Incorporated~~expense ~~herein~~increased $50.5 million, or 12 percent in 2006 and $241.1 million, or 131 percent, in 2005. The increases in both 2006 and 2005 were consistent with the overall growth in Alltel’s income before income taxes. Income tax expense for 2006 was also adversely affected by ~~reference~~the asnon-deductibility ~~indicated~~for both federal and state income tax purposes of the $27.5 (million loss incurred by Alltel in connection with completing the debt exchange, partially offset by the increase in tax-exempt interest income discussed above under “Non-Operating Income, Net”, and the tax benefits associated with a fourth quarter 2006 adjustment to certain income tax liabilities including contingency reserves. As more fully discussed in Notes 2 and 13 to the consolidated financial statements, during the fourth quarter of 2006, Alltel entered into agreements with the Internal Revenue Service (“IRS”) ~~Filed~~to ~~herewith~~settle all of its tax liabilities related to its consolidated federal income tax returns for the fiscal years 1997 through 2003. In conjunction with those settlements, Alltel adjusted its income tax contingency reserves to reflect the IRS audit findings. The adjustments to the income tax liabilities resulted in a reduction in income tax expense associated with continuing operations of $29.9 million.

34In addition to the growth in income before income taxes, income tax expense for 2005 also reflected the absence of $35.5 million of tax benefits recorded in 2004. As further discussed in Notes 2 and 13 to the consolidated financial statements, during the third quarter of 2004, the IRS issued its proposed audit adjustments related to Alltel’s consolidated federal income tax returns for the fiscal years 1997 through 2001. With the exception of three issues which were pending appeals and subsequently resolved in the fourth quarter of 2006, Alltel agreed with the IRS findings and adjusted its income tax contingency reserves to reflect the IRS findings, the effects of which resulted in a reduction in income tax expense associated with continuing operations of $17.9 million. In 2004, the Company also reached an agreement with the IRS allowing for the deduction of a previously realized loss associated with Alltel’s 1997 disposition of a subsidiary, which resulted in the recognition of a tax benefit of $17.6 million in 2004.

~~EXHIBIT~~The Company’s ~~INDEX~~effective income tax rates were 36.6 percent in both 2006 and 2005 compared to 30.8 percent in 2004. The Company’s effective income tax rate in 2006 was favorably affected by tax benefits associated with the fourth quarter 2006 adjustment to Alltel’s income tax liabilities and the increase in tax-exempt interest income discussed above. The effective income tax rate in 2006 was adversely affected by the non-deductibility for both federal and state income tax purposes of the $27.5 million loss incurred by Alltel in connection with completing the debt exchange. In addition, ~~Continued~~the state income tax rate in 2005 also included the favorable effect on income tax expense resulting from the reversal of valuation allowances related to certain state net operating loss carryforwards and the favorable income tax treatment related to both the special cash dividend received from Fidelity National and the gain realized from the sale of the Fidelity National stock previously discussed. The Company’s effective income tax rate in 2004 was favorably affected by tax benefits associated with the reversal of income tax contingency reserves and the allowance of a prior year loss from the sale of a subsidiary discussed above. For 2007, Alltel’s annual effective income tax rate is expected to range between 39.0 percent and 40.0 percent, absent the effects of any future significant or unusual items, such as the reversal of income tax contingency reserves.

~~Number and Name~~ F-13

(10)(k)(8)	Amendment No. 7 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(k)(7) to Form 10-K for the fiscal year ended December 31, 2003).	*
(k)(9)	Amendment No. 8 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit (10)(k)(8) to Form 10-K for the fiscal year ended December 31, 2003).	*
(k)(10)	Amendment No. 9 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement).	(a)
(k)(11)	Amendment No. 10 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement).	(a)
(k)(12)	Amendment No. 11 to ALLTEL Corporation Pension Plan (January 1, 2001 Restatement).	(a)
(1)(1)	ALLTEL Corporation Profit-Sharing Plan (January 1, 2002 Restatement) (incorporated herein by reference to Exhibit 10(l) to Form 10-Q for the period ended March 31, 2002).	*
(l)(2)	Amendment No. 1 to ALLTEL Corporation Profit-Sharing Plan (January 1, 2002 Restatement) (incorporated herein by reference to Exhibit 10(l)(2) to Form 10-K for the fiscal year ended December 31, 2002).	*
(l)(3)	Amendment No. 2 to ALLTEL Corporation Profit-Sharing Plan (January 1, 2002 Restatement) (incorporated herein by reference to Exhibit 10(I)(3) to Form 10-K for the fiscal year ended December 31, 2003).	*
(l)(4)	Amendment No. 3 to ALLTEL Corporation Profit-Sharing Plan (January 1, 2002 Restatement) (incorporated herein by reference to Exhibit 10(I)(4) to Form 10-K for the fiscal year ended December 31, 2003).	*
(l)(5)	Amendment No. 4 to ALLTEL Corporation Profit-Sharing Plan (January 1, 2002 Restatement) (incorporated herein by reference to Exhibit 10(I)(5) to Form 10-K for the fiscal year ended December 31, 2003).	*
(l)(6)	Amendment No. 5 to ALLTEL Corporation Profit-Sharing Plan (January 1, 2002 Restatement).	(a)
(m)	ALLTEL Corporation Benefit Restoration Plan (January 1, 1996 Restatement) (incorporated herein by reference to Exhibit 10(m) to Form 10-K for the fiscal year ended December 31, 1995).	*
(n)(1)	Amended and Restated ALLTEL Corporation Supplemental Medical Expense Reimbursement Plan (incorporated herein by reference to Exhibit 10(p) to Form 10-K for the fiscal year ended December 31, 1990).	*
(n)(2)	First Amendment to ALLTEL Corporation Supplemental Medical Expense Reimbursement Plan (incorporated herein by reference to Exhibit 10(n)(1) to Form 10-K for the fiscal year ended December 31, 2001).	*
(o)(1)	ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(o) to Form 10-K for the fiscal year ended December 31, 2001).	*
(o)(2)	Amendment No. 1 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(o)(2) to Form 10-K for the fiscal year ended December 31, 2002).	*
(o)(3)	Amendment No. 2 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(o)(3) to Form 10-K for the fiscal year ended December 31, 2002).	*

Net Income and Earnings per Share from Continuing Operations

*Net income ~~Incorporated~~from ~~herein~~continuing byoperations ~~reference~~increased as$88.2 ~~indicated~~million, or 12 percent, in 2006 and $323.4 (million, or 78 percent, in 2005. Basic and diluted earnings per share from continuing operations in 2006 were relatively unchanged from 2005. Conversely, basic and diluted earnings per share from continuing operations in 2005 increased 61 percent and 60 percent, respectively from 2004. The increase in net income in 2006 primarily reflected the growth in operating income, consistent with the increase in revenues and sales previously discussed, and lower interest costs. Net income from continuing operations in 2006 also reflected the absence of the special cash dividend received on the Fidelity National common stock, the effects of the debt termination charges incurred in connection with completing the debt exchange and cash tender offers, and when compared to 2005, a) ~~Filed~~reduction ~~herewith~~in the amount of pretax gains realized from the sale or exchange of investments and other assets.

