SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                  For the quarterly period ended June 30, 2002

                                       OR

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

                   For the transition period from     to
                                                  ----   ----

                            Commission file number 0-19179

                             CT COMMUNICATIONS, INC.
             (Exact name of registrant as specified in its charter)

         NORTH CAROLINA                                   56-1837282
 (State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                       Identification No.)

         1000 Progress Place NE
        P.O. Box 227, Concord, NC                          28026-0227
(Address of principal executive offices)                   (Zip Code)

                                  (704)722-2500
              (Registrant's telephone number, including area code)

              (Former name, former address and former fiscal year,
                          if changed since last report)

         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 [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

         18,671,595 shares of Common Stock outstanding as of July 31, 2002.



                             CT COMMUNICATIONS, INC.

                                      INDEX


                                                                                                      Page No.
                                                                                                      --------
                                                                                                   
PART I.  Financial Information

Item 1.  Financial Statements

Consolidated Balance Sheets--
              June 30, 2002 and December 31, 2001                                                         2

Consolidated Statements of Income--
              Three and Six Months Ended June 30, 2002 and 2001                                           4

Consolidated Statements of Cash Flows--
              Six Months Ended June 30, 2002 and 2001                                                     5

Consolidated Statements of Comprehensive Income--
              Three and Six Months Ended June 30, 2002 and 2001                                           6

Notes to Consolidated Financial Statements                                                                7

Item 2. Management's Discussion and Analysis of
              Financial Condition and Results of Operations                                              14

Item 3. Quantitative and Qualitative Disclosures
              About Market Risk                                                                          21

PART II. Other Information

Item 4. Submission of Matters to a Vote of Security Holders                                              22

Item 6. Exhibits and Reports on Form 8-K                                                                 22


                                       1


               PART I. Item 1. FINANCIAL INFORMATION

             CT COMMUNICATIONS, INC. AND SUBSIDIARIES
                    Consolidated Balance Sheets
                            (Unaudited)



                                                    June 30,       December 31,
                                                      2002             2001
                                                 -------------    -------------
                                                            
ASSETS
    Current assets:
      Cash and cash equivalents                  $   6,637,722    $   8,396,860
      Accounts receivable, net of
        allowance for doubtful
        accounts of $905,000 and $744,682           20,977,207       21,102,252
      Other accounts receivable                        133,694          439,022
      Materials and supplies                         4,422,571        4,519,718
      Income tax receivable                                  -        2,442,720
      Deferred income taxes                            293,103          293,103
      Prepaid expenses and other assets              1,682,725        1,916,800
                                                 -------------    -------------
Total current assets                                34,147,022       39,110,475
                                                 -------------    -------------

    Investment securities                            5,259,106       14,046,861
    Other investments                                  184,363          184,363
    Investments in unconsolidated companies         13,694,429       22,308,152

    Property and equipment:
      Land, buildings, and general equipment        84,940,584       55,493,878
      Central office equipment                     144,427,104      132,700,260
      Poles, wires, cables and conduit             127,939,396      121,138,173
      Construction in progress                       5,927,709       26,812,559
                                                 -------------    -------------
                                                   363,234,793      336,144,870
    Less accumulated depreciation                 (149,932,126)    (137,457,941)
                                                 -------------    -------------

    Net property and equipment                     213,302,667      198,686,929

    Goodwill, net                                    9,933,491        9,906,267
    Other intangibles, net                          52,711,115       22,264,535
    Other assets                                     1,346,344        1,061,614

                                                 -------------    -------------
TOTAL ASSETS                                     $ 330,578,537     $307,569,196
                                                 =============    =============



See accompanying notes to consolidated financial statements.

                                       2


                CT COMMUNICATIONS, INC. AND SUBSIDIARIES
                 Consolidated Balance Sheets (Continued)
                               (Unaudited)



                                                    June 30,      December 31,
                                                      2002            2001
                                                  -------------   -------------
                                                            
LIABILITIES & STOCKHOLDERS' EQUITY
   Current liabilities:
      Redeemable preferred stock                  $          --   $      12,500
      Accounts payable                                7,354,304      10,233,035
      Short-term borrowings                           2,500,000              --
      Customer deposits and advance billings          1,856,281       2,185,338
      Accrued payroll                                 2,011,705       3,068,221
      Income taxes payable                              675,234              --
      Accrued pension cost                            2,399,296       2,446,730
      Other accrued liabilities                       3,765,289       2,061,487
                                                  -------------   -------------
   Total current liabilities                         20,562,109      20,007,311
                                                  -------------   -------------

   Long-term debt                                   127,696,562     100,000,000
                                                  -------------   -------------

   Deferred credits and other liabilities:
      Deferred income taxes                          10,216,540      11,746,554
      Investment tax credits                            402,098         459,540
      Post-retirement benefits other than
         pension                                     10,955,927      10,817,927
      Other                                           1,099,265         896,388
                                                  -------------   -------------

   Total deferred credits and other liabilities:     22,673,830      23,920,409
                                                  -------------   -------------

   Redeemable Preferred Stock:
      4.8% series, $100 par value; 5,000
      shares authorized; 1,000 shares issued
      and outstanding in 2001                                --          87,500

                                                  -------------   -------------
   Total liabilities                                170,932,501     144,015,220
                                                  -------------   -------------

   Stockholders' equity:
      Preferred Stock not subject to
         mandatory redemption:
            5% series, $100 par value; 3,356
               shares outstanding in 2002 and 200       335,600         335,600
            4.5% series, $100 par value; 614
               shares outstanding in 2002 and 200        61,400          61,400
      Common Stock, 18,669,611 and 18,734,008
         shares outstanding in 2002 and 2001,
         respectively                                39,737,111      40,846,672
      Other capital                                     298,083         298,083
      Unearned compensation                          (1,053,716)       (653,693)
      Other accumulated comprehensive income (exp      (728,465)      4,786,104
      Retained earnings                             120,996,023     117,879,810
                                                  -------------   -------------

   Total stockholders' equity                       159,646,036     163,553,976
                                                  -------------   -------------

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY          $ 330,578,537   $ 307,569,196
                                                  =============   =============



See accompanying notes to consolidated financial statements.


                                       3


                    CT COMMUNICATIONS, INC. AND SUBSIDIARIES
                       Consolidated Statements of Income
                                  (Unaudited)



                                                   Three Months Ended             Six Months Ended
                                                         June 30,                      June 30,
                                                   2002           2001          2002             2001
                                                   ----           ----          ----             ----
                                                                                  
Operating revenues                            $ 37,381,194    $ 31,724,387    $ 72,956,101    $ 62,809,945

Operating expenses                              33,967,272      30,205,795      66,480,212      59,915,008

Restructuring charge                                    --              --              --       1,942,076
                                              ------------    ------------    ------------    ------------
        Operating income                         3,413,922       1,518,592       6,475,889         952,861
                                              ------------    ------------    ------------    ------------

Other income (expenses):
    Equity in income of
      unconsolidated companies, net              1,179,950       1,620,561       1,859,980       2,561,558
    Interest, dividend income and gain
      on sale of investments                     1,844,349       4,025,292       4,787,688       7,153,347
    Impairment of investments                     (170,724)             --        (704,299)             --
    Other expenses, principally interest        (1,572,102)       (858,157)     (2,985,188)     (2,094,243)
                                              ------------    ------------    ------------    ------------
        Total other income                       1,281,473       4,787,696       2,958,181       7,620,662
                                              ------------    ------------    ------------    ------------

        Income before income taxes               4,695,395       6,306,288       9,434,070       8,573,523

Income taxes                                     1,918,004       2,545,476       3,860,861       3,456,962
                                              ------------    ------------    ------------    ------------

        Net income                               2,777,391       3,760,812       5,573,209       5,116,561

Dividends on Preferred Stock                         4,195           6,236          10,281          12,472
                                              ------------    ------------    ------------    ------------

Earnings for Common Stock                     $  2,773,196       3,754,576    $  5,562,928       5,104,089
                                              ============    ============    ============    ============

Basic earnings per common share:
    Earnings per common share                 $       0.15    $       0.20    $       0.30    $       0.27
                                              ============    ============    ============    ============

Diluted earnings per common share:
    Earnings per common share                 $       0.15    $       0.20    $       0.30    $       0.27
                                              ============    ============    ============    ============

Basic weighted average shares outstanding       18,734,756      18,848,149      18,746,997      18,852,698
                                              ============    ============    ============    ============

Diluted weighted average shares outstanding     18,774,592      18,889,365      18,790,135      18,895,277
                                              ============    ============    ============    ============


See accompanying notes to consolidated financial statements.


