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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

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

COMMISSION FILE NUMBER 1-9712

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UNITED STATES CELLULAR CORPORATION
(Exact name of Registrant as specified in its charter)
- --------------------------------------------------------------------------------

DELAWARE 62-1147325
- --------------------------------------- ---------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)

8410 WEST BRYN MAWR, SUITE 700, CHICAGO, ILLINOIS 60631
(Address of principal executive offices) (Zip code)

REGISTRANT'S TELEPHONE NUMBER: (773) 399-8900

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

Title of each class Name of each exchange on which
- ------------------------------------- registered
-------------------------------------
Common Shares, $1 par value American Stock Exchange
Liquid Yield Option Notes Due 2015 American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None
-------------------

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 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.

Yes __X__ No______

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ______

As of February 29, 2000, the aggregate market value of registrant's Common
Shares held by nonaffiliates was approximately $1.1 billion (based upon the
closing price of the Common Shares on February 29, 2000, of $66.94, as reported
by the American Stock Exchange).

The number of shares outstanding of each of the registrant's classes of
common stock, as of February 29, 2000, is 54,692,996 Common Shares, $1 par
value, and 33,005,877 Series A Common Shares, $1 par value.

DOCUMENTS INCORPORATED BY REFERENCE

Those sections or portions of the registrant's 1999 Annual Report to
Shareholders and of the registrant's Notice of Annual Meeting of Shareholders
and Proxy Statement for its Annual Meeting of Shareholders to be held May 17,
2000, described in the cross reference sheet and table of contents attached
hereto are incorporated by reference into Parts II and III of this report.

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CROSS REFERENCE SHEET
AND
TABLE OF CONTENTS

- --------------------------------------------------------------------------------

PAGE NUMBER
OR REFERENCE(1)
---------------

Item 1. Business.................................................... 3
Item 2. Properties.................................................. 24
Item 3. Legal Proceedings........................................... 24
Item 4. Submission of Matters to a Vote of Security Holders......... 24
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 25(2)
Item 6. Selected Financial Data..................................... 25(3)
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 25(4)
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk...................................................... 25(4)
Item 8. Financial Statements and Supplementary Data................. 25(5)
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 25
Item 10. Directors and Executive Officers of the Registrant.......... 26(6)
Item 11. Executive Compensation...................................... 26(7)
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................ 26(8)
Item 13. Certain Relationships and Related Transactions.............. 26(9)
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K....................................................... 27

- ---------

(1) Parenthetical references are to information incorporated by reference from
Exhibit 13, which includes portions of the registrant's Annual Report to
Shareholders for the year ended December 31, 1999 ("Annual Report") and from
the registrant's Notice of Annual Meeting of Shareholders and Proxy
Statement for its Annual Meeting of Shareholders to be held on May 17, 2000
(the "Proxy Statement").

(2) Annual Report section entitled "United States Cellular Stock and Dividend
Information."

(3) Annual Report section entitled "Selected Consolidated Financial Data."

(4) Annual Report section entitled "Management's Discussion and Analysis of
Results of Operations and Financial Condition."

(5) Annual Report sections entitled "Consolidated Quarterly Income Information
(Unaudited)," "Consolidated Statements of Operations," "Consolidated
Statements of Cash Flows," "Consolidated Balance Sheets," "Consolidated
Statements of Changes in Common Shareholders' Equity," "Notes to
Consolidated Financial Statements" and "Report of Independent Public
Accountants."

(6) Proxy Statement sections entitled "Election of Directors" and "Executive
Officers."

(7) Proxy Statement section entitled "Executive Compensation," except for the
information specified in Item 402(a)(8) of Regulation S-K under the
Securities Exchange Act of 1934, as amended.

(8) Proxy Statement section entitled "Security Ownership of Certain Beneficial
Owners and Management."

(9) Proxy Statement section entitled "Certain Relationships and Related
Transactions."

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UNITED STATES CELLULAR CORPORATION

8410 WEST BRYN MAWR - CHICAGO, ILLINOIS 60631
TELEPHONE (773) 399-8900

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PART I
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ITEM 1. BUSINESS

THE COMPANY

United States Cellular Corporation (the "Company") provides cellular
telephone service to 2,602,000 customers through 139 majority-owned and managed
("consolidated") cellular systems serving approximately 17% of the geography and
approximately 9% of the population of the United States. Since 1985, when the
Company began providing cellular service in Knoxville, Tennessee, the Company
has expanded its cellular networks and customer service operations to cover 145
markets in 26 states as of December 31, 1999. In total, the Company now operates
eight market clusters, of which four have a total population of more than two
million, and each of which has a total population of more than one million.
Overall, 91% of the Company's 26.4 million population equivalents are in markets
which are consolidated, 1% are in managed but not consolidated markets and 8%
are in markets in which the Company holds an investment interest.

The Company is the eighth largest wireless company in the United States,
based on the aggregate number of customers in its consolidated markets. The
Company's corporate development strategy is to operate controlling interests in
cellular market licensees in areas adjacent to or in proximity to its other
markets, thereby building clusters of operating markets. Customers benefit from
larger service areas such as these, which provide longer uninterrupted service
and the ability to make outgoing calls and receive incoming calls within the
designated area without special roaming arrangements. In addition, the Company
anticipates that clustering will continue to provide the Company certain
economies in its capital and operating costs. Over the past few years, the
Company has completed exchanges of controlling interests in its less strategic
markets for controlling interests in markets which better complement its
clusters. The Company has also completed outright sales of other less strategic
markets, and has purchased controlling interests in markets which enhance its
clusters.

The following table summarizes the status of the Company's interests in
cellular markets at December 31, 1999.

Owns Majority Interest and Manages.......................... 139
Owns Minority Interest and Manages.......................... 6
---
Total Markets Managed by the Company........................ 145
Markets Managed by Others (1)............................... 35
---
Total Markets............................................... 180
===

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(1) Represents markets in which the Company owns a minority or other
noncontrolling interest and which are managed by third parties; as of
December 31, 1999, the Company accounted for its interests in 29 of these
markets using the equity method and accounted for the remaining six markets
using the cost method.

Cellular systems in the Company's 139 majority-owned and managed markets
served 2,602,000 customers at December 31, 1999, and contained 2,300 cell sites.
The average penetration rate in the Company's consolidated markets was 10.39% at
December 31, 1999, and

the churn rate in all consolidated markets averaged 2.1% per month for the
twelve months ended December 31, 1999.

The Company was incorporated in Delaware in 1983. The Company's executive
offices are located at 8410 West Bryn Mawr, Chicago, Illinois 60631. Its
telephone number is 773-399-8900. The Common Shares of the Company are listed on
the American Stock Exchange under the symbol "USM." The Company's Liquid Yield
Option Notes ("LYONs") are also listed on the American Stock Exchange.

Unless the context indicates otherwise: (i) references to the "Company"
refer to United States Cellular Corporation and its subsidiaries;
(ii) references to "TDS" refer to Telephone and Data Systems, Inc. and its
subsidiaries; (iii) references to "MSA" or to a particular city refer to the
Metropolitan Statistical Area, as designated by the U.S. Office of Management
and Budget and used by the Federal Communications Commission ("FCC") in
designating metropolitan cellular market areas; (iv) references to "RSA" refer
to the Rural Service Area, as used by the FCC in designating non-MSA cellular
market areas; (v) references to cellular "markets" or "systems" refer to MSAs,
RSAs or both; (vi) references to "population equivalents" mean the population of
a market, based on 1999 Claritas estimates, multiplied by the percentage
interests that the Company owns or has the right to acquire in an entity
licensed, designated to receive a license or expected to receive a construction
permit ("licensee") from the FCC to construct or operate a cellular system in
such market.

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR CAUTIONARY STATEMENT

This Annual Report on Form 10-K, including exhibits, contains statements
that are not based on historical fact, including the words "believes",
"anticipates", "intends", "expects" and similar words. These statements
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
actual results, events or developments to be significantly different from any
future results, events or developments expressed or implied by such
forward-looking statements. Such factors include:

- general economic and business conditions, both nationally and in the
regions in which the Company operates;

- technology changes;

- competition;

- changes in business strategy or development plans;

- changes in governmental regulations;

- our ability and the ability of our third-party suppliers to take
corrective action in a timely manner with respect to the Year 2000 Issue;

- availability of future financing; and

- changes in growth in cellular customers, penetration rates and churn
rates.

CELLULAR TELEPHONE OPERATIONS

THE CELLULAR TELEPHONE INDUSTRY. Cellular telephone technology provides
high-quality, high-capacity communications services to in-vehicle and hand-held
portable cellular telephones. Cellular technology is a major improvement over
earlier mobile telephone technologies. Cellular telephone systems are designed
for maximum mobility of the customer. Access is provided through system
interconnections to local, regional, national and world-wide telecommunications
networks. Cellular telephone systems also offer a full range of ancillary
services such as conference calling, call-waiting, call-forwarding, voice mail,
Internet access, facsimile and data transmission.

Cellular telephone systems divide each service area into smaller geographic
areas or "cells." Each cell is served by radio transmitters and receivers
operating on discrete radio frequencies

licensed by the FCC. All of the cells in a system are connected to a
computer-controlled Mobile Telephone Switching Office ("MTSO"). The MTSO is
connected to the conventional "landline" telephone network and potentially other
MTSOs. Each conversation on a cellular phone involves a transmission over a
specific set of radio frequencies from the cellular phone to a
transmitter/receiver at a cell site. The transmission is forwarded from the cell
site to the MTSO and from there may be forwarded to the landline telephone
network to complete the call. As the cellular telephone moves from one cell to
another, the MTSO determines radio signal strength and transfers ("hands off")
the call from one cell to the next. This hand-off is not noticeable to either
party on the phone call.

The FCC currently grants only two licenses to provide cellular telephone
service in each market. However, competition for customers includes competing
communications technologies such as conventional landline and mobile telephone,
Specialized Mobile Radio ("SMR") systems and radio paging. Personal
Communications Service ("PCS") has become available in many areas of the United
States, including the majority of the Company's markets, and the Company expects
PCS operators to continue deployment of PCS in portions of all of the Company's
clusters through 2000. Additionally, technologies such as Enhanced Specialized
Mobile Radio ("ESMR") are proving to be competitive with cellular service in
certain of the Company's markets.

The services available to cellular customers and the sources of revenue
available to cellular system operators are similar to those provided by
conventional landline telephone companies. Customers may be charged a separate
fee for system access, airtime, long-distance calls and ancillary services.
Cellular system operators often provide service to customers of other operators'
cellular systems while the customers are temporarily located within the
operators' service areas. Customers using service away from their home system
are called "roamers." Roaming is available because technical standards require
that analog cellular telephones be compatible in all market areas in the United
States. Additionally, because the Company has deployed digital technologies in
many of its service areas, its customers with digital or dual-mode (both analog
and digital capabilities) wireless telephones can roam in other companies'
service areas which have a compatible digital technology in place. Likewise, in
its service areas with digital technologies in place, the Company can provide
roaming service to other companies' customers who have compatible digital
wireless telephones. This type of roaming is not limited to cellular customers
and systems; PCS customers and systems have this roaming capability as well. In
all cases, the system that provides the service to roamers will generate usage
revenue. Many operators, including the Company, charge premium rates for this
roaming service.