35The increases in net income from continuing operations and earnings per share in 2005 primarily reflected the special dividend related to the Company’s investment in Fidelity National common stock, gains realized from the exchange of wireless assets with Cingular and the sale of the Company’s investment in Fidelity National common stock combined with the growth in operating income consistent with the increase in revenues and sales. Growth in basic and diluted earnings per share in both 2006 and 2005 was adversely affected by increases in weighted average share counts due to the equity unit conversion in May 2005 and the Western Wireless merger as further discussed below.

~~EXHIBIT INDEX, Continued~~Discontinued Operations

~~Number~~As previously discussed, on July 17, 2006, Alltel completed the spin-off of its wireline telecommunications business to its stockholders and ~~Name~~the merger of that wireline business with Valor. In accordance with SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets”, the results of operations, assets, liabilities and cash flows of the wireline telecommunications business have been presented as discontinued operations for all periods presented. As a condition of receiving approval from the DOJ and FCC for its acquisition of Midwest Wireless, Alltel agreed on September 7, 2006 to divest four rural markets in Minnesota. During 2005, Alltel also had agreed to divest certain wireless operations of Western Wireless in 16 markets in Arkansas, Kansas and Nebraska, as well as the “Cellular One” brand as a condition of receiving approval from the DOJ and FCC for the merger with Western Wireless. On December 19, 2005, Alltel completed an exchange of wireless properties with U.S. Cellular that included a substantial portion of the divestiture requirements related to the Western Wireless merger. In December 2005, Alltel sold the Cellular One brand and in March 2006, Alltel sold the remaining market in Arkansas. During 2005, Alltel completed the sales of Western Wireless’ international operations in Georgia, Ghana and Ireland, and during the second quarter of 2006, Alltel completed the sales of the Western Wireless international operations in Austria, Bolivia, Côte d’Ivoire, Haiti and Slovenia. The acquired international operations and interests of Western Wireless and the domestic markets in Arkansas, Kansas, Minnesota, and Nebraska required to be divested by Alltel have been classified as discontinued operations in the accompanying consolidated financial statements for all periods presented.

(10)(o)(4)	Amendment No. 3 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(o)(4) to Form 10-Q for the period ended June 30, 2003).	*
(o)(5)	Amendment No. 4 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(o)(5) to Form 10-K for the fiscal year ended December 31, 2003).	*
(o)(6)	Amendment No. 5 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(o)(6) to Form 10-K for the fiscal year ended December 31, 2003).	*
(o)(7)	Amendment No. 6 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement) (incorporated herein by reference to Exhibit 10(o)(7) to Form 10-Q for the period ended June 30, 2004).	*
(o)(8)	Amendment No. 7 to ALLTEL Corporation 401(k) Plan (January 1, 2001 Restatement).	(a)
(11)	Statement Re: Computation of per share earnings.	(a)
(12)	Statement Re: Computation of ratios.	(a)
(21)	Subsidiaries of ALLTEL Corporation.	(a)
(23)	Consent of PricewaterhouseCoopers LLP.	(a)
(24)	Power of attorney.	(a)
31(a)	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	(a)
31(b)	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	(a)
32(a)	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	(a)
32(b)	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	(a)

The table presented below includes certain summary income statement information related to the wireline business, international operations and the domestic markets to be divested that have been reflected as discontinued operations for the years ended December 31:

* Incorporated herein by reference as indicated. (a) Filed herewith.


(Millions)	2006			2005			2004
Revenues and sales	$	1,839.3		$	3,369.8		$	2,947.2
Operating expenses		1,290.5			2,325.4			1,944.5
Operating income		548.8			1,044.4			1,002.7
Minority interest in consolidated entities		(6.0	)		(5.9	)		-
Other income, net		0.9			11.6			13.2
Interest expense		(9.1	)		(19.4	)		(19.4	)
Loss on sale of discontinued operations		(14.8	)		-			-
Income before taxes		519.8			1,030.7			996.5
Income tax expense		214.1			427.4			362.4
Income from discontinued operations	$	305.7		$	603.3		$	634.1

36 F-14

~~ALLTEL~~Operating expenses ~~CORPORATION~~for 2006 included an impairment charge of $30.5 million to reflect the fair value less cost to sell of the four rural markets in Minnesota required to be divested, and resulted in the write-down in the carrying values of goodwill and customer list allocated to these markets. The depreciation of long-lived assets related to the international operations and the domestic markets in Arkansas, Kansas and Nebraska to be divested ceased as of August 1, 2005, the date of Alltel’s merger with Western Wireless. Depreciation of long-lived assets and amortization of finite-lived intangible assets related to the four markets in Minnesota to be divested was not recorded subsequent to September 7, 2006, the date of Alltel’s agreement with the DOJ and FCC to divest these markets. The cessation of depreciation had the effect of reducing operating expenses by approximately $26.9 million in 2006 and $47.8 million in 2005. In connection with the sales of the international operations completed in the second quarter of 2006, Alltel recorded an after tax loss of $9.3 million. There was no gain or loss realized upon the sales of the international operations in Georgia, Ghana and Ireland and the domestic markets in Arkansas, Kansas and Nebraska.

~~FINANCIAL~~Income tax ~~SUPPLEMENT~~expense in 2006 reflected a tax benefit of $7.6 million due to the reversal TO of ~~ANNUAL~~income ~~REPORT~~tax ONcontingency ~~FORM~~reserves 10attributable to the spun-Koff wireline ~~FOR~~ business ~~THE~~and ~~YEAR~~sold ~~ENDED~~financial ~~DECEMBER~~services ~~31,~~division. Income tax expense in 2004 also reflected the reversal of $16.9 million of federal income tax contingency reserves attributable to the spun-off wireline business and sold financial services division and a foreign tax credit carryback benefit of $4.4 million that were recorded as a result of the IRS audits of Alltel’s consolidated federal income tax returns for the fiscal years 1997 through 2001. (See Note 14 to the consolidated financial statements for additional information regarding the discontinued operations.)