                                      4

                    CT COMMUNICATIONS, INC. AND SUBSIDIARIES
                     Consolidated Statements of Cash Flows
                                  (Unaudited)



                                                                    Six Months Ended June 30,
                                                                       2002            2001
                                                                   ------------    ------------
                                                                             
Cash flows from operating activities:
    Net income                                                     $  5,573,209    $  5,116,561
Adjustments to reconcile net income to
net cash provided by operating activities:
    Depreciation and amortization                                    13,807,073      11,328,458
    Postretirement benefits                                             138,000          77,488
    Gain on sales of investment securities                           (3,966,574)     (6,200,984)
    Gain on sales of investment in unconsolidated companies            (656,679)             --
    Impairment of investments                                           704,299              --
    Undistributed income of unconsolidated companies                 (1,859,980)     (2,561,558)
    Deferred income taxes and tax credits                             1,507,147        (468,442)
    Changes in operating assets and
    liabilities, net of effects of acquisitions:
      Accounts receivable                                               655,373      (2,616,432)
      Income taxes receivable                                         3,117,954       1,273,381
      Materials and supplies                                             97,147        (329,036)
      Other assets                                                     (221,132)       (768,776)
      Accounts payable                                               (3,592,329)     (2,020,071)
      Customer deposits and advance billings                           (329,057)       (332,060)
      Accrued liabilities                                               555,991         142,958
                                                                   ------------    ------------
Net cash provided by operating activities                            15,530,442       2,641,487
                                                                   ------------    ------------
Cash flows from investing activities:
    Capital expenditures, net                                       (27,341,068)    (36,009,414)
    Investment in unconsolidated company                               (500,000)             --
    Purchase of investment securities                                (1,147,932)     (1,272,925)
    Proceeds from sale of investment securities                       4,891,667       6,924,974
    Proceeds from sale of investment in unconsolidated companies        818,360              --
    Capital distribution from unconsolidated companies                1,986,426       1,986,426
    Purchase of wireless spectrum                                      (760,000)     (2,397,840)
    Acquisitions, net of cash                                        (3,212,503)    (19,325,309)
                                                                   ------------    ------------
Net cash used in investing activities                               (25,265,050)    (50,094,088)
                                                                   ------------    ------------
Cash flows from financing activities:
    Net proceeds from credit facilities                              12,500,000      86,000,000
    Repayment of credit facility                                             --     (39,000,000)
    Dividends paid                                                   (2,456,996)     (2,466,463)
    Repurchase of Common and Preferred Stock                         (2,394,787)     (1,053,050)
    Proceeds from Common Stock issuances                                327,253          67,292
                                                                   ------------    ------------
Net cash provided by financing activities                             7,975,470      43,547,779
                                                                   ------------    ------------
Net decrease in cash and cash equivalents                            (1,759,138)     (3,904,822)
Cash and cash equivalents - beginning of period                       8,396,860       8,060,015
                                                                   ------------    ------------
Cash and cash equivalents - end of period                          $  6,637,722    $  4,155,193
                                                                   ============    ============

Supplemental disclosure of non-cash investing and
    financing activities:
      Issuance of note payable in connection with
         acquisition of wireless spectrum                          $ 17,696,562    $         --


See accompanying notes to consolidated financial statements.


                                       5


                    CT COMMUNICATIONS, INC. AND SUBSIDIARIES
                 Consolidated Statements of Comprehensive Income
                                  (Unaudited)




                                                Three Months Ended           Six Months Ended
                                                     June 30,                     June 30,
                                           --------------------------    --------------------------
                                               2002           2001           2002          2001
                                           -----------    -----------    -----------    -----------
                                                                            
Net income                                 $ 2,777,391    $ 3,760,812    $ 5,573,209    $ 5,116,561

Other comprehensive income, net of tax:
     Unrealized holding gains (losses)
        on available-for-sale securities      (906,897)     2,333,124     (2,485,845)     1,682,436
     Unrealized holding losses on
        interest rate swaps                   (221,417)            --        (63,370)            --
     Less reclassification adjustment
        for gains realized in net income    (1,137,323)    (2,335,067)    (2,965,354)    (3,977,311)
                                           -----------    -----------    -----------    -----------
Comprehensive income                       $   511,754    $ 3,758,869    $    58,640    $ 2,821,686
                                           ===========    ===========    ===========    ===========


See accompanying notes to consolidated financial statements.


                                       6

                    CT COMMUNICATIONS, INC. AND SUBSIDIARIES
                                   (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       In the opinion of management of CT Communications, Inc. (the
         "Company"), the accompanying unaudited financial statements contain all
         adjustments consisting of only normal recurring accruals necessary to
         present fairly the Company's financial position as of June 30, 2002 and
         2001, and the results of its operations and cash flows for the three
         and six months then ended. These unaudited financial statements should
         be read along with the Company's Annual Report on Form 10-K for the
         year ended December 31, 2001 and do not include all disclosures
         associated with the Company's annual financial statements.

2.       In certain instances, amounts previously reported in the 2001
         consolidated financial statements have been reclassified to conform
         with the 2002 consolidated financial statements presentation. Such
         reclassifications have no effect on net income or retained earnings as
         previously reported.

3.       The results of operations for the six months ended June 30, 2002 and
         2001 are not necessarily indicative of the results to be expected for
         the full year.

4.       The following is a summary of Common Stock transactions during the six
         months ended June 30, 2002.




                                                                                  Shares          Value
                                                                                ----------    -----------
                                                                                        
Outstanding at December 31, 2001 ...........................................    18,734,008    $40,846,672
Purchase of Common Stock ...................................................      (174,134)    (2,758,539)
Issuance of Common Stock ...................................................       109,737      1,648,978
                                                                                ----------    -----------
Outstanding at June 30, 2002 ...............................................    18,669,611    $39,737,111
                                                                                ==========    ===========

                                                                                  Basic         Diluted
                                                                                ----------     ----------
Weighted average shares outstanding for the
         six months ended June 30, 2002 ....................................    18,746,997     18,790,135

Weighted average shares outstanding for the
         six months ended June 30, 2001 ....................................    18,852,698     18,895,277


         The Company began a stock repurchase program in March 2001 to
         repurchase up to 1,000,000 shares of its outstanding Common Stock
         periodically through March 2002. In April 2002, the Board of Directors
         approved the continuation of the stock repurchase program through March
         2003. As of June 30, 2002, 317,950 shares had been repurchased at a
         cost of approximately $4.7 million, including 156,500 shares at a cost
         of $2.3 million repurchased during the six months ended June 30, 2002.
         Under the repurchase program, the Company is authorized to repurchase
         up to 797,550 shares of Common Stock over the next nine months.

         Outstanding options to purchase approximately 674,000 shares of Common
         Stock for the three and six months ended June 30, 2002 and
         approximately 441,000 shares of Common Stock for the three and six
         months ended June 30, 2001 were not included in the computation of
         diluted earnings per share and diluted weighted shares outstanding
         because the exercise price of these options was greater than the
         average market price of the Common Stock during the respective periods.