There have been a number of technical developments in the cellular industry
since its inception. Currently, while most companies' MTSOs process information
digitally, on certain cellular systems the radio transmission is done on an
analog basis. Several years ago, certain digital transmission techniques were
approved for implementation by the cellular industry. Time Division Multiple
Access ("TDMA") technology was selected as one industry standard by the cellular
industry and has been deployed by many wireless operators, including the
Company's operations in portions of several clusters. Another digital
technology, Code Division Multiple Access ("CDMA"), is also being deployed by
the Company in portions of several clusters. Digital radio technology offers
several advantages, including greater privacy, less transmission noise, greater
system capacity and potentially lower incremental costs to accomodate additional
system usage. The conversion from analog to digital radio technology is
continuing on an industry-wide basis; however, this process is expected to take
a number of years. PCS operators have deployed TDMA, CDMA and a third digital
technology, Global System for Mobile Communication ("GSM"), in the markets where
they have begun operations.

The cellular telephone industry is characterized by high initial fixed
costs. Accordingly, if and when revenues less variable costs exceed fixed costs,
incremental revenues should yield an operating profit. The amount of profit, if
any, under such circumstances is dependent on, among other things, prices and
variable marketing costs which in turn are affected by the amount and extent of
competition. Until technological limitations on total capacity are approached,
additional cellular system capacity can normally be added in increments that
closely match demand and at less than the proportionate cost of the initial
capacity.

THE COMPANY'S OPERATIONS. From its inception in 1983 until 1993, the
Company was principally in a start-up phase. Until 1993, the Company's
activities were concentrated significantly on the acquisition of interests in
cellular licensees and on the construction and initial operation of cellular
systems. The development of a cellular system is capital-intensive and requires
substantial investment prior to and subsequent to initial operation. The Company
experienced operating losses and net losses from its inception until 1993. In
the years since 1993, the Company has generated operations-driven net income and
significantly increased its operating cash flows. Management anticipates further
growth in cellular units in service and revenues as the Company continues to
expand through internal growth. Marketing and system operations expenses
associated with this expansion may reduce the rate of growth in operating cash
flows and operating income during the period of additional growth. In addition,
the Company anticipates that the seasonality of revenue streams and operating
expenses may cause the Company's operating income to vary from quarter to
quarter.

While the Company has produced operating income and net income since 1993,
changes in any of several factors may reduce the Company's growth in operating
income and net income over the next few years. These factors include:

- the growth rate in the Company's customer base;

- the usage and pricing of cellular services;

- the churn rate;

- the cost of providing cellular services, including the cost of attracting
new customers;

- continued competition from PCS and other technologies; and

- continuing technological advances which may provide additional competitive
alternatives to cellular service.

The Company is building a substantial presence in selected geographic areas
throughout the United States where it can efficiently integrate and manage
cellular telephone systems. Its cellular interests include regional market
clusters in the following areas:

Midwest Regional Market Cluster

- Western Wisconsin/Northern Illinois

- Eastern Wisconsin

- Missouri/Illinois/Indiana

- Eastern Iowa

- Western Iowa

Mid-Atlantic Regional Market Cluster

- Eastern North Carolina/South Carolina

- Virginia/North Carolina

- West Virginia/Maryland/Pennsylvania/Ohio

Northwest Regional Market Cluster

- Washington/Oregon/Idaho

- Oregon/California

Maine/New Hampshire/Vermont Market Cluster

Florida/Georgia Market Cluster

Texas/Oklahoma/Missouri/Kansas Regional Market Cluster

- Oklahoma/Missouri/Kansas

- Texas/Oklahoma

Eastern Tennessee/Western North Carolina Market Cluster

Southern Texas Market Cluster

See "The Company's Cellular Interests." The Company has acquired its cellular
interests through the wireline application process (16%), including settlements
and exchanges with other applicants, and through acquisitions (84%), including
acquisitions from TDS and third parties.

CELLULAR SYSTEMS DEVELOPMENT

ACQUISITIONS, DIVESTITURES AND EXCHANGES. The Company assesses its cellular
holdings on an ongoing basis in order to maximize the benefits derived from
clustering its markets. Over the past few years, the Company has completed
exchanges of controlling interests in its less strategic markets for controlling
interests in markets which better complement its clusters. The Company has also
completed outright sales of other less strategic markets, and has purchased
controlling interests in markets which enhance its clusters. As a result, the
Company has not substantially increased its population equivalents during the
past five years, but has shifted the balance of its holdings between investment
and operating interests so that currently over 90% of the Company's interests
are in markets where it is the operator.

Recently, the pace of acquisitions, exchanges and divestitures has slowed as
industry-wide consolidation has reduced the number of markets available for
acquisition. The Company may continue to make opportunistic acquisitions or
exchanges in markets that further strengthen its market clusters and in other
attractive markets. The Company also seeks to acquire minority interests in
markets where it already owns the majority interest and/or operates the market.
There can be no assurance that the Company, or TDS for the benefit of the
Company, will be able to negotiate additional acquisitions or exchanges on terms
acceptable to it or that regulatory approvals, where required, will be received.
The Company plans to retain minority interests in certain cellular markets which
it believes will earn a favorable return on investment. Other minority interests
may be exchanged for interests in markets which enhance the Company's market
clusters or may be sold for cash or other consideration. The Company also
continues to evaluate the disposition of certain managed interests which are not
essential to its corporate development strategy.

COMPLETED ACQUISITIONS. During 1999, the Company purchased a majority
interest in one market and several minority interests in markets in which the
Company currently owns a majority interest, representing approximately 245,000
population equivalents, for $31.5 million in cash.

COMPLETED DIVESTITURES. During 1999, the Company sold a majority interest
in one market and minority interests in three markets, representing
approximately 612,000 population equivalents, for cash and receivables totaling
$59.7 million.

PENDING ACQUISITIONS AND DIVESTITURE. As of December 31, 1999, the Company
had agreements pending to acquire a majority interest in one market and a
minority interest in another market in which it currently owns a majority
interest, representing an aggregate of 160,000 population equivalents, in
exchange for $24.0 million in cash and the issuance of approximately 28,000 USM
Common Shares. Also at December 31, 1999, the Company had an agreement pending
to divest a minority interest in one market, representing 114,000 population
equivalents, for $22.5 million in cash. The Company expects all of the pending
transactions to be completed in the first half of 2000.

The Company maintains shelf registration of its Common Shares and Preferred
Stock under the Securities Act of 1933 for issuance specifically in connection
with acquisitions.

The Company is a majority-owned subsidiary of TDS. TDS owns 80.7% of the
combined total of the outstanding Common Shares and Series A Common Shares of
the Company and controls 95.6% of the combined voting power of both classes of
common stock.

CELLULAR INTERESTS AND CLUSTERS

The Company operates clusters of adjacent cellular systems in nearly all of
its markets, enabling its customers to benefit from larger service areas than
otherwise possible. Where the Company offers wide-area coverage, its customers
enjoy uninterrupted service within the designated area. Customers may also make
outgoing calls and receive incoming calls within this area without special
roaming arrangements. In addition to benefits to customers, clustering also has
provided to the Company certain economies in its capital and operating costs.
These economies are made possible through increased sharing of facilities,
personnel and other costs and have resulted in a reduction of the Company's per
customer cost of service. The extent to which the Company benefits from these
revenue enhancements and economies of operation is dependent on market
conditions, population size of each cluster and engineering considerations.

The Company may continue to make opportunistic acquisitions and exchanges
which will complement its established market clusters. From time to time, the
Company may also consider exchanging or selling its interests in markets which
do not fit well with its long-term strategies.

The Company owned interests in cellular telephone systems in 180 markets at
December 31, 1999, representing 26,395,000 population equivalents. Including the
interest to be purchased and the interest to be sold during 2000, the Company
owned or had the right to acquire 180 markets, representing 26,362,000
population equivalents, at December 31, 1999. The following table summarizes the
changes in the Company's population equivalents in recent years.

DECEMBER 31,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
(THOUSANDS OF POPULATION EQUIVALENTS) (1)

Operational Markets:
Majority-Owned and Managed...................... 24,079 23,825 23,051 20,625 20,325
Minority-Owned and Managed (2).................. 306 358 405 405 516
Majority-Owned Markets to be Managed, Net of
Markets to be Divested:(2)(3)................... -- -- -- 221 274
------ ------ ------ ------ ------
Total Markets Managed and to be Managed........... 24,385 24,183 23,456 21,251 21,115
Minority Interests in Markets Managed by Others... 1,977 2,166 2,163 4,614 4,115
------ ------ ------ ------ ------
Total........................................... 26,362 26,349 25,619 25,865 25,230
====== ====== ====== ====== ======

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(1) Based on 1999 Claritas estimates for all years.

(2) Includes markets where the Company has the right to acquire an interest but
does not currently own an interest.

(3) Includes markets which are operational but which are currently managed by
third parties.

The following section details the Company's cellular interests, including
those it owned or had the right to acquire as of December 31, 1999. The table
presented therein lists clusters of markets that the Company manages. The
Company's market clusters show the areas in which the Company is currently
focusing its development efforts. These clusters have been devised with a
long-term goal of allowing delivery of cellular service to areas of economic
interest and along corridors of economic activity. The number of population
equivalents represented by the Company's cellular interests may have no direct
relationship to the number of potential cellular customers or the revenues that
may be realized from the operation of the related cellular systems.

THE COMPANY'S CELLULAR INTERESTS

The table below sets forth certain information with respect to the interests
in cellular markets which the Company owned or had the right to acquire pursuant
to definitive agreements as of December 31, 1999.