~~ALLTEL CORPORATION~~Cumulative Effect of Accounting Change

~~INDEX~~During the TOfourth ~~FINANCIAL~~quarter ~~SUPPLEMENT~~of 2005, the Company adopted Financial Accounting Standards TO Board ~~ANNUAL~~(“FASB”) ~~REPORT~~Interpretation ONNo. ~~FORM~~47, 10“Accounting for Conditional Asset Retirement Obligations” (“FIN 47”). Alltel evaluated the effects of FIN 47 on its operations and determined that, for certain buildings containing asbestos, the Company was legally obligated to remediate the asbestos if the Company were to abandon, sell or otherwise dispose of the buildings. In addition, for the former wireline operations acquired in Kentucky and Nebraska that were not subject to SFAS No. 71 “Accounting for the Effects of Certain Types of Regulation”, upon adoption of FIN 47, Alltel recorded a liability to reflect the legal obligation to properly dispose of chemically-Ktreated telephone poles ~~FOR~~ at the ~~THE~~time ~~YEAR~~they ~~ENDED~~were ~~DECEMBER~~removed 31from service. In accordance with federal and state regulations, ~~2004~~depreciation expense for Alltel’s former wireline operations that followed the accounting prescribed by SFAS No. 71 historically included an additional provision for cost of removal, and accordingly, the adoption of FIN 47 had no impact to these operations. The cumulative effect of this change in 2005 resulted in a non-cash charge of $7.4 million, net of income tax benefit of $4.6 million, and was included in net income for the year ended December 31, 2005.

Management's Discussion and Analysis of Financial Condition and Results of Operations		F-2 – F-36
Selected Financial Data		F-37 – F-38
Management's Responsibility for Financial Statements		F-39
Management's Report on Internal Control Over Financial Reporting		F-40
Report of Independent Registered Public Accounting Firm		F-41 – F-42
Annual Financial Statements:
Consolidated Statements of Income for the years ended December 31, 2004, 2003 and 2002		F-43
Consolidated Balance Sheets as of December 31, 2004 and 2003		F-44
Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002		F-45
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2004, 2003 and 2002		F-46
Notes to Consolidated Financial Statements		F-47 – F-77

Weighted Average Common Shares Outstanding

F-The weighted average number of common shares outstanding increased 12 percent in 2006 and 11 percent in 2005. The increases in weighted average shares in both 2006 and 2005 primarily reflected the issuance of approximately 54.3 million Alltel common shares to effect the August 1, 2005 merger with Western Wireless. The issuance of 24.5 million Alltel common shares to settle the purchase contract portion of the Company’s equity units on May 17, 2005 also contributed to the increases in the weighted average number of common shares outstanding in both 2006 and 2005. The increases in weighted average share counts attributable to the Western Wireless merger and the settlement of the equity unit purchase contracts were partially offset by the effects of Alltel’s repurchase of approximately 28.5 million of its common shares during the second half of 2006, as further discussed below under “Cash Flows from Financing Activities - Continuing Operations”.

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~Regulatory Matters

~~Executive~~Alltel is subject ~~Summary~~to regulation primarily by the FCC as a provider of Commercial Mobile ~~ALLTEL~~ Radio ~~Corporation~~Services (~~''ALLTEL''~~“CMRS”). orThe FCC’s regulatory oversight consists of ensuring that wireless service providers are complying with the ~~''Company''~~Communications Act of 1934, as amended (the “Communications Act”), isand athe ~~customer-focused~~FCC’s ~~communications~~regulations ~~company~~governing ~~providing~~ technical ~~wireless~~standards, ~~local~~spectrum ~~telephone~~usage, ~~long-distance~~license requirements, ~~Internet~~market structure, consumer protection, including public safety issues like enhanced 911 emergency service (“E-911”) and ~~high~~the Communications Assistance for Law Enforcement Act (“CALEA”), and environmental matters governing tower siting. State public service commissions are pre-~~speed~~empted ~~data~~under ~~services~~the toCommunications ~~more~~Act from regulatory ~~than~~ oversight ~~13 million~~of ~~residential~~wireless carriers’ market entry and ~~business~~retail ~~customers~~rates, inbut 26they ~~states~~are entitled to address certain terms and conditions of service offered by wireless service providers. ~~Among~~The ~~the~~nation’s ~~highlights~~telecommunications laws continue to be reviewed with bills introduced in ~~2004:~~Congress, rulemaking proceedings pending at the FCC and various state regulatory initiatives, the effects of which could significantly impact Alltel’s wireless telecommunications business in the future.

• Wireless customer growth was strong as ALLTEL added more than 600,000 net customers during the year, most of which were on postpay plans. Excluding the effects of acquisitions, the number of net new wireless customers increased 511,000 or 86 percent, from 2003. Primarily due to improvements in customer service levels, digital network expansion and ALLTEL's proactive retention strategies targeting customer contract extensions, wireless postpay churn decreased 35 basis points from 2003 to 1.74 percent, the lowest annual churn rate since 1998. Total churn, which includes prepay customer losses, was 2.23 percent for the year, a 36 basis point improvement from 2003.F-15

• Wireless service revenues increased 7 percent from 2003 driven by an 8 percent increase in retail revenues, reflecting ALLTEL's focus on quality customer growth, data revenues and ETC subsidies. Average revenue per customer increased to $48.13, the highest annual rate in four years. Retail minutes of use per wireless customer per month increased 32 percent from a year ago to 494 minutes.Universal Service

•To ensure affordable ~~Wireless~~access ~~segment~~to ~~income~~telecommunications ~~for~~services ~~2004~~throughout ~~increased~~the 2United ~~percent~~States, the ~~from~~FCC aand ~~year~~many ~~ago,~~state ~~reflecting~~commissions ~~the~~administer ~~growth~~universal inservice ~~retail~~programs. ~~revenues~~CMRS providers ~~noted~~are ~~above,~~required ~~partially~~to ~~offset~~contribute byto athe ~~decline~~federal inUSF ~~wholesale~~and ~~wireless~~are ~~revenues~~required to contribute to some state universal service funds. The rules and ~~increased~~methodology under ~~network~~which ~~costs~~carriers ~~attributable~~contribute to the ~~significant~~federal ~~growth~~fund inare ~~customer~~the ~~usage.~~subject ~~Wireless~~of ~~wholesale~~an ongoing ~~revenues~~FCC ~~decreased~~rulemaking 4in ~~percent~~which ~~year~~a change from the current interstate revenue-~~over-year~~based system to some other system based upon line capacity or utilized numbers is being considered. In the meantime, ~~primarily~~the ~~due~~FCC has increased the safe harbor percentage of a wireless carrier’s revenue subject to ~~lower~~a ~~analog~~federal universal service assessment from 28.5 percent to 37.1 percent and ~~TDMA~~clarified ~~minutes~~the alternative methods under which CMRS contribute to the fund. CMRS providers also are eligible to receive support from the federal USF if they obtain designation as an ETC. The collection and distribution of ~~use~~USF fees are under continual review by ~~other~~federal ~~carriers'~~and ~~customers~~state ~~roaming~~legislative onand ~~ALLTEL's~~regulatory ~~wireless~~bodies. ~~network~~A pending FCC proceeding, ~~partially~~for ~~offset~~example, bycould ~~continued~~change ~~growth~~the inway ~~CDMA~~universal ~~minutes~~service ofprograms ~~use~~are funded and the way these funds are disbursed to program recipients.