         In June 2002, the Company secured approval from the North Carolina
         Utilities Commission and accelerated the redemption of the remaining
         1,000 outstanding shares of 4.8% redeemable preferred stock of The
         Concord Telephone Company, a subsidiary of the Company, for $95,000.


                                       7


5.       SECURITIES AVAILABLE-FOR-SALE

         The amortized cost, gross unrealized holding gains, gross unrealized
holding losses and fair value for the Company's investments by major security
type and class of security at June 30, 2002 and December 31, 2001 were as
follows:



Equity Securities                     Amortized          Gross Unrealized             Gross Unrealized               Fair
Available-for-Sale                      Cost               Holding Gains               Holding Losses                Value
- ------------------                      ----               -------------               --------------                -----
                                                                                                      
June 30, 2002                      $5,803,145            $        114,750             $      (658,789)            $  5,259,106
                                   ==========            ================             ===============             ============

December 31, 2001                  $6,184,604            $      8,236,285             $      (374,028)            $ 14,046,861
                                   ==========            ================             ===============             ============


During the six months ended June 30, 2002, the Company sold 218,092 shares of
VeriSign, Inc. ("VeriSign") common stock and 222,182 shares of ITC-DeltaCom,
Inc. ("ITC-DeltaCom") common stock. As of June 30, 2002, the Company has no
remaining shares of VeriSign common stock. During the six months ended June 30,
2002, the Company wrote down $0.7 million for impaired investment securities,
including $0.5 million related to shares of ITC-DeltaCom common stock.

6.       INVESTMENTS IN UNCONSOLIDATED COMPANIES



                                                                           June 30, 2002                     December 31, 2001
                                                                           -------------                     -----------------
                                                                                                      
Equity Method:
         Palmetto MobileNet, L.P.                                          $     9,717,869                  $          9,808,915
         Wireless One of North Carolina, L.L.C.                                         --                             8,762,090
         Other                                                                     113,512                               112,418

Cost Method:
         ITC Holding Company                                                     2,124,572                             2,215,534
         Maxcom
           Telecomunicaciones, S.A. de C.V.                                      1,238,476                             1,238,476
         Other                                                                     500,000                               170,719
                                                                           ---------------                  --------------------
                  TOTAL                                                    $    13,694,429                  $         22,308,152
                                                                           ===============                  ====================


On September 14, 2001, the Company's wholly owned subsidiary, CT Wireless Cable,
Inc. ("CTWC"), and Wireless One of North Carolina, L.L.C. ("WONC"), entered into
a Limited Liability Company Interest Purchase Agreement (the "Purchase
Agreement") with Wireless One, Inc., a subsidiary of WorldCom, Inc. ("Wireless
One"), and Worldcom Broadband Solutions, Inc. pursuant to which WONC would
purchase from Wireless One its entire 50% interest in WONC. The FCC approved
this transaction on March 28, 2002 and the transaction was closed on April 5,
2002, resulting in CTWC owning 100% of the equity interest in WONC. This
transaction has been accounted for using the purchase method of accounting. As a
result, the results of WONC have been consolidated with the Company's results
from the beginning of the second quarter 2002. Pro forma results for WONC are
not material to the Company's consolidated financial statements.

The total purchase price for Wireless One's interest in WONC was $20,696,562,
$3.0 million of which was paid in cash at the closing and the remainder of which
was paid in the form of an interest bearing promissory note of WONC. The
promissory note is payable over the 10 year period following the closing, with a
$7.0 million payment due by 12 months from the closing date (which payment may
be deferred for up to an additional two years) and the remainder payable in
equal annual installments beginning after six years. In the event the $7.0
million payment is not made when due, either CTWC or Wireless One may cause WONC
to transfer certain of its licensed frequencies to Wireless One in payment of
the outstanding principal amount of the promissory note. The promissory note is
secured by a pledge of WONC's channel rights.


                                       8


The total purchase price of $20.7 million was allocated as follows:



                                                     
                  Current assets                        $     277,957
                  Intangibles and licenses                 20,725,918
                  Equipment                                   412,367
                  Accounts payable                           (719,680)
                                                        -------------

                  Total purchase price                  $  20,696,562
                                                        =============


On July 19, 2002, the Company delivered a "Split-Up Notice" to Wireless One
pursuant to the Purchase Agreement. This "Split-Up Notice" sets into motion a
process under the Purchase Agreement pursuant to which WONC will transfer to
Wireless One certain of WONC's licensed frequencies and a payment of all accrued
interest in satisfaction of WONC's $17.7 million promissory note to Wireless
One. The dates on which these transactions will be effected have not yet been
determined, but are expected to occur no later than the second quarter of fiscal
year 2003.

7.       RESTRUCTURING LIABILITY

In 2001, the Company recorded restructuring charges of $1,942,076 in connection
with an early retirement plan and the closing of competitive local exchange
carrier operations in Raleigh, North Carolina. The related liabilities are
included in other accrued liabilities and accrued pension cost in the
accompanying consolidated balance sheets and were established to accrue for
estimated retirement and severance costs related to 17 employees primarily
within the network department, lease termination costs, Raleigh transport costs
and other costs associated with the restructuring action. The remaining
liability at June 30, 2002 relates primarily to pension obligations of
approximately $1.0 million and the remaining Raleigh lease liability. A summary
of restructuring liability activity for the six months ended June 30, 2002 is as
follows:


                                                
Balance at December 31, 2001                       $       1,210,181
     Raleigh lease payments                                  (63,940)
                                                     ---------------
Balance at June 30, 2002                           $       1,146,241
                                                     ===============


In November 2001, the Company recorded restructuring charges of $1,521,511 in
connection with ceasing the expansion of the operations of the Company's
WaveTel, LLC ("WaveTel") subsidiary into the Raleigh, Durham, and Charlotte,
North Carolina markets. The related liabilities are included in other accrued
liabilities in the accompanying consolidated balance sheets and were established
to accrue for remaining severance costs related to 10 WaveTel employees, cell
site lease termination costs, design and engineering costs, and other costs
associated with the restructuring action. A summary of restructuring liability
activity related to the WaveTel restructuring for the six months ended June 30,
2002 is as follows:


                                                 
Balance at December 31, 2001                        $         222,509
     Severance costs                                           (7,509)
     Cell-site lease termination costs                        (52,500)
                                                    -----------------
Balance at June 30, 2002                            $         162,500
                                                    =================


8.       LONG-TERM DEBT

Long-term debt consists of the following:

The Company has a $90.0 million revolving five year line of credit with interest
at LIBOR plus a spread based on various financial ratios, currently 1.25%. The
interest rate on June 30, 2002 was 3.11%. The credit facility provides for
quarterly payments of interest until maturity on March 31, 2006. As of June 30,
2002, $60.0 million was outstanding

                                       9


under the revolving credit agreement. The Company also has a 7.32% fixed rate
$50.0 million term loan that matures on December 31, 2014. All $50.0 million was
outstanding as of June 30, 2002. The Company also has an additional line of
credit for $10.0 million at one month LIBOR plus 1.25%. As of June 30, 2002, the
Company had $2.5 million outstanding under this credit line at an interest rate
of 3.09%.

The Company has a $17.7 million note payable that bears interest at 9% annually
with principal payments due over the 10 year period ending March 2012. A $7.0
million principal payment is due by March 2003 (which payment may be deferred
until March 2005 with the payment of accrued interest) and the remainder payable
in equal annual installments beginning in March 2008. $0.4 million of interest
incurred has been capitalized during the six months ended June 30, 2002 to ready
the use of wireless spectrum.

The Company has three interest rate swap transactions to fix $10.0 million, $5.0
million, and $5.0 million of the amounts outstanding under the $90.0 million
revolving line of credit at rates of 5.9%, 4.53%, and 3.81%, respectively, plus
a current spread of 1.25%. The fair value of each of the swaps as of June 30,
2002 was ($513,468), ($59,550), and ($54,131), respectively.