TOTAL
PERCENTAGE CURRENT
CHANGE AND
CURRENT PURSUANT TO ACQUIRABLE
1999 PERCENTAGE DEFINITIVE POPULATION
CLUSTER/MARKET POPULATION INTEREST AGREEMENTS (1) TOTAL EQUIVALENTS
-------------- ---------- ---------- -------------- -------- -----------

MARKETS MANAGED BY THE COMPANY:

MIDWEST REGIONAL MARKET CLUSTER:
WESTERN WISCONSIN/NORTHERN ILLINOIS:
Madison, WI........................ 428,000 92.50% 92.50% 396,000
Appleton, WI....................... 346,000 100.00 100.00 346,000
Jo Daviess (IL 1).................. 318,000 100.00 100.00 318,000
Rockford, IL....................... 308,000 100.00 100.00 308,000
Wood (WI 7)........................ 291,000 100.00 100.00 291,000
Vernon (WI 8)...................... 238,000 100.00 100.00 238,000
Green Bay, WI...................... 217,000 100.00 100.00 217,000
Janesville-Beloit, WI.............. 151,000 95.44 95.44 144,000
Door (WI 10)....................... 129,000 100.00 100.00 129,000
La Crosse, WI...................... 103,000 95.11 95.11 98,000
Trempealeau (WI 6) (2)............. 84,000 100.00 100.00 84,000
Pierce (WI 5) (2).................. 14,000 100.00 100.00 14,000
---------- ----------
2,627,000 2,583,000
---------- ----------
EASTERN WISCONSIN:
Milwaukee, WI...................... 1,458,000 100.00 100.00 1,458,000
Columbia (WI 9).................... 390,000 100.00 100.00 390,000
Racine, WI......................... 187,000 91.88 91.88 171,000
Kenosha, WI........................ 145,000 99.32 99.32 144,000
Sheboygan, WI...................... 111,000 94.62 94.62 105,000
---------- ----------
2,291,000 2,268,000
---------- ----------
MISSOURI/ILLINOIS/INDIANA:
Peoria, IL......................... 345,000 100.00 100.00 345,000
Adams (IL 4) * (2)................. 212,000 100.00 100.00 212,000
Mercer (IL 3)...................... 202,000 100.00 100.00 202,000
Miami (IN 4) *..................... 181,000 85.71 85.71 155,000
Moniteau (MO 11)................... 152,000 100.00 100.00 152,000
Columbia, MO *..................... 131,000 100.00 100.00 131,000
Stone (MO 15)...................... 121,000 100.00 100.00 121,000
Laclede (MO 16).................... 103,000 100.00 100.00 103,000
Washington (MO 13)................. 97,000 100.00 100.00 97,000
Callaway (MO 6) *.................. 86,000 100.00 100.00 86,000
Shannon (MO 17).................... 57,000 100.00 100.00 57,000
Schuyler (MO 3).................... 56,000 100.00 100.00 56,000
Linn (MO 5) (2).................... 54,000 100.00 100.00 54,000
Warren (IN 5) *.................... 125,000 33.33 33.33 42,000
Alton, IL *........................ 21,000 100.00 100.00 21,000
---------- ----------
1,943,000 1,834,000
---------- ----------
EASTERN IOWA:
Davenport, IA-IL................... 358,000 97.37 97.37 349,000
Cedar Rapids, IA................... 184,000 96.43 96.43 177,000
Iowa (IA 6)........................ 157,000 100.00 100.00 157,000

Muscatine (IA 4)................... 153,000 100.00% 100.00% 153,000
Waterloo-Cedar Falls, IA........... 144,000 93.03 93.03 134,000
Hardin (IA 11)..................... 113,000 100.00 100.00 113,000
Jackson (IA 5)..................... 108,000 100.00 100.00 108,000
Kossuth (IA 14).................... 106,000 100.00 100.00 106,000
Iowa City, IA...................... 103,000 100.00 100.00 103,000
Dubuque, IA........................ 88,000 95.51 95.51 84,000
Mitchell (IA 13)................... 66,000 100.00 100.00 66,000
Monroe (IA 3)...................... 90,000 49.00 49.00 44,000
Winneshiek (IA 12)................. 115,000 24.50 24.50 28,000
---------- ----------
1,785,000 1,622,000
---------- ----------
WESTERN IOWA:
Des Moines, IA..................... 441,000 100.00 100.00 441,000
Humboldt (IA 10)................... 181,000 100.00 100.00 181,000
Lyon (IA 16)....................... 103,000 100.00 100.00 103,000
Mills (IA 1)....................... 63,000 100.00 100.00 63,000
Audubon (IA 7)..................... 55,000 100.00 100.00 55,000
Union (IA 2)....................... 50,000 100.00 100.00 50,000
Ida (IA 9) *....................... 63,000 16.67 16.67 10,000
---------- ----------
956,000 903,000
---------- ----------
TOTAL MIDWEST REGIONAL MARKET
CLUSTER......................... 9,602,000 9,210,000
========== ==========

MID-ATLANTIC REGIONAL MARKET CLUSTER:
EASTERN NORTH CAROLINA/SOUTH
CAROLINA:
Harnett (NC 10).................... 306,000 100.00 100.00 306,000
Rockingham (NC 7).................. 297,000 100.00 100.00 297,000
Northampton (NC 8)................. 293,000 100.00 100.00 293,000
Greenville (NC 14)................. 252,000 100.00 100.00 252,000
Greene (NC 13)..................... 249,000 100.00 100.00 249,000
Hoke (NC 11)....................... 231,000 100.00 100.00 231,000
Wilmington, NC..................... 223,000 96.79 96.79 216,000
Chesterfield (SC 4)................ 216,000 100.00 100.00 216,000
Chatham (NC 6)..................... 169,000 81.20 18.80% 100.00 169,000
Jacksonville, NC................... 143,000 97.53 97.53 139,000
Sampson (NC 12).................... 137,000 100.00 100.00 137,000
Camden (NC 9)...................... 121,000 100.00 100.00 121,000
---------- ----------
2,637,000 2,626,000
---------- ----------
VIRGINIA/NORTH CAROLINA:
Roanoke, VA........................ 232,000 100.00 100.00 232,000
Giles (VA 3)....................... 202,000 100.00 100.00 202,000
Bedford (VA 4)..................... 179,000 100.00 100.00 179,000
Ashe (NC 3)........................ 165,000 100.00 100.00 165,000
Lynchburg, VA...................... 159,000 100.00 100.00 159,000
Charlottesville, VA................ 151,000 95.37 95.37 144,000
Buckingham (VA 7).................. 91,000 100.00 100.00 91,000
Tazewell (VA 2) (2)................ 82,000 100.00 100.00 82,000

Bath (VA 5)........................ 61,000 100.00% 100.00% 61,000
---------- ----------
1,322,000 1,315,000
---------- ----------
WEST VIRGINIA/MARYLAND/
PENNSYLVANIA/OHIO:
Monongalia (WV 3) *................ 266,000 100.00 100.00 266,000
Raleigh (WV 7) *................... 252,000 100.00 100.00 252,000
Grant (WV 4) *..................... 178,000 100.00 100.00 178,000
Tucker (WV 5) *.................... 131,000 100.00 100.00 131,000
Hagerstown, MD *................... 128,000 100.00 100.00 128,000
Ross (OH 9) *...................... 251,000 49.00 49.00 123,000
Cumberland, MD *................... 98,000 100.00 100.00 98,000
Bedford (PA 10) * (2).............. 50,000 100.00 100.00 50,000
Garrett (MD 1) *................... 29,000 100.00 100.00 29,000
---------- ----------
1,383,000 1,255,000
---------- ----------
TOTAL MID-ATLANTIC REGIONAL MARKET
CLUSTER......................... 5,342,000 5,196,000
========== ==========

NORTHWEST REGIONAL MARKET CLUSTER:
WASHINGTON/OREGON/IDAHO:
Clark (ID 6)....................... 298,000 100.00 100.00 298,000
Yakima, WA *....................... 216,000 87.81 87.81 189,000
Pacific (WA 6) *................... 187,000 100.00 100.00 187,000
Richland-Kennewick-Pasco, WA *..... 185,000 100.00 100.00 185,000
Butte (ID 5) (3)................... 168,000 100.00 100.00 168,000
Okanogan (WA 4).................... 118,000 100.00 100.00 118,000
Umatilla (OR 3) *.................. 151,000 76.39 76.39 115,000
Kittitas (WA 5) * (2).............. 73,000 98.24 98.24 72,000
Hood River (OR 2) *................ 75,000 65.29 65.29 49,000
Skamania (WA 7) *.................. 29,000 65.29 65.29 19,000
---------- ----------
1,500,000 1,400,000
---------- ----------
OREGON/CALIFORNIA:
Coos (OR 5)........................ 261,000 100.00 100.00 261,000
Del Norte (CA 1)................... 210,000 100.00 100.00 210,000
Crook (OR 6) *..................... 203,000 100.00 100.00 203,000
Medford, OR *...................... 175,000 100.00 100.00 175,000
Mendocino (CA 9)................... 140,000 100.00 100.00 140,000
Modoc (CA 2)....................... 64,000 100.00 100.00 64,000
---------- ----------
1,053,000 1,053,000
---------- ----------
TOTAL NORTHWEST REGIONAL MARKET
CLUSTER......................... 2,553,000 2,453,000
========== ==========

MAINE/NEW HAMPSHIRE/VERMONT MARKET
CLUSTER:
Manchester-Nashua, NH.............. 366,000 93.07 93.07 341,000
Coos (NH 1) *...................... 223,000 100.00 100.00 223,000
Kennebec (ME 3).................... 222,000 100.00 100.00 222,000
Carroll (NH 2)..................... 221,000 100.00 100.00 221,000
Somerset (ME 2).................... 146,000 100.00 100.00 146,000
Bangor, ME......................... 142,000 91.88 91.88 130,000
Addison (VT 2) * (2)............... 107,000 100.00 100.00 107,000
Washington (ME 4) *................ 86,000 100.00 100.00 86,000

Lewiston-Auburn, ME................ 101,000 83.63% 83.63% 84,000
Oxford (ME 1)...................... 83,000 100.00 100.00 83,000
---------- ----------
TOTAL MAINE/NEW HAMPSHIRE/VERMONT
MARKET CLUSTER.................. 1,697,000 1,643,000
========== ==========

FLORIDA/GEORGIA MARKET CLUSTER:
Fort Pierce, FL *.................. 302,000 100.00 100.00 302,000
Tallahassee, FL.................... 294,000 100.00 100.00 294,000
Worth (GA 14)...................... 257,000 100.00 100.00 257,000
Gainesville, FL.................... 232,000 100.00 100.00 232,000
Toombs (GA 11)..................... 157,000 100.00 100.00 157,000
Walton (FL 10)..................... 126,000 100.00 100.00 126,000
Putnam (FL 5) (2).................. 72,000 100.00 100.00 72,000
Dixie (FL 6)....................... 60,000 100.00 100.00 60,000
Jefferson (FL 8) (2)............... 52,000 100.00 100.00 52,000
Calhoun (FL 9)..................... 45,000 100.00 100.00 45,000
---------- ----------
TOTAL FLORIDA/GEORGIA MARKET
CLUSTER......................... 1,597,000 1,597,000
========== ==========