•The Company Inis ~~its~~designated ~~wireline~~as ~~business,~~an ~~ALLTEL~~ETC ~~added~~and ~~more~~receives ~~than~~USF ~~90,000~~support ~~high-speed~~from ~~data~~the ~~customers,~~federal ~~increasing~~fund in ~~ALLTEL's~~the ~~DSL~~following ~~customer~~states: ~~base~~Alabama, toArkansas, ~~approximately~~California, ~~243~~Colorado,~~000.~~ ~~During~~Florida, Georgia, ~~2004~~Iowa, ~~the~~Kansas, ~~Company~~Louisiana, ~~lost~~Michigan, ~~approximately~~Minnesota, 86Mississippi,~~000~~ ~~wireline~~Montana, Nebraska, ~~access lines~~Nevada, aNew ~~year-over-year~~Mexico, ~~decline~~North ofCarolina, ~~approximately~~North ~~2.8~~Dakota, ~~percent.~~South ~~Average~~Dakota, ~~revenue~~Texas, Virginia, ~~per~~West ~~wireline~~Virginia, ~~customer~~Wisconsin, ~~increased~~and 2Wyoming. ~~percent~~The ~~from~~Company aalso ~~year~~receives state universal ~~ago~~service tosupport ~~$65.87~~for ~~due~~certain ~~primarily~~product toofferings ~~growth~~ in ~~DSL~~Texas. ~~revenues~~The Communications ~~and~~Act ~~selling additional services~~ and ~~features~~FCC toregulations ~~existing~~require ~~wireline~~that ~~customers.~~universal ~~Wireline~~service ~~segment~~receipts be ~~income~~used ~~comparisons~~to ~~for~~provision, ~~2004~~maintain ~~were~~and ~~favorably~~upgrade ~~affected by~~ the ~~effects~~networks ofthat ~~strike-related~~provide ~~expenses~~the supported ~~of $14~~services.9 ~~million~~Additionally, ~~incurred~~the inCompany ~~2003.~~accepted Ascertain afederal ~~result~~and state reporting ofrequirements ~~ALLTEL's continued focus on controlling operating expenses~~ and ~~the~~other ~~favorable~~obligations ~~year-over-year~~as ~~comparisons~~a ~~attributable~~condition toof the ~~strike-related~~ETC designation. ~~expenses~~Currently, ~~wireline~~Alltel ~~segment~~receives ~~income~~approximately ~~for~~$65.0 ~~2004~~to ~~increased~~$70.0 5million of USF ~~percent~~support ~~from~~each ~~a year ago~~quarter.

• ALLTEL maintained its strong financial position while returning more than $1 billion in capital to shareholders. During 2004, ALLTEL paid out $467.6 million in dividends and repurchased 11.2 million of its common shares at a cost of $595.3 million, leaving $154.7 million remaining under the Company's $750.0 million stock repurchase program that expires at the end of 2005. At December 31, 2004, the Company had approximately $1 billion in cash and marketable securities.E-911

AsWireless service ~~further~~providers ~~discussed~~are ~~under~~required ~~''Pending~~by ~~Acquisitions~~the FCC to beprovide ~~Completed~~E-911 in ~~2005'',~~a ~~ALLTEL~~two-phased approach. ~~positioned~~In ~~its wireless~~phase ~~business~~one, ~~for~~carriers ~~future~~must, ~~growth~~within ~~opportunities~~six asmonths after receiving a request ~~result~~from ofa ~~the~~phase ~~Company's~~one ~~planned~~enabled ~~merger~~Public ~~with Western~~Safety ~~Wireless~~Answering ~~Corporation~~Point (~~''Western Wireless''~~“PSAP”)., ~~This~~deliver both ~~transaction,~~the ~~which~~caller’s isnumber ~~expected~~and tothe ~~close~~location ~~by mid-year~~of ~~2005,~~the iscell ~~significant~~site to ~~ALLTEL~~the inPSAP ~~several~~serving the ~~ways.~~geographic ~~First,~~territory itfrom ~~will~~which ~~increase~~the ~~ALLTEL's~~E-911 ~~wireless revenue~~call ~~mix~~originated. toIn ~~nearly~~phase ~~70 percent~~two, carriers ofthat ~~the~~have ~~Company's~~opted ~~total~~for ~~consolidated~~a ~~revenues.~~handset-based ~~Second,~~solution must determine the ~~transaction~~ location ~~will~~of ~~increase~~ the ~~Company's~~caller ~~retail~~within ~~position~~50 inmeters ~~markets~~for ~~where~~67 ~~ALLTEL~~percent ~~can~~of ~~bring~~the originated calls ~~significant~~ and ~~value~~150 tometers ~~customers~~for by95 ~~offering~~percent ~~competitive~~of ~~national~~the ~~rate~~originated ~~plans.~~calls ~~Third,~~and ~~this~~deploy Automatic ~~transaction~~ Location ~~will~~Identification ~~diversify~~(“ALI”) ~~ALLTEL's~~capable ~~wireless~~handsets ~~roaming~~according ~~revenue~~to ~~sources,~~specified thresholds ~~and,~~culminating aswith a ~~result~~requirement ofthat ~~offering multiple~~carriers ~~technologies,~~reach ~~the~~a ~~Company~~95% ~~will~~deployment level ~~become~~of ~~the~~ALI ~~leading~~capable ~~independent~~handsets ~~roaming~~within ~~partner~~their ~~for~~subscriber ~~the~~base ~~four national~~by ~~carriers~~December in31, 2005. Furthermore, ~~the~~on ~~markets~~April ~~served~~1, ~~by ALLTEL. Finally~~2005, ~~ALLTEL~~the ~~will~~FCC ~~enhance~~issued ~~its~~an ~~strategic options~~order asimposing ~~the~~an ~~wireless~~E-911 obligation ~~industry~~to ~~continues~~deliver toALI ~~restructure~~data ~~while~~on ~~preserving~~carriers ~~the~~providing ~~Company's~~only ~~strong~~roaming ~~financial position~~ services.