9.       PARTITIONING

The Company effected the partitioning of its portion of the Cingular DCS Network
on June 1, 2001. As a result, the Company acquired 47 cell sites, approximately
13,000 additional subscribers and a license for spectrum for Cabarrus, Rowan and
Stanly Counties in North Carolina and the southern portion of Iredell County,
North Carolina. This transaction has been accounted for under the purchase
method of accounting. The total purchase price was $23.2 million. The Company
paid $19.3 million in June 2001 and $3.9 million in September 2001. Allocation
of the purchase price is summarized below:


                                                
                  Property and equipment           $            4,635,875
                  Intangible and other assets                  18,724,559
                  Liabilities                                    (150,000)
                                                   ----------------------

                  Total purchase price             $           23,210,434
                                                   ======================


While the Company has ownership of the assets and customer accounts within its
partitioned area, the Company will continue to purchase pre-defined services
from Cingular Wireless, such as switching, and will remain subject to certain
conditions including certain branding requirements, offering partnership service
plans and adherence to partnership technical and customer care standards.


                                       10





10.    GOODWILL

On January 1, 2002, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets." In
accordance with SFAS No. 142, the Company discontinued goodwill amortization and
tested goodwill for impairment as of January 1, 2002 determining that the
recognition of an impairment loss was not necessary. The Company will continue
to test goodwill for impairment at least annually. Goodwill was $10.3 million as
of June 30, 2002, and was unchanged for the quarter then ended. The following
table presents net income on a comparable basis, after adjustment for goodwill
amortization:




                                                Three Months Ended June 30,                Six Months Ended June 30,
                                                   2002              2001                  2002                 2001
                                                   ----              ----                  ----                 ----
                                                                                               
Net income:
       As reported                             $   2,777,391     $   3,760,812         $   5,573,209       $   5,116,561
       Goodwill amortization
        (net of tax)                                      --           225,425                    --             695,175
                                               -------------     -------------         -------------       -------------

       Adjusted net income                     $   2,777,391     $   3,986,237         $   5,573,209       $   5,811,736
                                               =============     =============         =============       =============

Basic earnings per share:
       As reported                             $        0.15     $        0.20         $        0.30       $        0.27
                                               =============     =============         =============       =============

       As adjusted                             $        0.15     $        0.21         $        0.30       $        0.31
                                               =============     =============         =============       =============


Diluted earnings per share:
       As reported                             $        0.15     $        0.20         $        0.30       $        0.27
                                               =============     =============         =============       =============

       As adjusted                             $        0.15     $        0.21         $        0.30       $        0.31
                                               =============     =============         =============       =============



11.      RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Company adopted SFAS No. 141, "Business Combinations." SFAS
No. 141 requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001, as well as all purchase method
business combinations completed after June 30, 2001. SFAS No. 141 also specifies
the criteria that intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill.

SFAS No. 141 required the Company to evaluate its existing intangible assets and
goodwill that were acquired in prior purchase business combinations, and to make
any necessary reclassifications in order to conform with the new criteria in
SFAS No. 141 for recognition apart from goodwill. SFAS No. 142 required the
Company to reassess the useful lives and residual values of all intangible
assets acquired in purchase business combinations, and to make any necessary
amortization period adjustments. In addition, for those intangible assets the
Company identified as having an indefinite useful life, the Company tested the
intangible asset for impairment in accordance with the provisions of SFAS No.
142 during the period ended June 30, 2002.

Effective January 1, 2002, the Company adopted SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This statement addresses
accounting and reporting of all long-lived assets, except goodwill, that are
either held and used or disposed of through sale or other means. Adoption of
SFAS No. 144 did not have a material effect on the Company's financial position,
results of operations or cash flows.


                                       11


The Financial Accounting Standards Board issued SFAS No. 143, "Accounting For
Asset Retirement Obligations," which is effective January 1, 2003. This
statement requires, among other things, the accounting and reporting of legal
obligations associated with the retirement of long-lived assets that result from
the acquisition, construction, development or normal operation of a long-lived
asset. The Company has not yet determined the impact of the adoption of this
standard on its financial position, results of operations and cash flows.

Effective January 1, 2001, the Company adopted the provisions of SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
requires the recognition of all derivative financial instruments as either
assets or liabilities in the statement of financial condition and measurement of
those instruments at fair value. Changes in the fair value of those derivatives
will be reported in earnings or other comprehensive income depending on the use
of the derivative and whether it qualifies for hedge accounting. We have
identified the interest rate swap agreements as our only derivative instruments.

12.  SEGMENT INFORMATION

The Company has five reportable segments as follows: the incumbent local
exchange carrier ("ILEC") which provides local telephone service, the digital
wireless group ("DCS") which provides wireless phone services, the competitive
local exchange carrier ("CLEC") which provides competitive local telephone
services to customers outside the ILEC's operating area, the Greenfield business
segment ("Greenfield") which provides telecommunications services to new single
family and mixed-use developments outside the ILEC's operating area, and the
internet and data service provider ("ISP") which provides dial-up and high-speed
internet access, web design, web hosting and other data related services.
Effective January 1, 2002, the Company stopped managing results of the long
distance services unit as a separate business unit and began reporting long
distance as a product offering within the remaining business segments. Results
for previous quarters have been restated for comparability. Accounting policies
of the segments are the same as those described in the summary of significant
accounting policies included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2001. The Company evaluates performance based on
operating profit before other income/(expenses) and income taxes. Intersegment
revenues and expenses are excluded for purposes of calculating operating
earnings before interest, income taxes, depreciation, and amortization
("Operating EBITDA") and segment operating profit/(loss). Select data by
business segment for the three and six months ended June 30, 2002 and 2001, is
as follows:


                                       12





THREE MONTHS ENDED JUNE 30, 2002
                                               ILEC               DCS              CLEC          GREENFIELD
                                               ----               ---              ----          ----------
                                                                                        
 External revenues                $         23,982,140         6,133,614        3,873,013           902,043
 Intersegment revenues                       1,725,487            32,854          260,015            15,474
 External expenses                          11,156,917         5,055,042        4,959,083         1,707,980
 Intersegment expenses                       1,926,558           332,488          749,381           427,102
 Operating EBITDA *                         12,825,223         1,078,572       (1,086,070)         (805,937)
 Depreciation and
     amortization                            4,928,686           277,989          546,904           478,897
                                  -------------------------------------------------------------------------
 Segment operating
    profit (loss)                           7,896,537           800,583       (1,632,974)       (1,284,834)
                                  -------------------------------------------------------------------------
 Segment Assets                            159,486,372        29,521,461       17,510,926        18,253,263

THREE MONTHS ENDED JUNE 30, 2001
                                               ILEC               DCS              CLEC          GREENFIELD
                                               ----               ---              ----          ----------
 External revenues                $         23,278,153         3,278,004        2,568,958           358,443
 Intersegment revenues                       1,793,068            18,915               --                --
 External expenses                          11,848,080         2,628,864        4,269,570         1,164,790
 Intersegment expenses                         868,885            23,238          137,060             2,523
 Operating EBITDA *                         11,430,073           649,140       (1,700,612)         (806,347)
 Depreciation and
     amortization                            4,440,304            21,157          478,191           205,767
                                  -------------------------------------------------------------------------
 Segment operating
     profit (loss)                           6,989,769           627,983       (2,178,803)       (1,012,114)
                                  -------------------------------------------------------------------------
 Segment Assets                            169,658,996        21,304,926       13,931,339         9,733,253