TEXAS/OKLAHOMA/MISSOURI/KANSAS
REGIONAL MARKET CLUSTER:
OKLAHOMA/MISSOURI/KANSAS:
Tulsa, OK *........................ 822,000 55.06 55.06 452,000
Joplin, MO *....................... 150,000 100.00 100.00 150,000
Seminole (OK 6).................... 222,000 55.06 55.06 122,000
Elk (KS 15) *...................... 154,000 75.00 75.00 115,000
Nowata (OK 4) * (2)................ 103,000 55.06 55.06 57,000
---------- ----------
1,451,000 896,000
---------- ----------
TEXAS/OKLAHOMA:
Garvin (OK 9)...................... 204,000 100.00 100.00 204,000
Wichita Falls, TX *................ 137,000 78.46 78.46 107,000
Lawton, OK *....................... 113,000 78.46 78.46 89,000
Haskell (OK 10).................... 83,000 100.00 100.00 83,000
Jackson (OK 8) *................... 95,000 78.46 78.46 74,000
Hardeman (TX 5) * (2).............. 37,000 78.46 78.46 29,000
Briscoe (TX 4) * (2)............... 12,000 78.46 78.46 10,000
Beckham (OK 7) * (2)............... 10,000 78.46 78.46 8,000
---------- ----------
691,000 604,000
---------- ----------
TOTAL TEXAS/OKLAHOMA/MISSOURI/
KANSAS REGIONAL MARKET CLUSTER.. 2,142,000 1,500,000
========== ==========

EASTERN TENNESSEE/WESTERN NORTH
CAROLINA MARKET CLUSTER:
Knoxville, TN *.................... 558,000 96.03 96.03 536,000
Asheville, NC *.................... 215,000 100.00 100.00 215,000
Henderson (NC 4) * (2)............. 199,000 100.00 100.00 199,000
Bledsoe (TN 7) * (2)............... 156,000 96.03 96.03 150,000
Hamblen (TN 4) * (2)............... 140,000 100.00 100.00 140,000
Macon (TN 3) *..................... 353,000 16.67 16.67 59,000

Yancey (NC 2) * (2)................ 32,000 100.00% 100.00% 32,000
---------- ----------

TOTAL EASTERN TENNESSEE/WESTERN NORTH
CAROLINA MARKET CLUSTER............ 1,653,000 1,331,000
========== ==========
SOUTHERN TEXAS MARKET CLUSTER:
Corpus Christi, TX................. 390,000 100.00 100.00 390,000
Atascosa (TX 19) (3)............... 266,000 100.00 100.00 266,000
Edwards (TX 18).................... 228,000 100.00 100.00 228,000
Laredo, TX......................... 193,000 100.00 100.00 193,000
Wilson (TX 20)..................... 151,000 100.00 100.00 151,000
Victoria, TX....................... 83,000 100.00 100.00 83,000
---------- ----------
TOTAL SOUTHERN TEXAS MARKET
CLUSTER......................... 1,311,000 1,311,000
========== ==========
OTHER OPERATIONS:
Hawaii (HI 3)...................... 144,000 100.00 100.00 144,000
---------- ----------
Total Managed Markets............ 26,041,000 24,385,000
========== ==========
MARKETS MANAGED BY OTHERS:
Los Angeles/Oxnard, CA *........... 15,955,000 5.50 5.50 877,000
Jefferson (NY 1) *................. 251,000 60.00 60.00 151,000
Oklahoma City, OK *................ 1,015,000 14.60 14.60 148,000
Franklin (NY 2) *.................. 223,000 57.14% 57.14 128,000
Others (Fewer than 100,000
population equivalents each)..... 673,000
----------
Total Population Equivalents of
Markets Managed by Others...... 1,977,000
----------
Total Population Equivalents..... 26,362,000
==========

- ------------

* Designates wireline market.

(1) Interests under these agreements are expected to be acquired at the time
specified therein, following the satisfaction of customary closing
conditions.

(2) These markets have been partitioned into more than one licensed area. The
1999 population, percentage ownership and number of population equivalents
shown are for the licensed areas within the markets in which the Company
owns an interest.

(3) These markets include territory and population equivalents of fill-in areas
which were annexed from adjacent MSAs or RSAs.

SYSTEM DESIGN AND CONSTRUCTION

The Company designs and constructs its systems in a manner it believes will
permit it to provide high-quality service to analog and certain types of digital
telephones, based on market and engineering studies which relate to specific
markets. Engineering studies are performed by Company personnel or independent
engineering firms. The Company's switching equipment is digital, which reduces
noise and crosstalk and is capable of interconnecting in a manner which reduces
costs of operation. While digital microwave interconnections are typically made
between the MTSO and cell sites, both analog and digital radio transmissions are
made between cell sites and the cellular telephones themselves. Network
reliability is given careful consideration and extensive redundancy is employed
in virtually all aspects of the Company's network design. Route diversity, ring
topology and extensive use of emergency standby power are also utilized to
enhance network reliability and minimize service disruption from any particular
network failure.

In accordance with its strategy of building and strengthening market
clusters, the Company has selected high capacity digital cellular switching
systems that are capable of serving multiple markets through a single MTSO. The
Company's cellular systems are designed to facilitate the installation of
equipment which will permit microwave interconnection between the MTSO and the
cell site. The Company has implemented such microwave interconnection in most of
the cellular systems it manages. Otherwise, such systems will rely upon landline
telephone connections to link cell sites with the MTSO. Although the
installation of microwave network interconnection equipment requires a greater
initial capital investment, a microwave network enables a system operator to
avoid the current and future charges associated with leasing telephone lines
from the landline telephone company, while generally improving system
reliability. In addition, microwave facilities can be used to connect separate
cellular systems to allow shared switching, which reduces the aggregate cost of
the equipment necessary to operate multiple systems. Microwave facilities can
also be used to carry long-distance calls, which reduces the costs of
interconnecting to the landline network.

The Company has continued to expand its Wide Area Network ("WAN") to
accomodate various business functions, including:

- automatic call delivery

- intersystem handoff

- credit validation

- fraud prevention

- network management and

- interconnectivity of all of the Company's MTSOs and cell sites.

In addition, the WAN accomodates virtually all internal data communications
between various Company office locations and a significant number of the
Company's retail locations to process customer activations. The WAN is deployed
in the Company's five regional customer service centers ("Communications
Centers") for all customer service functions using the Company's new billing and
information system.

Management believes that currently available technologies will allow
sufficient capacity on the Company's networks to meet anticipated demand over
the next few years.

COSTS OF SYSTEM CONSTRUCTION AND FINANCING

Construction of cellular systems is capital-intensive, requiring substantial
investment for land and improvements, buildings, towers, MTSOs, cell site
equipment, microwave equipment, engineering and installation. The Company,
consistent with FCC control requirements, uses primarily its own personnel to
engineer and oversee construction of each cellular system it owns and operates.

The costs (exclusive of license costs) of the systems in which the Company
owns an interest have historically been financed through capital contributions
or intercompany loans from the

Company to the entities owning the systems, and through certain vendor
financing. In recent years, these funding requirements have been met with cash
generated from operations, proceeds from debt offerings and proceeds from the
sales of cellular interests.

MARKETING

The Company's marketing plan is centered around rapid penetration of its
market clusters, increasing customer awareness of cellular service and reducing
churn. The Company achieves these results through the building of brand
awareness and the implementation of loyalty programs which give customer service
priority to the Company's most valuable customers. The marketing plan stresses
the value of the Company's service offerings and incorporates combinations of
rate plans and cellular telephone equipment which are designed to meet the needs
of defined customer segments and their usage patterns. The Company supports a
multi-faceted distribution program, including direct sales, agents and retail
service centers in the vast majority of its markets, and the Internet for those
customers who wish to contact the Company through that medium.

Company-owned and managed locations are designed to market cellular service
to the consumer segment in a familiar setting. In late 1999, the Company
expanded its e-commerce site to make additional accessories available online.
The Company anticipates that as customers become more comfortable with
e-commerce, the Internet will become more of a robust marketing channel for both
sales of rate plans as well as accessories.

The Company manages each cluster of markets with a local staff, including
sales, engineering and in some cases installation personnel. The Company
operates five regional Communications Centers whose personnel are responsible
for customer service and certain other functions. Direct sales consultants
market cellular service to business customers throughout each cluster. Retail
sales associates work out of the Company's nearly 500 Company-owned retail
stores and kiosks and market cellular service primarily to the consumer and
small business segment. The Company maintains an ongoing training program to
improve the effectiveness of sales consultants and retail associates by focusing
their efforts on obtaining customers and maximizing the sale of high-use
packages. These packages enable customers to buy substantial amounts of minutes
for fixed monthly rates.

The Company continues to expand its relationships with agents, dealers and
non-Company retailers to obtain customers, and at year-end 1999 had contracts
with more than 2,000 of these businesses. Agents and dealers are independent
business people who obtain customers for the Company on a commission basis. The
Company's agents are generally in the business of selling cellular telephones,
cellular service packages and other related products. The Company's dealers
include car stereo companies, major appliance dealers, office supply dealers and
mass merchants including national companies such as Best Buy and Circuit City.

The Company created a new class of agent during 1999, the Value Added
Distributor agent channel. This channel's initial focus was on the sale of the
Company's prepaid service product, TalkTracker-Registered Trademark-, to
selected market segments, and complements the Company's own distribution
channels. Additionally, in support of its overall Internet initiatives, the
Company has actively recruited agents who provide services exclusively through
the Internet. Such agents include Sundial, Telstreet, StartSmart and
Buyphone.com.

The Company uses a variety of direct mail, billboard, radio, television and
newspaper advertising to stimulate interest by prospective customers in
purchasing the Company's cellular service and to establish familiarity with the
Company's name. In 1999, the Company began operating under a unified brand name
and logo, U.S. Cellular(SM), across all its markets. All markets were converted
to the new brand name in the second quarter of 1999. The new logo is simpler and
bolder than the old logo. The Company retained its tag line "The way people talk
around here(SM)," which is still used to promote the U.S. Cellular brand.

The Company continues to advertise its digital service offerings through
both television and radio advertising, which contributed to a significant
increase in the number of customers using the Company's digital services during
1999. Advertising is directed at gaining customers, improving customers'
awareness of the U.S. Cellular brand, increasing existing customers' usage of
the

Company's services and increasing the public awareness and understanding of the
cellular services offered by the Company. The Company attempts to select the
advertising and promotion media that are most appealing to the targeted groups
of potential customers in each local market. The Company utilizes local
advertising media and public relations activities and establishes community
relations programs to enhance public awareness of the Company. These programs
are aimed at supporting the communities in which the Company serves. The
programs range from loaning phones to public service operations in emergencies
to assisting victims of domestic abuse through the Company's Stop Abuse From
Existing(SM) programs.

The following table summarizes, by operating cluster, the total population,
the Company's customer units and penetration for the Company's majority-owned
and managed markets that were operational as of December 31, 1999.