~~During~~Alltel began selling ALI-capable handsets in June 2002 and had complied with each of the intermediate handset deployment thresholds under the FCC’s order or otherwise obtained short-term relief from the FCC to facilitate certain acquisitions. On September 30, 2005, due to the ~~Company~~slowing ~~will~~pace ~~continue~~of customer migration to ~~face~~ALI-capable ~~significant~~handsets ~~challenges~~and ~~resulting~~lower ~~from~~than ~~competition~~forecasted inchurn, Alltel filed a request with the ~~telecommunications~~FCC ~~industry~~for ~~and~~a ~~changes~~waiver inof the ~~regulatory~~December ~~environment~~31, ~~including~~2005 ~~the~~requirement ~~effects~~to achieve 95 percent penetration of ALI-capable phones. The request included ~~potential~~ an explanation ~~changes~~of the Company’s compliance efforts to date and the ~~rules~~expected ~~governing~~date when ~~universal~~it ~~service~~will ~~and~~meet ~~inter~~the 95 percent penetration rate of ALI-~~carrier~~capable ~~compensation~~handsets, June 30, 2007. ~~In addressing~~A ~~competition~~number of other wireless carriers, ~~ALLTEL~~including ~~will~~large ~~continue~~national tocarriers and ~~focus~~CTIA-The ~~its~~Wireless ~~efforts~~Association (“CTIA”) on ~~improving~~behalf ~~customer~~of CMRS carriers in ~~service~~ general, ~~enhancing~~also sought relief from the ~~quality~~95 percent requirement. On January 5, 2007, the FCC issued a number of ~~its~~orders ~~networks~~denying ~~and~~certain ~~expanding~~of ~~its~~the ~~product~~waivers ~~and~~of ~~service~~the ~~offerings~~E-911 handset deployment requirement, including the waiver filed by the Company. The FCC’s order imposed reporting requirements on the Company and referred the issue of Alltel’s compliance with the rules to the FCC’s Enforcement Bureau for consideration of further action. While the Company seeks to resolve this matter, it cannot predict the outcome of any proceeding before the FCC’s Enforcement Bureau, although fines and new handset deployment thresholds are possible.

~~F-2~~ CALEA

~~ACQUISITIONS~~CALEA ~~Pending~~ requires ~~Acquisitions~~wireless carriers to beensure ~~Completed~~that ~~During~~their ~~2005 On~~networks ~~January 9,~~are ~~2005,~~capable ~~ALLTEL entered into an Agreement and Plan~~ of ~~Merger (the~~ ~~''Merger~~ accommodating ~~Agreement'') with~~lawful ~~Western~~intercept ~~Wireless~~requests ~~providing~~received ~~for~~from ~~the~~law ~~merger~~enforcement ~~of Western Wireless with and into a wholly-owned subsidiary of ALLTEL (the ''Merger'')~~agencies. ~~In the Merger, each share of Western Wireless common stock~~ ~~will~~ The beFCC ~~exchanged~~has ~~for~~imposed ~~.535~~various ~~shares~~obligations ~~of ALLTEL common stock~~ and ~~$9.25~~compliance indeadlines, ~~cash~~with ~~unless the shareholder~~which ~~makes~~ Alltel anhas ~~all-cash~~either orcomplied ~~all-stock election. Western Wireless shareholders making an all-stock~~ or ~~all-cash election may be subject to proration depending on elections made by shareholders. In the aggregate~~, ALLTEL will issue approximately 60 million shares of stock and pay approximately $1.0 billion in cash. A subsidiary of ALLTEL will also assume debt of approximately $2.2 billion, including $1.2 billion of term notes issued under Western Wireless' credit facility that, as a result of a change in control, will become due immediately upon the closing of the Merger. The transaction is valued at approximately $6 billion. As a result of the Merger, ALLTEL will add approximately 1.3 million domestic wireless customers (excluding reseller customers) in 19 midwestern and western states that are contiguous to the ~~Company's~~future ~~existing~~deadline ~~wireless properties, increasing the number~~ of ~~wireless customers~~May ~~served by ALLTEL to approximately 10 million. ALLTEL also will add wireless operations in nine new states~~14, ~~including California~~2007, ~~Idaho, Minnesota, Montana, Nevada, North Dakota, South~~for ~~Dakota,~~ Voice ~~Utah~~Over ~~and~~Internet ~~Wyoming,~~Protocol and ~~will~~Broadband ~~also~~Internet ~~significantly~~Access ~~expand~~Services ~~its~~under ~~wireless operations in Arizona, Colorado, New Mexico and Texas. In addition, ALLTEL will add approximately 1.6 million international wireless customers in six countries. Consummation of~~ the ~~Merger is subject to~~ ~~certain~~ FCC’s ~~conditions,~~May ~~including~~12, ~~without~~2006 ~~limitation~~order, ~~the~~will ~~approval~~comply ofwith ~~the~~CALEA ~~Merger by the stockholders of Western Wireless~~ and the ~~receipt of regulatory approvals. The transaction is expected to close~~FCC’s ~~by mid-year 2005~~ rules. ~~(See Note 18 to the consolidated financial statements for additional information regarding this pending merger.)~~

~~On November 26, 2004, ALLTEL and Cingular Wireless LLC (''Cingular''), a joint venture between SBC~~Inter-carrier Communications, Inc. and BellSouth Corporation, entered into a definitive agreement to exchange certain wireless assets. Under the terms of the agreement, Cingular will sell to ALLTEL former AT&T Wireless properties, including licenses, network assets, and subscribers, in selected markets in Kentucky, Oklahoma, Texas, Connecticut and Mississippi. Cingular will also sell to ALLTEL 20MHz of spectrum and network assets owned by AT&T Wireless in Wichita, Kansas and wireless spectrum in several counties in Georgia and Texas. In addition, ALLTEL and Cingular will exchange partnership interests, with Cingular receiving interests in markets including Wichita, Kansas; Kansas City, Missouri; Milwaukee, Wisconsin and several in Texas, and ALLTEL receiving more ownership in markets it manages in Michigan, Louisiana, and Toledo, Ohio. ALLTEL will also pay Cingular $170.0 million in cash. Completion of this transaction is contingent upon regulatory approval and is expected to occur in the second quarter of 2005. Compensation