SIX MONTHS ENDED JUNE 30, 2002
                                              ILEC               DCS              CLEC          GREENFIELD
                                              ----               ---              ----          ----------
 External revenues                $         47,177,200        11,888,611        7,320,146         1,701,924
 Intersegment revenues                       3,343,097            56,654          470,128            18,167
 External expenses                          22,073,874         9,732,332        9,475,765         3,347,802
 Intersegment expenses                       3,072,160           396,341          990,416           455,240
 Operating EBITDA *                         25,103,326         2,156,279       (2,155,619)       (1,645,878)
 Depreciation and
     amortization                            9,847,147           477,622        1,062,248           898,434
                                  -------------------------------------------------------------------------
 Segment operating
     profit (loss)                          15,256,179         1,678,657       (3,217,867)       (2,544,312)
                                  -------------------------------------------------------------------------
 Segment Assets                            159,486,372        29,521,461       17,510,926        18,253,263

SIX MONTHS ENDED JUNE 30, 2001
                                               ILEC               DCS              CLEC          GREENFIELD
                                               ----               ---              ----          ----------
 External revenues                $         47,454,944         5,727,121        4,424,077           649,549
 Intersegment revenues                       3,443,900            39,189               --                --
 External expenses                          25,417,651         5,861,371        8,676,084         2,285,177
 Intersegment expenses                       1,708,659            58,017          240,134             4,472
 Operating EBITDA *                         22,037,293          (134,250)      (4,252,007)       (1,635,628)
 Depreciation and
     amortization                            8,796,335            37,527          922,869           320,465
                                    ------------------------------------------------------------------------
 Segment operating
     profit (loss)                          13,240,958          (171,777)      (5,174,876)       (1,956,093)
                                    ------------------------------------------------------------------------
 Segment Assets                            169,658,996        21,304,926       13,931,339         9,733,253




THREE MONTHS ENDED JUNE 30, 2002
                                        ISP              OTHER             TOTAL
                                        ---              -----             -----
                                                                
 External revenues                   2,444,000            46,384         37,381,194
 Intersegment revenues                      65         2,566,470          4,600,365
 External expenses                   2,567,215         1,471,910         26,918,147
 Intersegment expenses               1,085,170            79,666          4,600,365
 Operating EBITDA *                   (123,215)       (1,425,526)        10,463,047
 Depreciation and
     amortization                      347,950           468,699          7,049,125
                                    -----------------------------------------------
 Segment operating
     profit (loss)                    (471,165)       (1,894,225)         3,413,922
                                    -----------------------------------------------
 Segment Assets                     15,561,648        90,244,867        330,578,537

THREE MONTHS ENDED JUNE 30, 2001
                                        ISP              OTHER             TOTAL
                                        ---              -----             -----
 External revenues                   2,240,568               261         31,724,387
 Intersegment revenues                      --                --          1,811,983
 External expenses                   2,469,706         2,027,049         24,408,059
 Intersegment expenses                 731,263            49,014          1,811,983
 Operating EBITDA *                   (229,138)       (2,026,788)         7,316,328
 Depreciation and
     amortization                      567,372            84,945          5,797,736
                                    -----------------------------------------------
     profit (loss)                    (796,510)       (2,111,733)         1,518,592
 Segment operating
                                    -----------------------------------------------
 Segment Assets                     15,420,162        34,743,797        264,792,473

SIX MONTHS ENDED JUNE 30, 2002
                                        ISP              OTHER             TOTAL
                                        ---              -----             -----
 External revenues                   4,786,633            81,587         72,956,101
 Intersegment revenues                     369         2,986,830          6,875,245
 External expenses                   5,284,287         2,759,079         52,673,139
 Intersegment expenses               1,874,973            86,115          6,875,245
 Operating EBITDA *                   (497,654)       (2,677,492)        20,282,962
 Depreciation and
     amortization                      791,435           730,187         13,807,073
                                    -----------------------------------------------
 Segment operating
     profit (loss)                  (1,289,089)       (3,407,679)         6,475,889
                                    -----------------------------------------------
 Segment Assets                     15,561,648        90,244,867        330,578,537

SIX MONTHS ENDED JUNE 30, 2001
                                        ISP              OTHER             TOTAL
                                        ---              -----             -----
 External revenues                   4,553,993               261         62,809,945
 Intersegment revenues                      --                --          3,483,089
 External expenses                   4,613,741         3,674,600         50,528,624
 Intersegment expenses               1,415,424            56,383          3,483,089
 Operating EBITDA *                    (59,748)       (3,674,339)        12,281,321
 Depreciation and
     amortization                    1,090,139           161,125         11,328,460
                                    -----------------------------------------------
 Segment operating
     profit (loss)                  (1,149,887)       (3,835,464)           952,861
                                    -----------------------------------------------
 Segment Assets                     15,420,162        34,743,797        264,792,473




* Management believes that investors may use this data to analyze and compare
other communications companies with the Company in terms of operating
performance and liquidity. Operating EBITDA is not a measure of financial
performance under generally accepted accounting principles and should not be
construed as a substitute for consolidated net income as a measure of
performance,

                                       13



or for cash flow as a measure of liquidity. Operating EBITDA, as calculated by
the Company, is not necessarily comparable to similarly captioned amounts of
other companies.

Reconciliation to Net Income Before Tax



                                                             Three Months Ended     Three Months Ended
                                                               June 30, 2002           June 30, 2001
                                                               -------------           -------------
                                                                              
Segment operating profit                                         $3,413,922             $1,518,592
Total other income                                                1,281,473              4,787,696
                                                                 ----------             ----------
Income before income taxes                                       $4,695,395             $6,306,288
                                                                 ==========             ==========

                                                              Six Months Ended       Six Months Ended
                                                                June 30, 2002          June 30, 2001
                                                                -------------          -------------

Segment operating profit                                         $6,475,889             $  952,861
Total other income                                                2,958,181              7,620,662
                                                                 ----------             ----------
Income before income taxes                                       $9,434,070             $8,573,523
                                                                 ==========             ==========


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Results of Operations

Three Months Ended June 30, 2002 and June 30, 2001

         CONSOLIDATED

         Operating revenues increased $5.7 million or 17.8% to $37.4 million for
the three months ended June 30, 2002 when compared to the three months ended
June 30, 2001. The increase in revenues is primarily due to increases in the
revenues of DCS, CLEC, ILEC and Greenfield. See the discussions by business unit
below for additional detail and analysis.

         Operating expenses, exclusive of depreciation and amortization,
increased $2.5 million or 10.3% to $26.9 million for the three months ended June
30, 2002 when compared to the three months ended June 30, 2001. Substantially
all of this increase is a result of additional DCS expenses attributable to the
partitioning of the Company's portion of the Cingular Wireless digital network
completed in June 2001.

         Depreciation and amortization expense increased $1.3 million or 21.6%
to $7.0 million for the three months ended June 30, 2002 when compared to the
three months ended June 30, 2001. This increase reflects the significant
increase in depreciable assets over the last 12 months, including additions in
DCS assets from the partitioning of the Cingular DCS partnership, Greenfield
assets from continued growth and construction of facilities, and certain other
business unit assets such as WaveTel's wireless broadband trial market and the
new corporate center. This increase also reflects $0.2 million in reduced
amortization due to a change in accounting rules for goodwill and other
intangibles.

         Other income (expenses) decreased $3.5 million for the three months
ended June 30, 2002 when compared to the three months ended June 30, 2001.
Equity in income of unconsolidated companies decreased $0.4 million due to lower
income from the equity interest in Palmetto MobileNet, L.P. Interest, dividends
and gain on sale of investments reflected $2.2 million lower gains on marketable
security sales during the three months ended June 30, 2002 when compared to the
three months ended June 30, 2001. Interest expense increased $0.7 million as a
result of the Company's increased level of


                                       14


indebtedness. During the three months ended June 30, 2002, the Company wrote
down the carrying value of security investments by $0.2 million for impairment.

         Income taxes decreased $0.6 million or 24.7% to $1.9 million for the
three months ended June 30, 2002 compared with the three months ended June 30,
2001 due primarily to the decrease in taxable income of $1.6 million.