OPERATING CLUSTERS POPULATION CUSTOMERS PENETRATION
------------------ ---------- --------- -----------

Midwest Regional Market Cluster.......................... 9,209,000 1,140,000 12.38%
Mid-Atlantic Regional Market Cluster..................... 5,091,000 415,000 8.15
Northwest Regional Market Cluster........................ 2,553,000 254,000 9.95
Maine/New Hampshire/Vermont Market Cluster............... 1,697,000 165,000 9.72
Florida/Georgia Market Cluster........................... 1,597,000 151,000 9.46
Texas/Oklahoma/Missouri/Kansas Regional Market Cluster... 2,142,000 226,000 10.55
Eastern Tennessee/Western North Carolina Market
Cluster................................................ 1,300,000 152,000 11.69
Southern Texas Market Cluster............................ 1,311,000 77,000 5.87
Other Operations......................................... 144,000 22,000 15.28
---------- --------- -----
25,044,000 2,602,000 10.39%
========== ========= =====

CUSTOMERS AND SYSTEM USAGE

Cellular customers come from a wide range of demographic segments. Business
users typically include a large proportion of individuals who work outside of
their offices such as people in the construction, real estate, wholesale and
retail distribution businesses and professionals. Increasingly, the Company is
providing cellular service to consumers and to customers who use their cellular
telephones for mixed business and personal use as well as for security purposes.
A major portion of the Company's recent customer growth is from these lower
revenue segments. Although some of the Company's customers still use in-vehicle
cellular telephones, the vast majority of new customers are selecting portable
cellular telephones. These units are more compact and fully featured as well as
more attractively priced, and they appeal to newer segments of the customer
population.

The Company's cellular systems are used most extensively during normal
business hours between 7:00 AM and 6:00 PM. On average, the local retail
customers in the Company's consolidated markets used their cellular systems
approximately 115 minutes per unit each month and generated retail revenue of
approximately $33 per month during 1999, compared to 105 minutes and $33 per
month in 1998. Revenue generated by roamers using the Company's systems
("inbound roaming"), together with local retail, toll and other revenues,
brought the Company's total average monthly service revenue per customer unit in
consolidated markets to $48 during 1999. Average monthly service revenue per
customer unit decreased approximately 1% during 1999. This decrease was not as
significant as in recent years, due to the proliferation of certain national
pricing plans used by other wireless companies which significantly increased
inbound roaming minutes of use on the Company's systems during 1999. This effect
was offset by decreases in average revenue per minute of use from both local
retail customers and inbound roamers. Competitive pressures and the Company's
increasing use of pricing and other incentive programs to stimulate overall
usage resulted in a decrease in average local retail revenue per minute of use
in 1999. Inbound roaming revenue per minute also decreased during the year,
partially due to the ongoing trend toward reduced per minute prices for roaming
negotiated between the Company and other cellular operators and also due to the
additional minutes generated by customers with national pricing plans, which are
at lower than average rates. The Company anticipates that average monthly
service revenue per customer unit will continue to decline in the future.
However,

this effect is more than offset by the Company's increasing number of customers;
therefore, the Company expects total revenues to continue to grow for the next
few years.

The Company's main sources of revenue are from its own customers and from
inbound roaming customers. The Company's roaming service allows a customer to
place or receive a call in a cellular service area away from the customer's home
service area. The Company has entered into "roaming agreements" with operators
of other cellular systems covering virtually all systems in the United States,
Canada and Mexico. The Company also has roaming agreements with several PCS
operators. Roaming agreements offer customers the opportunity to roam in these
systems. These reciprocal agreements automatically pre-register the customers of
the Company's systems in the other carriers' systems. Also, a customer of a
participating system roaming (i.e., traveling) in a Company market where this
arrangement is in effect is able to make and receive calls on the Company's
system. The charge for this service is typically at premium rates and is billed
by the Company to the customer's home system, which then bills the customer. The
Company has entered into agreements with other cellular carriers to transfer
roaming usage at agreed-upon rates. In some instances, based on competitive
factors, the Company may charge a lower amount to its customers than the amount
actually charged to the Company by another cellular carrier for roaming.

The following table summarizes certain information about customers and
market penetration in the Company's managed operations.

YEAR ENDED OR AT DECEMBER 31,
---------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- --------

Majority-owned and managed markets:
Cellular markets in operation
(1).............................. 139 138 134 131 137
Total population of markets in
service (000s)................... 25,044 24,683 24,034 21,712 22,309
Customer Units:
at beginning of period (2)....... 2,183,000 1,710,000 1,073,000 710,000 421,000
additions during period (2)...... 1,015,000 915,000 941,000 561,000 426,000
disconnects during period (2).... 596,000 442,000 304,000 198,000 137,000
at end of period (2)............. 2,602,000 2,183,000 1,710,000 1,073,000 710,000
Market penetration at end of period
(3)................................ 10.39% 8.84% 7.11% 4.94% 3.18%

- ---------

(1) Represents the number of markets in which the Company owned at least a 50%
interest and which it managed. The revenues and expenses of these cellular
markets are included in the Company's consolidated revenues and expenses.

(2) Represents the approximate number of revenue-generating cellular telephones
served by the cellular markets referred to in footnote (1). The revenue
generated by such cellular telephones is included in consolidated revenues.

(3) Computed by dividing the number of customer units at the end of the period
by the total population of markets in service as estimated by Donnelley
Marketing Service (1995-1996) or Claritas (1997-1999) for the respective
years.

PRODUCTS AND SERVICES

CELLULAR TELEPHONES AND INSTALLATION. There are a number of different types
of cellular telephones, all of which are currently compatible with analog
cellular systems nationwide. The Company offers a full range of cellular
telephones for use by its customers. Features offered in some of the cellular
telephones include hands-free calling, repeat dialing, voice mail and others. In
the systems where the Company offers digital service, additional features such
as caller ID and short messaging services are available on those cellular
telephones.

The Company negotiates volume discounts from its cellular telephone
suppliers. The Company discounts cellular telephones to meet competition or to
stimulate sales by reducing the cost of becoming a cellular customer. In these
instances, where permitted by law, customers are generally required to sign a
service contract with the Company. The Company also cooperates with cellular
equipment manufacturers in local advertising and promotion of cellular
equipment.

The Company has established service and/or installation facilities in many
of its local markets to ensure quality installation and service of the cellular
telephones it sells. These facilities allow the Company to improve its service
by promptly assisting customers who experience equipment problems. Additionally,
the Company maintains a repair facility in Tulsa, Oklahoma, which handles more
complex service and repair issues.

CELLULAR SERVICES. The Company's customers are able to choose from a
variety of packaged pricing plans which are designed to fit different calling
patterns. The ability to help a customer find the right technology and the right
pricing plan is central to the Company's brand positioning. During 1999, the
Company focused its efforts on new products with the continued promotion of its
digital service offering, called Digital PCS, and its prepaid offering,
TalkTracker-Registered Trademark-. Both offerings continued their success during
the year, as many higher revenue customers purchased the Company's digital
offering and new market segments such as individuals with credit difficulties
were able to purchase cellular service through the Company's prepaid offering.

The Company's customer bills typically show separate charges for
custom-calling features, airtime in excess of the packaged amount, and toll
calls. Custom-calling features provided by the Company include wide-area call
delivery, call forwarding, call waiting, three-way calling and no-answer
transfer. The Company also offers a voice message service in many of its
markets. This service, which functions like a sophisticated answering machine,
allows customers to receive messages from callers when they are not available to
take calls. Additional services, such as short messaging services, are available
in the Company's markets where digital service is offered.

REGULATION

REGULATORY ENVIRONMENT. The operations of the Company are subject to FCC
and state regulation. The cellular telephone licenses the Company holds are
granted by the FCC for the use of radio frequencies and are an important
component of the overall value of the Company's assets. The construction,
operation and transfer of cellular systems in the United States are regulated to
varying degrees by the FCC pursuant to the Communications Act of 1934. In 1996,
Congress enacted the Telecommunications Act of 1996, which amended the
Communications Act. The Telecommunications Act mandates significant changes in
existing telecommunications rules and policies to promote competition, ensure
the availability of telecommunications services to all parts of the nation and
to streamline regulation of the telecommunications industry to remove regulatory
burdens, as competition develops and makes regulation unnecessary. The FCC has
promulgated regulations governing construction and operation of cellular
systems, licensing (including renewal of licenses) and technical standards for
the provision of cellular telephone service under the Communications Act, and is
implementing the legislative objectives of the Telecommunications Act, as
discussed below.

LICENSING. For cellular telephone licensing purposes, the FCC has divided
the United States into separate geographic markets (MSAs and RSAs). In each
market, the allocated cellular frequencies are divided into two equal blocks.
During the application process, the FCC reserved one block of frequencies for
non-wireline applicants and another block for wireline applicants. Subject to
FCC approval, a cellular system may be sold to either a wireline or non-wireline
entity, but no entity which controls a cellular system may own a significant
interest in another cellular system in the same MSA or RSA.

The completion of acquisitions involving the transfer of control of a
cellular system requires prior FCC approval. Acquisitions of minority interests
generally do not require FCC approval. Whenever FCC approval is required, any
interested party may file a petition to dismiss or deny the application for
approval of the proposed transfer.

The FCC must be notified each time an additional cell is constructed which
enlarges the service area of a given market. The FCC's rules also generally
require persons or entities holding cellular construction permits or licenses to
coordinate their proposed frequency usage with neighboring cellular licensees in
order to avoid electrical interference between adjacent systems. The height and
power of base stations in the cellular system are regulated by FCC rules, as are
the types of signals emitted by these stations. In addition to regulation by the
FCC, cellular systems are

subject to certain Federal Aviation Administration ("FAA") regulations with
respect to the siting and construction of cellular transmitter towers and
antennas as well as local zoning requirements.

Beginning in 1996, the FCC has also imposed a requirement that all licensees
register and obtain FCC registration numbers for all of their antenna towers
which require prior FAA clearance. All new towers must be registered at the time
of construction and existing towers were required to be registered by May 1998
on a staggered state-by-state basis. The Company believes that it is in
compliance with the FCC's tower registration requirements.

Beginning in October 1997, cellular systems, which previously were
"categorically excluded" from having to evaluate their facilities to ensure
their compliance with federal radio frequency radiation requirements, were made
subject to those requirements. As a result, cellular towers of less than 10
meters in height, building-mounted antennae and cellular telephones must comply
with radio frequency radiation guidelines. After October 1997, all new cellular
facilities must be in compliance when they are brought into service. As of
September 1, 2000, all existing facilities must be brought into compliance. The
Company believes that the majority of its existing facilities already comply
with the requirements and will seek to ensure that the remainder are brought
into compliance as required.

Initial cellular telephone licenses were granted tor ten-year periods. The
FCC has established standards for conducting comparative renewal proceedings
between a cellular licensee seeking renewal of its license and challengers
filing competing applications. The FCC has: (i) established criteria for
comparing the renewal applicant to challengers, including the standards under
which a renewal expectancy will be granted to the applicant seeking license
renewal; (ii) established basic qualifications standards for challengers; and
(iii) provided procedures for preventing possible abuses in the comparative
renewal process. The FCC has concluded that it will award a renewal expectancy
if the licensee has (i) provided "substantial" performance, which is defined as
"sound, favorable and substantially above a level of mediocre service just
minimally justifying renewal," and (ii) complied with FCC rules, policies and
the Communications Act. If a renewal expectancy is awarded to an existing
licensee, its license is renewed and competing applications are not considered.
All of the Company's licenses which it applied to have renewed between 1995 and
1999 were renewed.