~~Acquisitions Completed During 2004, 2003 and 2002~~Under ~~On December 1, 2004, ALLTEL completed~~ the ~~purchase of certain wireless assets from United States~~ ~~Cellular~~ 96 ~~Corporation~~Act ~~(''U.S. Cellular'')~~ and ~~TDS~~the ~~Telecommunications~~FCC’s ~~Corporation (''TDS Telecom'') for $148.2 million in cash~~rules, ~~acquiring~~CMRS ~~wireless~~providers ~~properties~~are ~~with~~subject a potential service area covering approximately 584,000 potential customers (''POPs'') in Florida and Ohio. The Company also purchased partnership interests in seven ALLTEL-operated markets in Georgia, Mississippi, North Carolina, Ohio and Wisconsin. Prior to ~~this~~certain ~~acquisition, ALLTEL owned an approximate 42 percent interest in~~requirements ~~the~~ governing ~~Georgia market, with a potential service area covering approximately 229,000 POPs, and ALLTEL owned a majority interest in~~ the ~~Mississippi,~~exchange ~~North~~of ~~Carolina,~~telecommunications ~~Ohio~~traffic ~~and~~with ~~Wisconsin~~other ~~markets~~carriers. OnThere ~~November 2,~~ is ~~2004, the Company purchased for $35.6 million in cash wireless properties with~~ a ~~potential~~ ~~service~~pending ~~area~~rulemaking ~~covering~~at ~~approximately 275,000 POPs in south Louisiana from SJI, a privately held company. During~~ the ~~fourth~~FCC ~~quarter~~addressing ofinter-carrier ~~2004~~compensation, ~~ALLTEL also acquired additional ownership interests in wireless properties in Louisiana and Wisconsin in~~ which ~~the Company owned a majority~~ ~~interest~~ could inimpact ~~exchange for $1.4 million in cash and a portion of the Company'~~Alltel’s ~~ownership~~future ~~interest~~costs ~~in a~~to ~~wireless~~provide ~~partnership serving the St~~service. Louis, Missouri market. Through these transactions, ALLTEL added approximately 92,000 wireless customers. Because all of the acquisitions were completed in the fourth quarter of 2004, the acquired operations did not have a significant effect on the Company's consolidated results of operations or cash flows for the year ended December 31, 2004.

On August 29, 2003, ALLTEL purchased for $22.8 million in cash a wireless property with a potential service area covering approximately 205,000 POPs in an Arizona Rural Service Area (''RSA''). During the third quarter of 2003, the Company also purchased for $5.7 million in cash additional ownership interests in wireless properties in Mississippi, New Mexico and Virginia in which the Company owned a majority interest. On April 1, 2003, the Company paid $7.5 million to increase its ownership interest from 43 percent to approximately 86 percent in a wireless property with a potential service area covering about 145,000 POPs in a Wisconsin RSA. On February 28, 2003, the Company purchased for $72.0 million in cash wireless properties with a potential service area covering approximately 370,000 POPs in southern Mississippi, from Cellular XL Associates (''Cellular XL''), a privately held company. On February 28, 2003, the Company also purchased for $60.0 million in cash the remaining ownership interest in wireless properties with a potential service area covering approximately 355,000 POPs in two Michigan RSAs. Prior to this acquisition, ALLTEL owned approximately 49 percent of the Michigan properties. Through the completion of these transactions, ALLTEL added approximately 147,000 wireless customers. F-16

~~F-3~~Wireless Spectrum

~~On August 1, 2002, ALLTEL completed its purchase of local telephone properties serving~~Alltel ~~approximately~~ holds ~~589,000~~FCC ~~wireline~~authorizations ~~customers~~for inCellular ~~Kentucky~~Radiotelephone ~~from~~Service ~~Verizon Communications Inc.~~ (~~''Verizon''~~“CRS”) for $1.93 billion in cash. The acquired wireline properties overlapped ALLTEL's existing wireless service in northeastern Kentucky and increased the Company's total access lines by approximately 23 percent to nearly 3.2 million wireline customers. On August 1, ~~2002, ALLTEL also completed its~~Personal ~~purchase~~ Communications ofService ~~substantially all of the wireless properties owned by CenturyTel, Inc.~~ (~~''CenturyTel''~~“PCS”) ~~for approximately $1.59 billion in cash. Through the completion of the transaction~~, ~~ALLTEL added properties representing approximately 8.3 million POPs, acquired approximately 762,000 customers, increasing its wireless customer base to more than 7.5 million customers,~~ and ~~expanded~~paging ~~its wireless footprint into new markets across Arkansas~~services, ~~Louisiana,~~as ~~Michigan,~~well ~~Mississippi,~~as ~~Texas and Wisconsin.~~ancillary ~~Also~~ authorizations ~~included~~ in the ~~transaction~~private ~~were~~radio ~~minority partnership interests in cellular operations representing approximately 1.8 million proportionate POPs,~~ and ~~Personal~~microwave ~~Communications~~services ~~Services~~ (~~''PCS'') licenses covering 1.3 million POPs in Wisconsin and Iowa. To fund the cost of these acquisitions~~collectively, ~~during~~ the ~~second quarter of 2002, ALLTEL sold 27.7 million equity units and received~~ ~~net~~ “FCC ~~proceeds of $1~~Licenses”).~~34 billion.~~ ~~In June 2002~~Generally, ~~the~~FCC ~~Company~~licenses ~~also~~are issued ~~$1.5 billion~~initially offor ~~unsecured long~~10-~~term~~year ~~debt~~terms and ~~consisting~~may ofbe ~~$800.0 million~~renewed offor ~~7.0 percent~~additional ~~senior~~10-year ~~notes~~terms ~~due~~upon ~~July 1,~~FCC ~~2012~~approval ~~and $700.0 million~~ of ~~7.875 percent~~the ~~senior notes due July 1, 2032. Net proceeds from this debt issuance were~~renewal $1 application.~~47 billion,~~ ~~after~~The ~~deducting~~Company ~~the~~has ~~underwriting~~routinely ~~discount~~sought and ~~other~~been ~~offering~~granted ~~expenses.~~renewal ~~The~~of ~~net~~its ~~proceeds~~ FCC ~~from~~Licenses ~~the~~without ~~issuance~~contest ofand ~~the~~anticipates ~~equity~~that ~~units~~future ~~and~~renewals ~~long-term debt~~ of ~~$2.81 billion~~its ~~were invested~~FCC ~~until~~ Licenses ~~completion~~will ofbe ~~the acquisitions~~granted.