         Net income decreased $1.0 million or 26.1% to $2.8 million for the
three months ended June 30, 2002 compared to the three months ended June 30,
2001.

         ILEC

         Excluding intersegment revenues, ILEC revenue was $24.0 million for the
three months ended June 30, 2002, a $0.7 million or 3.0% increase from the three
months ended June 30, 2001. This increase is primarily due to higher line charge
and calling feature revenues of $0.6 million. During the three months ended June
30, 2002, the Company recorded a $0.3 million provision for bad debts related to
WorldCom's bankruptcy filing. At June 30, 2002, the total number of local access
lines in the ILEC's three-county service area equaled approximately 123,321. The
Company is currently a party to six interconnection agreements that provide
other CLECs access to the Company's local telephone service market. Other CLECs
may request interconnection agreements in the future. Additional interconnection
agreements would be expected to provide increased competition to the ILEC.

         Excluding intersegment expenses, ILEC operating expenses were $11.2
million for the three months ended June 30, 2002, which is $0.7 million less
than operating expenses for the three months ended June 30, 2001. Such decreased
operating expenses were primarily attributable to lower interconnection expense
of $0.2, lower settlement expense of $0.2 million, decreased franchise taxes of
$0.2 million due to changes in North Carolina tax laws, and a $0.1 million
reduction in marketing expense.

         DIGITAL WIRELESS

         DCS revenue was $6.1 million for the three months ended June 30, 2002,
a $2.9 million or 87.1% increase over the three months ended June 30, 2001. This
increase was primarily attributable to monthly recurring revenue due to the
addition of the approximately 13,000 subscribers acquired from Cingular Wireless
in the partitioning since June 30, 2001. The total number of post-pay
subscribers is approximately 32,100. With the increase in customers, the DCS
business unit began showing an operating profit during the third quarter of
2001. Offsetting some of the revenue increases were decreases in paging revenues
and prepaid card sales.

         DCS operating expenses were $5.1 million for the three months ended
June 30, 2002, a $2.4 million or 92.3% increase over the three months ended June
30, 2001. This increase was primarily due to the increase in DCS subscribers and
the costs associated with subscriber acquisition. Additionally, DCS recognized
increased employee expenses of $0.2 million from the opening of two new wireless
stores and higher property taxes of $0.1 million attributable to assets acquired
in the partitioning.

         CLEC

         CLEC revenue was $3.9 million for the three months ended June 30, 2002,
a $1.3 million or 50.8% increase over the three months ended June 30, 2001. This
increase was primarily due to an increase in local revenues of $0.9 million and
access revenue of $0.5 million based on the addition of 9,121 access lines since
June 30, 2001. As of June 30, 2002, CLEC had 24,605 total lines in service. This
increase reflects growth in facilities-based services for the Charlotte, North
Carolina and the Greensboro, North Carolina markets.


                                       15


         CLEC operating expenses were $4.3 million for the three months ended
June 30, 2002, a $0.7 million or 16.1% increase over the three months ended June
30, 2001. Costs of providing services, including transport and access expense,
increased $0.3 million due to the increase in access lines. In addition, costs
associated with services provided by centralized corporate units increased.

         GREENFIELD

         Greenfield revenue for the three months ended June 30, 2002 was $0.9
million, a $0.5 million or 151.7% increase over the three months ended June 30,
2001. Revenue growth is primarily associated with lines located at malls served
by the Greenfield unit, as well as single family and multi-dwelling unit
developments. Line revenue increased $0.3 million and access revenue increased
$0.2 million in the three months ended June 30, 2002 compared to the three
months ended June 30, 2001. In total, 4,386 access lines were in service in 45
developments as of June 30, 2002. The Greenfield unit has entered into preferred
provider agreements with a total of 65 residential and business developments and
projects located primarily in the Charlotte and Raleigh, North Carolina markets
as of June 30, 2002. Revenues from these projects are expected to grow as access
lines are placed in service.

         Greenfield expenses were $1.7 million for the three months ended June
30, 2002, a $0.5 million or 46.6% increase over the three months ended June 30,
2001. These expenses are associated with the existing 4,386 lines in service, as
well as the growth of the business unit due to continued work on new developer
agreements.

         INTERNET AND DATA SERVICES

         ISP revenue was $2.4 million for the three months ended June 30, 2002,
a $0.2 million or 9.1% increase over the three months ended June 30, 2001.
Revenues from dial-up accounts decreased by $0.1 million and web development and
programming were lower than last year. DSL revenues increased $0.3 million.
While traditional dial-up customers have decreased in number by approximately
1,100 during the last 12 months, over 2,700 DSL subscribers and dedicated high
speed customers have been added since June 30, 2001.

         ISP operating expenses were $2.6 million for the three months ended
June 30, 2002, consistent with the three months ended June 30, 2001. Increases
in network expense were offset by decreases in various selling, general and
administrative expenses as the unit continues to focus on cost control.

         OTHER BUSINESS UNITS

         Other operating unit expenses were $1.5 million for the three months
ended June 30, 2002 compared to $2.0 million for the three months ended June 30,
2001. This decrease reflects lower expenses associated with the broadband
wireless trial market operated in Fayetteville, North Carolina by WaveTel as a
result of the November 2001 decision to cease expansion of WaveTel's operations
into the Raleigh, Durham and Charlotte, North Carolina markets. WaveTel provides
broadband data and second-line voice service to its customers.

Six Months Ended June 30, 2002 and June 30, 2001

         CONSOLIDATED

         Operating revenues increased $10.1 million or 16.2% to $73.0 million
for the six months ended June 30, 2002 when compared to the six months ended
June 30, 2001. The increase in revenues is due to increases in the revenues of
DCS, CLEC and Greenfield. See the discussions by business unit below for
additional detail and analysis.


                                       16


         Operating expenses, exclusive of depreciation and amortization,
increased $2.1 million or 4.2% to $52.7 million for the six months ended June
30, 2002 when compared to the six months ended June 30, 2001. This increase
results from increased access lines in several business units, including DCS,
Greenfield and CLEC. The operating expense increase was offset by a $1.9 million
restructuring charge expensed during the six months ended June 30, 2001.

         Depreciation and amortization expense increased $2.5 million or 21.9%
to $13.8 million for the six months ended June 30, 2002 when compared to the six
months ended June 30, 2001. This increase reflects the significant increase in
depreciable assets over the last 12 months, including additions in DCS assets
from the partitioning of the Cingular DCS partnership, the new corporate center
and Greenfield assets from continued growth and construction of facilities. This
increase also reflects $0.7 million in reduced amortization due to a change in
accounting rules for goodwill and other intangibles.

         Other income (expenses) decreased $4.7 million for the six months ended
June 30, 2002 when compared to the six months ended June 30, 2001. Equity in
income of unconsolidated companies decreased $0.7 million due to lower income
from the equity interest in Palmetto MobileNet, L.P. Interest, dividends and
gain on sale of investments reflected $2.4 million lower gains on marketable
security sales during the six months ended June 30, 2002 when compared to the
six months ended June 30, 2001. Interest expense increased $0.9 million as a
result of the Company's increased level of indebtedness. During the six months
ended June 30, 2002, the Company wrote down the carrying value of security
investments by $0.7 million for impairment.

         Income taxes increased $0.4 million or 11.7% to $3.9 million for the
six months ended June 30, 2002 compared with the six months ended June 30, 2001
due primarily to the increase in taxable income of $0.9 million.

         Net income increased $0.4 million or 8.2% to $5.6 million for the six
months ended June 30, 2002 compared to the six months ended June 30, 2001.