The Company conducts and plans to conduct its operations in accordance with
all relevant FCC rules and regulations and anticipates being able to qualify for
a renewal expectancy in its upcoming renewal filings. Accordingly, the Company
believes that current regulations will have no significant effect on its
operations and financial condition. However, changes in the regulation of
cellular operators or their activities and of other mobile service providers
could have a material adverse effect on the Company's operations.

The FCC has also provided that five years after the initial licenses are
granted, unserved areas within markets previously granted to licensees may be
applied for by both wireline and non-wireline entities and by third parties.
Accordingly, the Company and others have filed many unserved area applications
and these applications have generally been routinely granted. The Company's
strategy with respect to system construction in its markets has been and will be
to build cells covering areas within such markets that the Company considers
economically feasible to serve or might conceivably wish to serve and to do so
within the five-year period following issuance of the license. In cases where
applications for unserved areas are filed which are mutually exclusive and would
result in overlapping service areas, the FCC decides between the competing
applicants by an auction process.

Pursuant to 1993 amendments to the Communications Act, cellular service is
classified as a Commercial Mobile Radio Service, in that it is service offered
to the public, for a fee, which is interconnected to the public switched
telephone network. The FCC has determined that it will forbear from requiring
such carriers to comply with a number of statutory provisions otherwise
applicable to common carriers, such as the filing of tariffs.

RECENT EVENTS. There are certain regulatory proceedings currently pending
before the FCC which are of particular importance to the cellular industry. In
one proceeding, the FCC has imposed

new "enhanced 911" regulations on cellular carriers. Enhanced 911 capabilities
will enable cellular systems to determine the precise location of persons making
emergency calls. The new rules will require cellular carriers to work with local
public safety officials to process 911 calls, including those made from mobile
telephones not registered with the cellular system. Since April 1998, cellular
carriers have had to be able to identify the cell from which the call has been
made. The rules will require cellular systems to improve their ability to locate
wireless 911 callers during 2001 and 2002.

The FCC has adopted a limited expansion of the obligation of cellular
carriers to serve the roaming subscribers of broadband PCS providers, among
others, even though the subscribers involved have no pre-existing service
relationships with such cellular carriers. Under these policies, broadband PCS
providers may offer their subscribers handsets which are capable of operating
over broadband PCS and cellular networks so that when their subscribers are out
of range of broadband PCS networks, they will be able to obtain access to
cellular networks. The FCC expects that implementation of these roaming
capabilities will promote competition between broadband PCS and cellular service
providers.

The FCC has adopted requirements which will make it possible for subscribers
to retain, subject to certain geographic and other limitations, their existing
telephone numbers when they switch from one service provider to another. This
numbering portability will include switching between Local Exchange Carriers
("LECs") and other wireline providers, between wireless service providers and
between LEC/wireline and wireless providers. LECs in the 100 largest MSAs had
implementation deadlines by the end of 1998 at those switches which received
specific requests for numbering portability. The FCC has extended the compliance
date for cellular, broadband PCS and certain other wireless providers until
November 2002.

In another proceeding, the FCC in 1996 adopted rules regarding the method by
which cellular carriers and LECs shall compensate each other for interconnecting
cellular and local exchange facilities. The FCC rules provided for symmetrical
and reciprocal compensation between LECs and cellular carriers, and also
prescribed interim interconnection proxy rates, which are much lower than the
rates that were formerly paid by cellular carriers to LECs. Symmetrical and
reciprocal compensation means they must pay each other at the same rate.
Interconnection rate issues will be decided by the states. Cellular carriers are
now paying and in the future can be expected to pay lower rates to LECs than
they previously paid. This result is expected to be favorable to the wireless
industry and somewhat unfavorable to LECs.

The FCC is also proceeding to implement other parts of the
Telecommunications Act. The Telecommunications Act provides that implementing
its legislative objectives will be the task of the FCC, the state public
utilities commissions and a Federal-state Joint Board. Much of this
implementation is proceeding in numerous, concurrent proceedings with aggressive
deadlines. The Company cannot predict the full extent, nature of and
interrelationships among state and federal implementation and other responses to
Telecommunications Act.

The primary purpose and effect of the new law is to open all
telecommunications markets to competition. The Telecommunications Act makes most
direct or indirect state and local barriers to competition unlawful. It directs
the FCC to preempt all inconsistent state and local laws and regulations, after
notice and comment proceedings. It also enables electric and other utilities to
engage in telecommunications service through qualifying subsidiaries.

Only narrow powers over competitive entry are left to state and local
authorities. Each state retains the power to impose competitively neutral
requirements that are consistent with the Telecommunications Act's universal
service provisions and necessary for universal services, public safety and
welfare, continued service quality and consumer rights. While a state may not
impose requirements that effectively function as barriers to entry, it retains
limited authority to regulate certain competitive practices in rural telephone
company service areas.

The Telecommunications Act establishes principles and a process for
implementing a modified "universal service" policy. This policy seeks
nationwide, affordable service and access to advanced telecommunications and
information services. It calls for reasonably comparable urban and rural rates
and services. The Telecommunications Act also requires universal service to
schools, libraries and rural health facilities at discounted rates. Cellular
carriers must provide such discounted rates

to such organizations in accordance with federal regulations. The FCC has
implemented the mandate of the Telecommunications Act to create a new universal
service support mechanism "to ensure that all Americans have access to
telecommunications services." The Telecommunications Act requires all interstate
telecommunications providers, including wireless service providers, to "make an
equitable and non-discriminatory contribution," to support the cost of providing
universal service, unless their contribution would be DE MINIMIS. At present,
the provision of landline telephone service in high-cost areas is subsidized by
access charges and other payments by interexchange carriers to LECs. The
obligation to make payments to support universal service has been expanded to
include other telecommunications service providers, including cellular carriers.
Such payments, based on a percentage of the total "billed revenue" of carriers
for a given previous half year, began in the first quarter of 1998. Carriers are
free to pass such charges on to their customers. Cellular carriers are also
eligible to receive universal service support payments in certain circumstances
under the new systems if they provide specified services in "high-cost" areas.
The Company has sought designation as an "eligible telecommunications carrier"
qualified to receive universal service support in certain states, and has been
designated as such a carrier in Washington State. It has also sought FCC
clarification of the standards under which wireless eligible telecommunications
carriers will be designated.

Under a 1994 federal law, the Communications Assistance to Law Enforcement
Act, all telecommunications carriers, including the Company and other wireless
licensees, must implement by June 30, 2000, certain equipment changes necessary
to assist law enforcement authorities in achieving an enhanced ability to
conduct electronic surveillance of those suspected of criminal activity. In
August 1999, the FCC added certain additional capabilities necessary to meet the
requirements of such act, which are to become applicable by September 2001.
Also, issues remain as to when carriers may obtain reimbursement from the
federal government for upgrades related to such requirements. The Company will
work diligently to comply with all applicable requirements of the Communications
Assistance to Law Enforcement Act in cooperation with industry groups and
standard setting bodies.

The FCC has recently taken action in proceedings: (1) to ensure that the
customers of wireless providers, among other carriers, will receive complete,
accurate, and understandable bills; (2) to establish safeguards to protect
against unauthorized access to customer information, though these rules have
been overturned, at least temporarily, by court order; (3) to increase to
55 megahertz ("MHz") in rural areas its 45 MHz "cap" on the amount of spectrum
which entities under common ownership and control may hold in a single wireless
market and to relax its related cellular cross ownership restrictions; and
(4) to require improved access to telecommunications facilities by persons with
disabilities.

The FCC also has pending proceedings: (1) to implement a wireless billing
option under which wireline customers who call wireless customers could be
charged for wireless "airtime" as opposed to the wireless customer receiving the
call, as is the case at present ("calling party pays"); (2) to implement
requirements for wireless providers to set interstate interexchange rates in
each state at levels no higher than the rates charged to subscribers in any
other state; and (3) to set national policy for the allocation by state public
utilities commissions of telephone numbers to wireline and wireless carriers.

The Company will monitor such proceedings and comply with new federal
requirements as they become applicable.

The FCC has also allocated a total of 140 MHz to broadband PCS (a portion of
radio spectrum from 1850 MHz to 1990 MHz), 20 MHz to unlicensed operations and
120 MHz to licensed operations, consisting of two 30 MHz blocks in each of the
51 Major Trading Areas ("MTAs") and one 30 MHz block and three 10 MHz blocks in
each of 493 Basic Trading Areas ("BTAs"). Cellular operators and those entities
under common ownership with them are permitted to participate in the ownership
of PCS licenses, except for those PCS licenses reserved for small businesses,
and licenses for PCS service areas in which the cellular operator owns a 20% or
greater interest in a cellular licensee, the service area of which covers 10% or
more of the population of the PCS service area. In the latter case, the cellular
licensee is limited to 20 MHz of PCS channels in urban areas. In rural areas,
such a cellular operator may now own 30 MHz of PCS channels.

PCS technology is similar in some respects to cellular technology. Where it
has become commercially available, this technology is capable of offering
increased capacity for wireless two-way and one-way voice, data and multimedia
communications services and has resulted in increased competition with the
Company's operations in the markets where PCS systems have begun operations. The
ability of these PCS licensees to complement or compete with existing cellular
licensees will be affected by future FCC rule-makings. These and other future
technological and regulatory developments in the wireless telecommunications
industry and the enhancement of current technologies will likely create new
products and services that are competitive with the services the Company
currently offers. The Company could be adversely affected by such technological
and regulatory developments.

In January 2000, the FCC took an action which may have an impact on both
cellular and PCS licensees. Pursuant to a congressional directive, the FCC
adopted service rules for licensing the commercial use of 30 MHz of spectrum in
the 746-764 MHz and 776-794 MHz spectrum bands. That spectrum is to be
auctioned, beginning in June 2000. The licenses are divided into six regional
service areas, with 20 and 10 MHz blocks, and are designed to allow for a wide
range of wireless services. There will be no eligibility restrictions on
participation in the auctions for this spectrum. Cellular and PCS carriers and
other entities will be eligible to bid in the auction. Use of the spectrum by
licensees selected in the auction may be affected by the presence of incumbent
broadcast licensees on some of the auctioned frequencies through at least
December 31, 2006.