The FCC conducts ~~accounts~~proceedings ~~and~~through ~~results~~which ofadditional ~~operations~~spectrum is made available for the provision of wireless communications services, including broadband services. The FCC recently completed the ~~acquired~~auction ~~wireline~~for ~~and~~Advanced ~~wireless~~Wireless ~~properties~~Services ~~discussed~~(“AWS”) ~~above~~ spectrum ~~are~~and ~~included~~must begin the auction of spectrum in the ~~accompanying~~700 ~~consolidated~~MHz ~~financial~~band ~~statements~~no ~~from~~later than January 28, 2008. Alltel did not participate in the ~~date~~AWS ~~of acquisition~~spectrum auction. The ~~(See~~FCC ~~Note~~is 3currently toconsidering the ~~consolidated~~spectrum ~~financial~~plan ~~statements~~and ~~for~~service ~~additional~~rules ~~information~~that will ~~regarding~~ be ~~these~~applicable ~~acquisitions~~to the 700 MHz spectrum.) Alltel has made no determination as to whether it will participate in the auction at this time.

CONSOLIDATED RESULTS OF OPERATIONS
(Millions, except per share amounts)	2004			2003			2002
Revenues and sales:
Service revenues	$	7,374.3		$	7,156.1		$	6,428.9
Product sales		871.8			823.8			683.5
Total revenues and sales		8,246.1			7,979.9			7,112.4
Costs and expenses:
Cost of services		2,374.2			2,273.6			2,039.0
Cost of products sold		1,075.5			1,043.5			891.3
Selling, general, administrative and other		1,524.2			1,498.1			1,297.0
Depreciation and amortization		1,299.7			1,247.7			1,095.5
Restructuring and other charges		50.9			19.0			69.9
Total costs and expenses		6,324.5			6,081.9			5,392.7
Operating income		1,921.6			1,898.0			1,719.7
Non-operating income (expense), net		22.9			(3.2	)		(5.3	)
Interest expense		(352.5	)		(378.6	)		(355.1	)
Gain on disposal of assets, write-down of investments and other		–			17.9			1.0
Income from continuing operations before income taxes		1,592.0			1,534.1			1,360.3
Income taxes		565.3			580.6			510.2
Income from continuing operations		1,026.7			953.5			850.1
Income from discontinued operations, net of income taxes		19.5			361.0			74.2
Cumulative effect of accounting change, net of income taxes		–			15.6			–
Net income	$	1,046.2		$	1,330.1		$	924.3

Customer Billing

Basic earnings per share:
Income from continuing operations	$	3.34	$	3.06	$	2.73
Income from discontinued operations		.06		1.16		.24
Cumulative effect of accounting change		–		.05		–
Net income	$	3.40	$	4.27	$	2.97
Diluted earnings per share:
Income from continuing operations	$	3.33	$	3.05	$	2.72
Income from discontinued operations		.06		1.15		.24
Cumulative effect of accounting change		–		.05		–
Net income	$	3.39	$	4.25	$	2.96

The FCC requires CMRS carriers to ensure that the descriptions of line items on customer bills are clear and not misleading and has declared that any representation of a discretionary item on a bill as a tax or government-mandated charge is misleading. The Federal Court of Appeals for the Eleventh Circuit has vacated an order of the FCC preempting states from requiring or prohibiting the use of line items on CMRS carriers’ bills and remanded the decision to the FCC for further proceedings. The FCC is also considering additional CMRS billing regulations.

~~F-4~~CMRS Roaming

~~Service revenues increased $218.2 million, or 3 percent, in 2004, primarily reflecting growth in~~The ~~ALLTEL's~~ FCC has ~~wireless~~initiated ~~customer~~a ~~base~~rulemaking ~~and~~proceeding ~~the corresponding increase of $333.8 million in wireless access revenues compared~~ to ~~2003.~~examine ~~Service revenues for 2004 also reflected growth in revenues derived from wireless and wireline data services and from~~ the ~~sale~~rules ofapplicable ~~enhanced~~to ~~communication services,~~roaming ~~including~~ relationships ~~caller~~between ~~identification, call waiting, call forwarding, voice mail, and wireless equipment protection plans~~carriers. ~~Revenues~~The ~~from~~FCC’s ~~data~~rules ~~and~~currently ~~enhanced~~require ~~services~~only ~~increased $78.5 million in 2004~~that ~~compared~~ manual toroaming ~~2003,~~be ~~primarily~~provided ~~reflecting~~by ~~continued~~a ~~demand~~carrier ~~for these services. Wireless service revenues in 2004 also included increased regulatory and other fees of $76.4 million compared~~ to ~~2003.~~ ~~Regulatory~~any ~~fees~~subscriber in ~~2004~~good ~~included Universal Service Fund (''USF'') support received by ALLTEL~~standing ~~pursuant to its certification in seven states as an Eligible Telecommunications Carrier (''ETC''),~~ with ~~and~~ their ~~accounted~~home ~~for~~market ~~$48~~carrier.~~2 million~~ ofAutomatic ~~the~~roaming ~~overall~~agreements, ~~increase~~although ~~in regulatory fees in 2004. Regulatory~~common ~~fees~~ throughout inthe ~~2004~~CMRS ~~also reflected additional amounts billed to customers to offset costs related to certain regulatory mandates~~industry, ~~including~~are ~~universal~~not ~~service~~currently ~~funding,~~mandated ~~primarily~~by ~~resulting from changes~~the ~~in Federal Communications Commission (''~~ FCC~~'') regulations applicable to universal service fees that were effective on April 1, 2003~~.

~~The above increases in service revenues in 2004 were partially offset by lower wireless airtime,~~Customer ~~retail~~ Proprietary ~~roaming~~Network and wholesale revenues, reductions in revenues derived from telecommunications information services and decreases in wireline access and toll service revenues. Compared to 2003, wireless airtime and retail roaming revenues decreased $122.2 million in 2004, primarily due to the effects of customers migrating to rate plans with a larger number of packaged minutes. For a flat monthly service fee, such rate plans provide customers with a specified number of airtime minutes and include unlimited weekend, nighttime and mobile-to-mobile minutes at no extra charge. Wholesale wireless revenues declined $15.1 million in 2004 compared to 2003 primarily due to lower analog and TDMA minutes of use by other carriers' customers roaming on ALLTEL's wireless network, partially offset by growth in CDMA minutes of use as other CDMA carriers direct wholesale traffic to ALLTEL's network. Telecommunications information services revenues decreased $67.1 million in 2004 compared to 2003, primarily due to the December 2003 sale of certain assets and related liabilities, including selected customer contracts and capitalized software development costs, to Convergys Information ~~Management Group, Inc.~~ (~~''Convergys''~~“CPNI”), and the loss in 2004 of one of ALLTEL's remaining unaffiliated wireline services customers. Revenues from long-distance and network management services decreased $15.2 million in 2004, primarily due to declining usage by residential customers and a reduction in intercompany and residential customer billing rates. Wireline local service and network access and toll revenues decreased $51.6 million in 2004, primarily as a result of the loss of wireline access lines and a $20.3 million reduction in high-cost funding received by ALLTEL's wireline subsidiaries under the USF program.