         ILEC

         Excluding intersegment revenues, ILEC revenue was $47.2 million for the
six months ended June 30, 2002, a $0.3 million or 0.6% decrease from the six
months ended June 30, 2001. This decrease is primarily due to lower long
distance revenues of $1.2 million associated with a combination of decreases in
revenue per minute and minutes of use. Offsetting this decrease were increases
in local and feature revenues of $0.2 million and higher access revenues. During
the six months ended June 30, 2002, the Company recorded a $0.3 million
provision for bad debts related to WorldCom's bankruptcy filing. At June 30,
2002, the total number of local access lines in the ILEC's three-county service
area equaled approximately 123,321. The Company is currently a party to six
interconnection agreements that provide CLECs access to the Company's local
telephone service market. Other CLECs may request interconnection agreements in
the future. Additional interconnection agreements would be expected to provide
increased competition to the ILEC.

         Excluding intersegment expenses, ILEC operating expenses were $22.1
million for the six months ended June 30, 2002, which is $3.3 million less than
operating expenses for the six months ended June 30, 2001. $1.2 million of this
decrease is attributable to restructuring charges incurred for an early
retirement plan in the first quarter of 2001. Other specific decreases in
operating expenses included $0.3 million for the cost of materials associated
with lower equipment sales, $0.3 million in lower contracted services, decreased
settlement expense of $0.3 million, decreased franchise taxes of $0.3 million
due to changes in North Carolina tax laws, and a $0.2 million reduction in
marketing expense.


                                       17


         DIGITAL WIRELESS

         DCS revenue was $11.9 million for the six months ended June 30, 2002, a
$6.2 million or 107.6% increase over the six months ended June 30, 2001. This
increase was primarily attributable to monthly recurring revenue due to the
addition of the approximately 13,000 subscribers acquired from Cingular Wireless
in the partitioning since June 30, 2001. The total number of post-pay
subscribers is approximately 32,100. With the increase in customers, the DCS
business unit began showing an operating profit during the last half of 2001.
Offsetting some of the revenue increases were decreases in prepaid card sales of
$0.4 million, paging revenues of $0.1 million and an increase in bad debts due
to partitioned customers.

         DCS operating expenses were $9.7 million for the six months ended June
30, 2002, a $3.9 million or 66.0% increase over the six months ended June 30,
2001. This increase was primarily due to the increase in DCS subscribers and the
costs associated with subscriber acquisition. Additionally, DCS recognized
increased employee expenses of $0.3 million from the opening of two new wireless
stores, higher marketing expense of $0.1 million and higher property taxes of
$0.1 million attributable to assets acquired in the partitioning.

         CLEC

         CLEC revenue was $7.3 million for the six months ended June 30, 2002, a
$2.9 million or 65.5% increase over the six months ended June 30, 2001. This
increase was primarily due to increases in local revenues of $1.8 million and
access revenues of $1.0 million based on the addition of 9,121 access lines
since June 30, 2001. In addition, long distance revenues increased by $0.9
million due to customer growth and the resulting increase in minutes of use. As
of June 30, 2002, CLEC had 24,605 total lines in service. This increase reflects
growth in facilities-based services for the Charlotte, North Carolina and the
Greensboro, North Carolina markets.

         CLEC operating expenses were $9.5 million for the six months ended June
30, 2002, a $0.8 million or 9.2% increase over the six months ended June 30,
2001. Costs of providing services increased $0.4 million with the increase in
access lines. The increased cost of service was offset by a $0.2 million
decrease in marketing expense and $0.7 million decrease as a result of
restructuring charges expensed during the six months ended June 30, 2001.

         GREENFIELD

         Greenfield revenue for the six months ended June 30, 2002 was $1.7
million, a $1.1 million or 162.0% increase over the six months ended June 30,
2001. Local revenues increased $0.6 million, access revenues increased $0.3
million, and long distance revenues increased $0.1 million over the six months
ended June 30, 2001. In total, 4,386 access lines were in service as of June 30,
2002. The Greenfield unit has entered into preferred provider agreements with a
total of 65 residential and business developments and projects located primarily
in the Charlotte and Raleigh, North Carolina markets as of June 30, 2002.
Revenues from these projects are expected to grow as access lines are placed in
service.

         Greenfield expenses were $3.3 million for the six months ended June 30,
2002, a $1.1 million or 46.5% increase over the six months ended June 30, 2001.
Cost of providing services to the existing 4,386 lines in service increased $0.3
million. The remainder of the increased expenses are associated with the growth
of the business unit due to continued work on new developer agreements.


                                       18


         INTERNET AND DATA SERVICES

         ISP revenue was $4.8 million for the six months ended June 30, 2002, a
$0.2 million or 5.1% increase over the six months ended June 30, 2001. Revenues
from dial-up accounts decreased by $0.2 million and web development and
programming were lower than last year. DSL revenues have increased $0.5 million.
While traditional dial-up customers have decreased in number by approximately
1,100 during the last 12 months, over 2,700 DSL subscribers and dedicated high
speed customers have been added since June 30, 2001.

         ISP operating expenses were $5.3 million for the six months ended June
30, 2002, a $0.7 million or 14.5% increase over the six months ended June 30,
2001. The majority of the increase is associated with increased costs of
operating the DSL network due to the increase in DSL customers.

         OTHER BUSINESS UNITS

         Other operating unit expenses were $2.8 million for the six months
ended June 30, 2002 compared to $3.7 million for the six months ended June 30,
2001. This decrease reflects lower expenses associated with the broadband
wireless trial market operated in Fayetteville, North Carolina by WaveTel as a
result of the November 2001 decision to cease expansion of WaveTel's operations
into the Raleigh, Durham and Charlotte, North Carolina markets. WaveTel provides
broadband data and second-line voice service to its customers.

Liquidity and Capital Resources

         The liquidity of the Company decreased during the six-month period
ended June 30, 2002. Current assets exceeded current liabilities by $13.6
million at June 30, 2002. In comparison, current assets exceeded current
liabilities by $19.1 million at December 31, 2001.

         Current assets decreased by $5.0 million when compared to December 31,
2001. This decrease is primarily the result of a decrease in income tax
receivable of $2.4 million caused by recording the current year tax liability
and a decrease in cash of $1.8 million. In addition, other accounts receivable
decreased related to amounts eliminated due to the consolidation of WONC during
the quarter as a result of the WONC acquisition and prepaid assets decreased
caused by timing of directory, rent and insurance payments.

         Current liabilities increased by $0.6 million from December 31, 2001 to
June 30, 2002. This increase is attributable to increased short-term borrowings
of $2.5 million, increased income taxes payable of $0.7 million for the current
year tax liability and higher other accrued liabilities of $1.7 million,
primarily related to property and other taxes. These increases were offset by
decreases in accounts payable of $2.9 million caused by timing of expenditures,
accrued payroll of $1.1 million due to payment of incentive compensation and
advance billings of $0.3 million due to timing of directory revenues.

         The Company's principal sources of liquidity were cash provided by
operations of $15.5 million, proceeds from the sale of investment securities of
$4.9 million, partnership capital distributions of $2.0 million, and proceeds
from credit facilities of $12.5 million.

         Uses of cash during the six months ended June 30, 2002 included net
capital expenditures of $27.3 million, acquisition of additional ownership
interest in WONC of $3.2 million, purchases of investment securities of $1.1
million, investment in unconsolidated companies of $0.5 million, payment of
dividends of $2.5 million, and the repurchase of Common Stock of the Company and
redemption of 4.8% preferred stock of the Concord Telephone Company of $2.4
million. During March 2002, the Company completed construction of its new
corporate headquarters in Concord, North Carolina.