STATE AND LOCAL REGULATION. The Company is also subject to state and local
regulation in some instances. In 1981, the FCC preempted the states from
exercising jurisdiction in the areas of licensing, technical standards and
market structure. In 1993, Congress preempted states from regulating the entry
of cellular systems into service and the rates charged by cellular systems to
customers. The siting and construction of cellular facilities, including
transmitter towers, antennas and equipment shelters are still subject to state
or local zoning and land use regulations. However, in 1996, Congress amended the
Communications Act to provide that states could not discriminate against
wireless carriers in tower zoning proceedings and had to decide on zoning
requests with reasonable speed. In addition, states may still regulate other
terms and conditions of cellular service.

The FCC is required to forbear from applying any statutory or regulatory
provision that is not necessary to keep telecommunications rates and terms
reasonable or to protect consumers. A state may not apply a statutory or
regulatory provision that the FCC decides to forbear from applying. In addition,
the FCC must review its telecommunications regulations every two years and
change any that are no longer necessary. Further, the FCC is empowered under
certain circumstances to preempt state regulatory authorities if a state is
obstructing the Communications Act's basic purposes.

The Company and its subsidiaries have been and intend to remain active
participants in proceedings before the FCC and state regulatory authorities.
Proceedings with respect to the foregoing policy issues before the FCC and state
regulatory authorities could have a significant impact on the competitive market
structure among wireless providers and the relationships between wireless
providers and other carriers. The Company is unable to predict the scope, pace
or financial impact of policy changes which could be adopted in these
proceedings.

COMPETITION

The Company's principal competitor for cellular telephone service in each
market is the licensee of the second cellular system in that market. Since each
competitor operates its cellular system on a 25 MHz frequency block licensed by
the FCC using comparable technology and facilities, competition for customers
between the two systems in each market is principally on the basis of quality of
service, price, size of area covered, services offered and responsiveness of
customer service. The competing entities in many of the markets in which the
Company has an interest have financial resources which are substantially greater
than those of the Company and its partners in such markets.

The FCC's rules require all operational cellular systems to provide, on a
nondiscriminatory basis, cellular service to resellers which purchase blocks of
mobile telephone numbers from an operational system and then resell them to the
public.

In addition to competition from the other cellular licensee in each market,
there is also competition from PCS providers and SMR/ESMR system providers, both
of which are able to connect with the landline telephone network. PCS providers
have initiated service in many markets across the United States, including many
markets where the Company has operations. PCS providers offer digital, wireless
communications services to their customers. The Company expects PCS operators to
continue deployment of PCS in portions of all of the Company's clusters
throughout 2000. ESMR, an enhanced SMR system, has cells and frequency reuse
like other wireless services, thereby eliminating any technological limitation.
In recent years, ESMR providers have initiated service in several of the
Company's markets. Although less directly a substitute for cellular service,
wireless data services and paging services may be adequate for those who do not
need full two-way voice service. Similar technological advances or regulatory
changes in the future may make available other alternatives to cellular service,
thereby creating additional sources of competition.

Continuing technological advances in the communications field make it
difficult to predict the extent of additional future competition for cellular
systems. For example, the FCC has allocated radio channels to mobile satellite
systems in which transmissions from mobile units to satellites would augment or
replace transmissions to cell sites, and several consortia to provide such
service have been formed. Such systems are designed primarily to serve the
communications needs of remote locations and mobile satellite systems could
provide viable competition for cellular systems in such areas. It is also
possible that the FCC may in the future assign additional frequencies to
cellular telephone service to provide for more than two cellular telephone
systems per market.

EMPLOYEES

The Company had 4,800 employees as of December 31, 1999. None of the
Company's employees is represented by a labor organization. The Company
considers its relationship with its employees to be good.

- --------------------------------------------------------------------------------

ITEM 2. PROPERTIES

The property for mobile telephone switching offices and cell sites are
either owned or leased under long-term leases by the Company, one of its
subsidiaries or the partnership or corporation which holds the construction
permit or license. The Company has not experienced major problems with obtaining
zoning approval for cell sites or operating facilities and does not anticipate
any such problems in the future which are or will be material to the Company and
its subsidiaries as a whole. The Company's investment in property is small
compared to its investment in licenses and cellular system equipment.

The Company leases approximately 93,000 square feet of office space for its
headquarters in Chicago, Illinois.

The Company considers the properties owned or leased by it and its
subsidiaries to be suitable and adequate for their respective business
operations.

- --------------------------------------------------------------------------------

ITEM 3. LEGAL PROCEEDINGS

The Company is involved in a number of legal proceedings before the FCC and
various state and federal courts. In some cases, the litigation involves
disputes regarding rights to certain cellular telephone systems and other
interests. The Company does not believe that any such proceeding should have a
material adverse impact on the Company.

- --------------------------------------------------------------------------------

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of securities holders during the fourth
quarter of 1999.

- --------------------------------------------------------------------------------
PART II
- --------------------------------------------------------------------------------

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Incorporated by reference from Exhibit 13, Annual Report section entitled
"United States Cellular Stock and Dividend Information."

- --------------------------------------------------------------------------------

ITEM 6. SELECTED FINANCIAL DATA

Incorporated by reference from Exhibit 13, Annual Report section entitled
"Selected Consolidated Financial Data," except for ratios of earnings to fixed
charges, which are incorporated herein by reference from Exhibit 12 to this
Annual Report on Form 10-K.

- --------------------------------------------------------------------------------

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Incorporated by reference from Exhibit 13, Annual Report section entitled
"Management's Discussion and Analysis of Results of Operations and Financial
Condition."

- --------------------------------------------------------------------------------

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Incorporated by reference from Exhibit 13, Annual Report section entitled
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" under the caption "Market Risk."

- --------------------------------------------------------------------------------

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Incorporated by reference from Exhibit 13, Annual Report sections entitled
"Consolidated Quarterly Income Information (Unaudited)," "Consolidated
Statements of Income," "Consolidated Statements of Cash Flows," "Consolidated
Balance Sheets," "Consolidated Statements of Changes in Common Shareholders'
Equity," "Notes to Consolidated Financial Statements" and "Report of Independent
Public Accountants."

- --------------------------------------------------------------------------------

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

- --------------------------------------------------------------------------------
PART III
- --------------------------------------------------------------------------------

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Incorporated by reference from Proxy Statement sections entitled "Election
of Directors" and "Executive Officers."

- --------------------------------------------------------------------------------

ITEM 11. EXECUTIVE COMPENSATION

Incorporated by reference from Proxy Statement section entitled "Executive
Compensation," except for the information specified in Item 402(a)(8) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.

- --------------------------------------------------------------------------------

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Incorporated by reference from Proxy Statement section entitled "Security
Ownership of Certain Beneficial Owners and Management."

- --------------------------------------------------------------------------------

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Incorporated by reference from Proxy Statement section entitled "Certain
Relationships and Related Transactions."

- --------------------------------------------------------------------------------
PART IV
- --------------------------------------------------------------------------------

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

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

(a) (1) Financial Statements

Consolidated Quarterly Income Information (Unaudited)...... Annual Report*
Consolidated Statements of Income.......................... Annual Report*
Consolidated Statements of Cash Flows...................... Annual Report*
Consolidated Balance Sheets................................ Annual Report*
Consolidated Statements of Changes in Common Shareholders'
Equity................................................... Annual Report*
Notes to Consolidated Financial Statements................. Annual Report*
Report of Independent Public Accountants................... Annual Report*

- ---------

* Incorporated by reference from Exhibit 13.

(2) Schedules

LOCATION
--------

Report of Independent Public Accountants on Financial Statement
Schedule......................................................... page 29
II. Valuation and Qualifying Accounts for Each of the Three
Years in the Period Ended December 31, 1999................. page 30

All other schedules have been omitted because they are not applicable or not
required or because the required information is shown in the financial
statements or notes thereto.

(3) Exhibits

The exhibits set forth in the accompanying Index to Exhibits are filed as a
part of this Report. The following is a list of each management contract or
compensatory plan or arrangement required to be filed as an exhibit to this form
pursuant to Item 14(c) of this Report.

EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.1 Supplemental Benefit Agreement between the Company and H.
Donald Nelson is hereby incorporated by reference to an
exhibit to the Company's Registration Statement on Form S-1
(Registration No. 33-16975).

10.10 Stock Option and Stock Appreciation Rights Plan is hereby
incorporated by reference to Exhibit B to the Company's
definitive Notice of Annual Meeting and Proxy Statement
dated April 15, 1991, as filed with the Commission on April
16, 1991.

10.11 Summary of 1999 Bonus Program for Senior Corporate Staff of
the Company.

10.12(a) United States Cellular Corporation 1994 Long-Term Incentive
Plan is hereby incorporated by reference to exhibit 99.1 to
the Company's Registration Statement on Form S-8
(Registration No. 33-57255).

10.12(b) Form of 1994 Long-Term Stock Option Agreement (Transferable
Form) is hereby incorporated by reference to Exhibit 99.2 to
the Company's Registration Statement on Form S-8
(Registration No. 33-57255).

10.12(c) Form of 1994 Long-Term Stock Option Agreement
(Nontransferable Form) is hereby incorporated by reference
to Exhibit 99.3 to the Company's Registration Statement on
Form S-8 (Registration No. 33-57255).

EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.12(d) Form of 1995 Performance Stock Option Agreement
(Transferable Form) is hereby incorporated by reference to
Exhibit 99.4 to the Company's Registration Statement on Form
S-8 (Registration No. 33-57255).

10.12(e) Form of 1995 Performance Stock Option Agreement
(Nontransferable Form) is hereby incorporated by reference
to Exhibit 99.5 to the Company's Registration Statement on
Form S-8 (Registration No. 33-57255).

10.13 Supplemental Executive Retirement Plan of TDS is hereby
incorporated by reference to Exhibit 10.13 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994.

10.18 Deferred Compensation Agreement for H. Donald Nelson dated
July 15, 1996, is hereby incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1996.

10.19 Deferred Compensation Agreement for Richard Goehring dated
July 15, 1996, is hereby incorporated by reference to
Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1996.

10.20 Cellular Interest Transfer Agreement by and between TDS and
the Company dated June 20, 1996 is hereby incorporated by
reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.

10.21 United States Cellular Corporation Compensation Plan for
Non-Employee Directors is hereby incorporated by reference
to Exhibit 99.1 to the Company's Registration Statement on
Form S-8 (Registration No. 333-19403).

10.22 United States Cellular Corporation 1996 Senior Executive
Stock Bonus and Restricted Stock Award Plan is hereby
incorporated by reference to Exhibit 99.1 to the Company's
Registration Statement on Form S-8 (Registration No.
333-19405).

10.23 United States Cellular Corporation Special Retention
Restricted Stock Award Plan is hereby incorporated by
reference to Exhibit 99.1 to the Company's Registration
Statement on Form S-8 (Registration No. 333-23861).

10.24 Form of 1997 Special Retention Restricted Stock Awards is
hereby incorporated by reference to Exhibit 99.2 to the
Company's Registration Statement on Form S-8 (Registration
No. 333-57063).

10.25 United States Cellular Corporation 1998 Long-Term Incentive
Plan is hereby incorporated by reference to Exhibit 99.4 to
the Company's Registration Statement on Form S-8
(Registration No. 333-57063).