~~Service revenues increased $727.2 million, or 11 percent, in 2003.~~ The ~~acquisitions of wireless~~ ~~and wireline properties completed in 2003 and 2002 previously discussed accounted for approximately~~ FCC ~~$544.4 million~~ is ofconsidering ~~the overall increase~~ in ~~service~~a ~~revenues~~pending inrulemaking ~~2003. In addition to~~ the ~~effects~~protection of ~~the~~ ~~acquisitions, service revenues for 2003 also reflected increased wireless access revenues of $209.6 million resulting from nonacquisition-related~~ customer ~~growth, increased sales of ALLTEL's~~information ~~higher-yield national rate plans~~ and ~~continued~~call growth in average monthly minutes of use per customer. Service revenues for 2003 also reflected a $41.4 million increase in amounts billed to customers to offset costs related to certain regulatory mandatesrecords, including ~~Universal Service funding. Growth in revenues from~~ the ~~Company's~~adequacy ~~Internet operations~~ of ~~$12.8 million~~security ~~and~~measures ~~increased revenues~~employed ~~of $66.0 million derived from wireless and wireline data services and from the sale of~~by ~~enhanced~~ carriers ~~communications services also contributed~~ to ~~the~~protect ~~increase~~certain incustomer ~~service revenues in 2003~~information. ~~The~~Additional security ~~increase~~ requirements inbeing ~~service~~considered ~~revenues~~include incustomer ~~2003~~set ~~attributable to acquisitions~~passwords, ~~higher~~data ~~network usage~~encryption, ~~additional~~ ~~regulatory~~ audit ~~mandate fees billed to customers and growth in Internet~~trails, ~~wireless~~ data ~~and~~retention ~~enhanced communications~~limitations ~~services were partially offset by lower wireless airtime~~ and ~~retail~~customer ~~roaming~~notices ~~revenues~~ of ~~$110~~security breaches.~~7 million~~ Further, athe ~~reduction~~FCC inhas ~~intrastate~~initiated ~~network~~an ~~access~~ongoing ~~and~~investigation ~~toll revenues~~ of ~~$19.6 million due~~carrier to practices ~~the loss of wireline access lines, and a $10.2 million decrease in telecommunications information services revenues. Wireline access lines declined in both 2004 and 2003 primarily due~~ to ~~the~~protect ~~effects of broadband and wireless substitution~~CPNI.

~~Product sales increased $48.0 million, or 6 percent, in 2004 and $140.3 million, or 21 percent, in~~Analog 2003. The increase in product sales in 2004 was primarily driven by higher retail prices realized on the sale of wireless handsets that include advanced features, such as picture messaging, and that are capable of downloading games, entertainment content, weather and office applications. Compared to 2003, sales attributable to the Company's directory publishing operations increased $33.3 million, reflecting an increase in the number of directories published, including the initial publication of directories for the Kentucky and Nebraska operations, which had been previously outsourced. The increase in product sales in 2003 primarily resulted from higher retail prices realized on the sale of wireless handsets and accessories driven by growth in gross customer additions and increased retention efforts by the Company. The wireless and wireline acquisitions discussed above accounted for approximately $25.4 million of the overall increase in product sales in 2003. Product sales for 2003 also reflected increased sales of telecommunications and data products to non-affiliates of $60.0 million, primarily reflecting increased sales of wireless handsets to retailers and other distributors. Sunset

~~F-5~~Under current FCC rules, a carrier will not be required to offer analog wireless services after February 2008. This analog “sunset” rule is the subject of petitions seeking extension beyond 2008.

~~Cost of services increased $100.6 million, or 4 percent, in 2004 and $234.6 million, or 12 percent,~~Warn in Act/Emergency 2003. The increases in both years reflected higher wireless network-related costs and increased wireless regulatory fees. Compared to the prior year periods, wireless network-related costs increased $131.8 million in 2004 and $44.5 million in 2003 reflecting increased network traffic due to customer growth, increased minutes of use and expansion of network facilities. Cost of services for 2004 and 2003 also reflected increases in wireless regulatory fees of $12.7 million and $40.5 million, respectively, principally related to USF, reflecting changes in FCC regulations effective April 1, 2003. In addition, cost of services for 2004 also reflected increased wireless customer service expenses of $34.5 million, primarily reflecting additional costs associated with ALLTEL's initiatives designed to improve customer satisfaction and reduce postpay churn including subsidizing the cost of new handsets provided to existing customers before the expiration of their service contracts. Cost of services for 2004 also reflected decreased network-related costs for the wireline operations of $32.9 million, primarily due to the loss of wireline access lines and the effects of incremental strike-related expenses and maintenance costs incurred in 2003. During 2003, the Company incurred incremental expenses of approximately $14.9 million associated with a strike that began in early June and ended on October 1, 2003, when the Company signed a new collective bargaining agreement impacting approximately 400 ALLTEL employees in Kentucky represented by the Communications Workers of America. ALLTEL also incurred $6.0 million of additional maintenance costs in 2003 to repair damage caused by severe winter storms. Cost of services for 2004 was also favorably affected by reduced operating costs of $48.2 million, resulting from the sale of certain telecommunications information services operations to Convergys, as previously discussed. Alerts

InOn October ~~addition~~13, to2006, ~~higher~~the ~~wireless~~Warn ~~network-related~~Act ~~costs~~was ~~and~~signed ~~increased~~into ~~wireless~~law ~~regulatory~~which ~~fees,~~provides ~~cost~~that carriers of may, ~~services~~within ~~for~~two ~~2003~~years, ~~also~~voluntarily ~~reflected~~choose ~~the~~to ~~effects~~provide ofemergency ~~the~~alerts ~~acquisitions~~as part of ~~wireless and wireline~~ ~~properties~~ their ~~completed~~service inofferings ~~2003~~under standards and ~~2002,~~protocols ~~which~~adopted ~~accounted~~by ~~for~~the ~~approximately $214~~FCC.~~4 million~~ ~~of the~~The ~~overall~~ FCC ~~increase~~has inconvened ~~cost~~the ofindustry ~~services~~advisory incommittee ~~2003.~~required ~~Losses~~under ~~sustained from bad debts decreased $81.2 million in 2003, primarily reflecting~~ the ~~Company's~~Warn ~~continued efforts~~ Act to ~~monitor its customer~~ ~~credit~~ begin ~~policies,~~consideration ~~evaluate~~of ~~minimum~~technical ~~deposit~~standards ~~requirements for high-credit risk customers~~ and ~~improve collection~~operating ~~practices by adding new technologies and proactively managing the efforts of its collection agencies~~protocols.

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