                                       19

         At June 30, 2002, the fair market value of the Company's investment
securities was $5.3 million, all of which could be pledged to secure additional
borrowing, or sold, if needed for liquidity purposes. The Company has a $90.0
million revolving five year line of credit with interest at LIBOR plus a spread
based on various financial ratios, currently 1.25%. The interest rate on June
30, 2002 was 3.11%. The credit facility provides for quarterly payments of
interest until maturity on March 31, 2006. As of June 30, 2002, $60.0 million
was outstanding under the revolving credit agreement. The Company also has a
7.32% fixed rate $50.0 million term loan that matures on December 31, 2014. All
$50.0 million was outstanding as of June 30, 2002. The Company also has an
additional line of credit for $10.0 million at one month LIBOR plus 1.25%. As of
June 30, 2002, the Company had $2.5 million outstanding under this credit line
at an interest rate of 3.09%.



                                                                      Payments Due by Year
                                                                      --------------------
                                                         Remainder          2003 to             2006 to        2008 and
                                         Total            of 2002            2005                2007            after
                                         ----             -------            ----                ----            -----
                                                                                               
Contractual Obligations
Short-term debt                          2,500,000             --           2,500,000                  --              --
Long-term debt                         127,696,562             --           7,000,000          60,000,000      60,696,562
Operating leases                         5,721,534        901,239           4,232,793             539,934          47,568
                              -------------------------------------------------------------------------------------------
                                       135,918,096        901,239          13,732,793          60,539,934      60,744,130
                              ===========================================================================================


         The Company anticipates that it has adequate resources to meet its
currently foreseeable obligations and capital requirements associated with
continued growth in the CLEC, Greenfield, Digital Wireless and Internet and Data
Service units, as well as its operations, payments associated with long-term
debt and investments as summarized above.

Cautionary Note Regarding Forward-Looking Statements

         The foregoing discussion contains "forward-looking statements," as
defined in Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, that are based on the beliefs of management, as
well as assumptions made by, and information currently available to, management.
Management has based these forward-looking statements on its current
expectations and projections about future events and trends affecting the
financial condition and operations of the Company's business. These
forward-looking statements are subject to certain risks, uncertainties, and
assumptions about us that could cause actual results to differ materially from
those reflected in the forward-looking statements.

         Factors that may cause actual results to differ materially from these
forward-looking statements are (1) the Company's ability to respond effectively
to the sweeping changes in industry conditions caused by the Telecommunications
Act of 1996, and related state and federal legislation and regulations, (2) the
Company's ability to recover the substantial costs to be incurred in connection
with the expansion of existing businesses and the implementation of its various
new business projects, (3) the Company's ability to retain its existing customer
base against local, wireless, internet and data and long distance service
competition, and to market such services to new customers, (4) the performance
of the Company's investments, (5) the Company's ability to effectively manage
rapid changes in technology, (6) the financial stability of the Company's
customers and business partners, (7) the impact of economic and political events
on the Company's business, operating regions, and customers and (8) the
Company's ability to effectively respond to the actions of its competitors.


                                       20


         In some cases, these forward-looking statements can be identified by
the use of words such as "may," "will," "should," "expect," "intend," "plan,"
"anticipate," "believe," "estimate," "predict," "project" or "potential" or the
negative of these words or other comparable words. In making forward-looking
statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995. The Company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Readers are also directed to consider the risks,
uncertainties and other factors discussed in documents filed by us with the
Securities and Exchange Commission, including those matters summarized under the
caption "Risk Factors" in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001. All forward-looking statements should be viewed with
caution.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         The Company has a $90.0 million revolving five year line of credit with
interest at LIBOR plus a spread that is currently 1.25%, based on various
financial ratios. The interest rate on June 30, 2002 was 3.11%. The credit
facility provides for quarterly payments of interest until maturity on March 31,
2006. As of June 30, 2002, $60.0 million was outstanding under the revolving
credit agreement. The Company also has a 7.32% fixed rate $50.0 million term
loan that matures on December 31, 2014. All $50.0 million was outstanding as of
June 30, 2002. In addition, the Company has another line of credit for $10.0
million at one month LIBOR plus 1.25%. As of June 30, 2002, the Company had $2.5
million outstanding under this credit line at an interest rate of 3.09%.

         The Company has a $17.7 million note payable that bears interest at 9%
annually with principal payments due over the 10 year period ending March 2012.
A $7.0 million principal payment is due by March 2003 (which payment may be
deferred until March 2005 with the payment of accrued interest) and the
remainder payable in equal annual installments beginning in March 2008.

         The Company has three interest rate swap transactions to fix $10.0
million, $5.0 million and $5.0 million of the amounts outstanding under the
$90.0 million revolving line of credit at rates of 5.9%, 4.53%, and 3.81%,
respectively, plus a spread. The fair value of each swap as of June 30, 2002 was
($513,468), ($59,550), and ($54,131), respectively. The interest rate swaps are
intended to protect the Company against an upward movement in interest rates,
but subject the Company to above market interest costs if interest rates
decline.

         Management believes that reasonably foreseeable movements in interest
rates will not have a material adverse effect on the Company's financial
condition or operations.

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

                 None

Item 2.  Changes in Securities and Use of Proceeds

                 None

Item 3.  Defaults Upon Senior Securities

                 None


                                       21


Item 4.  Submission of Matters to a Vote of Security Holders

         An Annual Meeting of Shareholders was held on April 25, 2002. All
         directors were re-elected for the terms set forth below.

         Proxies were solicited for the following matters:

         (1)      To elect a Board of Directors

                  Three Directors for a three-year term expiring in 2005





                                                                For                  Withheld
                                                                               
                   O. Charlie Chewning, Jr.                 16,607,136                69,546
                   Michael R. Coltrane                      16,635,091                41,591
                   Raymond C. Groth                         16,576,237               100,445

                   One Director for a one-year term expiring in 2003

                                                                For                  Withheld
                   Phil W. Widenhouse                       16,619,467                57,215



         (2)      To ratify the action of the Board of Directors in the
                  appointment of KPMG LLP as independent public accountants to
                  audit the books of the Company for the 2002 fiscal year.



                                               For                    Against                 Abstain            Broker Non-Votes
                                                                                     
                                           16,586,586                 27,303                  62,793                     --


Item 5.  Other Information

                  None

Item 6.  Exhibits and Reports on Form 8-K


         (a)   Exhibits



                    Exhibit No.          Description of Exhibit
                    -----------          ----------------------
                                      
                       10.1              Employment Agreement, dated as of April 15, 2002, between CT
                                         Communications and James E. Hausman.

                       10.2              Employment Agreement, dated as of May 15, 2002, between CT
                                         Communications and Matthew J. Dowd.

                       10.3              Change in Control Agreement, dated as of May 20, 2002 between
                                         CT Communications and James E. Hausman.

                       11                Computation of Earnings per Share

                       99.1              Written statement of Chief Executive Officer and Chief Financial
                                         Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002



                                       22



         (b)    Reports on Form 8-K

                           On May 6, 2002, the Company filed a Current Report on
                           Form 8-K announcing that its Board of Directors
                           approved the continuance of its stock repurchase
                           program until March 2003.

                           On May 30, 2002, the Company filed a Current Report
                           on Form 8-K announcing the reassignment of duties
                           among its current executive team and the addition of
                           a new executive.



                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

CT COMMUNICATIONS, INC.

(Company)

  /s/  Amy M. Justis
- ------------------------------------
Amy M. Justis

Vice President and
Chief Accounting Officer

August 14, 2002
- ------------------------------------
Date

(The above signatory has dual responsibility as a duly authorized officer and
chief accounting officer of the Registrant.)


                                       23


                                  EXHIBIT INDEX



         Exhibit No.           Description of Exhibit
         -----------           ----------------------
                            
            10.1               Employment Agreement, dated as of April 15, 2002, between CT
                               Communications and James E. Hausman.

            10.2               Employment Agreement, dated as of May 15, 2002, between CT
                               Communications and Matthew J. Dowd.

            10.3               Change in Control Agreement, dated as of May 20, 2002 between
                               CT Communications and James E. Hausman.

            11                 Computation of Earnings per Share

            99.1               Written statement of Chief Executive Officer and Chief Financial
                               Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002



                                       24