10.26 United States Cellular Corporation 1999 Employee Stock
Purchase Plan is hereby incorporated by reference to Exhibit
99.1 to the Company's Registration Statement on Form S-8
(Registration No. 333-76455).

10.27 Retention Agreement for Kenneth R. Meyers dated
September 13, 1999 is included as Exhibit 10.27 to this Form
10-K filing.

(b) Reports on Form 8-K filed during the quarter ended December 31, 1999.

No reports on Form 8-K were filed during the quarter ended December 31,
1999.

- --------------------------------------------------------------------------------

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES

To the Shareholders and Board of Directors of United States Cellular
Corporation:

We have audited, in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements included in United States
Cellular Corporation and Subsidiaries Annual Report to Shareholders incorporated
by reference in this Form 10-K, and have issued our report thereon dated
January 26, 2000. Our audits were made for the purpose of forming an opinion on
the basic consolidated financial statements taken as a whole. The financial
statement schedules listed in Item 14(a)(2) are the responsibility of the
Company's management and are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
consolidated financial statements. These financial statement schedules have been
subjected to the auditing procedures applied in the audits of the basic
consolidated financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Chicago, Illinois
January 26, 2000

UNITED STATES CELLULAR CORPORATION AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
- --------------------------------------------------------------------------------

COLUMN A COLUMN B COLUMN C-1 COLUMN C-2 COLUMN D COLUMN E
BALANCE AT CHARGED TO BALANCE AT
BEGINNING OF COSTS AND CHARGED TO END OF
DESCRIPTION PERIOD EXPENSES OTHER ACCOUNTS DEDUCTIONS PERIOD
- ---------------------------------- ------------ ----------- -------------- ---------- ----------
(DOLLARS IN THOUSANDS)

FOR THE YEAR ENDED DECEMBER 31,
1999
Deducted from deferred state tax
asset:
For unrealized net operating
losses $ (13,448) $ 2,778 $ (1,026) $ -- $ (11,696)
Deducted from accounts receivable:
For doubtful accounts (6,054) (25,343) -- 21,368 (10,029)
FOR THE YEAR ENDED DECEMBER 31,
1998
Deducted from deferred state tax
asset:
For unrealized net operating
losses (10,233) (705) (2,510) -- (13,448)
Deducted from accounts receivable:
For doubtful accounts (5,259) (20,197) -- 19,402 (6,054)
FOR THE YEAR ENDED DECEMBER 31,
1997
Deducted from deferred federal tax
asset:
For unrealized net operating
losses (2,147) -- 2,147 -- --
Deducted from deferred state tax
asset:
For unrealized net operating
losses (11,003) 877 (107) -- (10,233)
Deducted from accounts receivable:
For doubtful accounts $ (4,199) $ (25,578) $ -- $ 24,518 $ (5,259)
- ---------------------------------------------------------------------------------------------------------

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

UNITED STATES CELLULAR CORPORATION

By: /S/ H. DONALD NELSON
------------------------------------------
H. Donald Nelson
PRESIDENT (CHIEF EXECUTIVE OFFICER)

By: /S/ KENNETH R. MEYERS
------------------------------------------
Kenneth R. Meyers
EXECUTIVE VICE PRESIDENT--FINANCE AND
TREASURER (CHIEF FINANCIAL OFFICER)

By: /S/ JOHN T. QUILLE
------------------------------------------
John T. Quille
VICE PRESIDENT AND CONTROLLER
(PRINCIPAL ACCOUNTING OFFICER)

Dated March 29, 2000

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.

SIGNATURE TITLE DATE
--------- ----- ----

/S/ H. DONALD NELSON DIRECTOR March 29, 2000
- -----------------------------------------------
H. Donald Nelson

/S/ KENNETH R. MEYERS DIRECTOR March 29, 2000
- -----------------------------------------------
Kenneth R. Meyers

/S/ LEROY T. CARLSON, DIRECTOR March 29, 2000
JR.
- -----------------------------------------------
LeRoy T. Carlson, Jr.

/S/ LEROY T. CARLSON DIRECTOR March 29, 2000
- -----------------------------------------------
LeRoy T. Carlson

/S/ WALTER C.D. CARLSON DIRECTOR March 29, 2000
- -----------------------------------------------
Walter C. D. Carlson

/S/ SANDRA L. HELTON DIRECTOR March 29, 2000
- -----------------------------------------------
Sandra L. Helton

/S/ PAUL-HENRI DENUIT DIRECTOR March 29, 2000
- -----------------------------------------------
Paul-Henri Denuit

/S/ J. SAMUEL CROWLEY DIRECTOR March 29, 2000
- -----------------------------------------------
J. Samuel Crowley

- --------------------------------------------------------------------------------
INDEX TO EXHIBITS
- --------------------------------------------------------------------------------

EXHIBIT
NO. DESCRIPTION OF DOCUMENT
- --------------------- ------------------------------------------------------------

3.1 Restated Certificate of Incorporation, as amended, is hereby
incorporated by reference to an exhibit to the Company's
Amendment No. 2 on Form 8 dated December 28, 1992, to the
Company's Report on Form 8-A.

3.2 Restated Bylaws, as amended.

4.1 Restated Certificate of Incorporation, as amended, is hereby
incorporated by reference to an exhibit to the Company's
Amendment No. 2 on Form 8 dated December 28, 1992 to the
Company's Report on Form 8-A.

4.2 Restated Bylaws, as amended, are included as Exhibit 3.2 to
this Form 10-K filing.

4.3 Indenture dated June 1, 1995 between registrant and Harris
Trust and Savings Bank, as Trustee, relating to the LYONs is
hereby incorporated by reference to the Company's Form 8-K
dated June 16, 1995.

4.4 Form of Certificate for Liquid Yield Option Note (included
in Exhibit 4.4).

9.1 Voting Trust Agreement, dated as of June 30, 1989, with
respect to Series A Common Shares of TDS, is hereby
incorporated by reference to an exhibit to the Company's
Registration Statement on Form S-1 (Registration No.
33-38644).

9.2 Amendment dated as of May 9, 1991, to the Voting Trust
Agreement dated as of June 30, 1989, is hereby incorporated
by reference to Exhibit 9.2 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1991.

9.3 Amendment dated as of November 20, 1992, to the Voting Trust
Agreement dated as of June 30, 1989, as amended is hereby
incorporated by reference to Exhibit 9.3 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1992.

9.4 Amendment dated as of May 22, 1998, to the Voting Trust
Agreement dated as of June 30, 1989, as amended is hereby
incorporated by reference to Exhibit 99.3 to Telephone and
Data Systems, Inc.'s Current Report on Form 8-K filed on
June 5, 1998.

10.3 Tax Allocation Agreement, between the Company and TDS, is
hereby incorporated by reference to an exhibit to the
Company's Registration Statement on Form S-1 (Registration
No. 33-16975).

10.4 Cash Management Agreement, between the Company and TDS, is
hereby incorporated by reference to an exhibit to the
Company's Registration Statement on Form S-1 (Registration
No. 33-16975).

10.5 Registration Rights Agreement, between the Company and TDS,
is hereby incorporated by reference to an exhibit to the
Company's Registration Statement on Form S-1 (Registration
No. 33-16975).

10.6 Exchange Agreement, between the Company and TDS, as amended,
is hereby incorporated by reference to an exhibit to the
Company's Registration Statement on Form S-1 (Registration
No. 33-16975).

EXHIBIT
NO. DESCRIPTION OF DOCUMENT
- --------------------- ------------------------------------------------------------

10.7 Intercompany Agreement, between the Company and TDS, is
hereby incorporated by reference to an exhibit to the
Company's Registration Statement on Form S-1 (Registration
No. 33-16975).

10.8 Employee Benefit Plans Agreement, between the Company and
TDS, is hereby incorporated by reference to an exhibit to
the Company's Registration Statement on Form S-1
(Registration No. 33-16975).

10.9 Insurance Cost Sharing Agreement, between the Company and
TDS, is hereby incorporated by reference to an exhibit to
the Company's Registration Statement on Form S-1
(Registration No. 33-16975).

10.10 Stock Option and Stock Appreciation Rights Plan, is hereby
incorporated by reference to Exhibit B to the Company's
definitive Notice of Annual Meeting and Proxy Statement
dated April 15, 1991, as filed with the Commission on April
16, 1991.

10.11 Summary of 1999 Bonus Program for the Senior Corporate Staff
of the Company.

10.12(a) United States Cellular Corporation 1994 Long-Term Incentive
Plan is hereby incorporated by reference to Exhibit 99.1 to
the Company's Registration Statement on Form S-8
(Registration No. 33-57255).

10.13 Supplemental Executive Retirement Plan of TDS is hereby
incorporated by reference to Exhibit 10.13 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994.

10.14 Securities Loan Agreement, dated June 31, 1995, between TDS
and Merrill Lynch & Co. is hereby incorporated by reference
to Exhibit 99.1 to the Company's Form 8-K dated June 16,
1995.

10.15 Registration Rights Agreement among TDS, Merrill Lynch & Co.
and United States Cellular Corporation is hereby
incorporated by reference to Exhibit 99.2 to the Company's
Form 8-K dated June 16, 1995.

10.16 Common Share Delivery Arrangement Agreement among TDS,
Merrill Lynch & Co. and United States Cellular Corporation
is hereby incorporated by reference to Exhibit 99.3 to the
Company's Form 8-K dated June 16, 1995.

10.17 LYONs Offering Agreement between TDS and United States
Cellular Corporation is hereby incorporated by reference to
Exhibit 99.4 to the Company's Form 8-K dated June 16, 1995.

10.18 Deferred Compensation Agreement for H. Donald Nelson dated
July 15, 1996 is hereby incorporated by reference to Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1996.

EXHIBIT
NO. DESCRIPTION OF DOCUMENT
- --------------------- ------------------------------------------------------------

10.19 Deferred Compensation Agreement for Richard Goehring dated
July 15, 1996 is hereby incorporated by reference to Exhibit
10.2 to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1996.

10.24 Form of 1997 Special Retention Restricted Stock Awards is
hereby incorporated by reference to Exhibit 99.2 to the
Company's Registration Statement on Form S-8 (Registration
No. 333-57063).

10.27 Retention Agreement for Kenneth R. Meyers dated September
13, 1999 is included as Exhibit 10.27 to this Form 10-K
filing.

11 Statement regarding computation of per share earnings
(included in Note 3 to Consolidated Financial Statements
which are included in Exhibit 13).

12 Statement regarding computation of ratios.

13 Incorporated portions of 1999 Annual Report to Security
Holders.

21 Subsidiaries of the Registrant.

23.1 Consent of independent public accountants.

27 Financial Data Schedules.

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8410 West Bryn Mawr
Suite 700
Chicago, Illinois 60631
(773) 399-8900