Exhibit 99.1 Alaska Communications Systems Reports Second Quarter 2006 Results ANCHORAGE, Alaska--(BUSINESS WIRE)--July 27, 2006--Alaska Communications Systems Group, Inc. (NASDAQ:ALSK): -- Revenue Increased 4.7% to $85.1 Million Compared to Second Quarter 2005 -- Wireless Revenue Rose 26.2% to $26.9 Million -- Cash Provided by Operating Activities Reached $22.7 Million and Grew 11.6% -- EBITDA of $30.1 Million Grew 3.8% over Second Quarter 2005 -- Retail Relationships Expanded to More than 432,600 Alaska Communications Systems Group, Inc. ("ACS") (NASDAQ:ALSK) today reported financial results for its second quarter and six months ended June 30, 2006. "We are proud of our second quarter financial performance and strategic accomplishments," said Liane Pelletier, ACS president and chief executive officer. "We continue to drive results by executing strategies to grow our customer base, streamline our business processes and leverage our assets. The second quarter is typically a seasonally strong quarter, and this year is no different as we increased retail relationships by 7,600, led by 5,000 wireless subscriber additions. At the same time, we continued to convert TDMA subscribers to CDMA, with 85 percent of our retail subscribers now on CDMA, and continued building our CDMA and DSL footprints. These accomplishments were achieved with lower headcount this year than last." "Additionally, year over year achievements are significant. Retail access line losses have stabilized at 3 percent, DSL subscriber growth topped 35 percent, long distance customers grew 19 percent and ACS wireless customers grew by 15 percent. As ACS total revenues grew by almost 5 percent, ACS wireless revenues grew by 26 percent. The contribution to total revenue from wireless now stands at 32 percent, up from 26 percent a year ago. Profitable ACS wireless growth continues even as the Alaskan wireless market has become more promotional and competitive. In the face of that increased competition, ACS remains focused on delivering superior product quality. ACS has been 'drive testing' its wireless services alongside those of its competitors and has been sharing specific results of the tests in advertising. The Anchorage results, for example, show that ACS users experience approximately 65 percent fewer dropped calls and approximately 73 percent fewer blocked calls than do those of the competition. These are meaningful service attributes for our customers and for those of our roaming partners, who visit the state with CDMA devices and enjoy quality mobile voice and data connections," commented Pelletier. "Enabled in large part by our Process Improvement efforts, we have effectively funded profitable revenue growth, and we have posted strong EBITDA and cash flow," concluded Pelletier. Financial Highlights: Second Quarter 2006 Compared to Second Quarter 2005 -- Revenues were $85.1 million, a 4.7 percent increase over second quarter 2005 revenues of $81.2 million. -- Operating income increased 48.9 percent to $12.2 million compared to the second quarter 2005 operating income of $8.2 million. -- The company posted net income of $13.5 million, or $0.32 per share, inclusive of non-recurring gains of $6.7 million from the liquidation of Rural Telephone Bank (RTB) class C stock that settled in April and $2.0 million from the Crest terrestrial asset purchase. The net loss for the second quarter 2005 was $312,000, or a net loss of $0.01 per share. -- Net cash provided by operating activities increased to $22.7 million, or 11.6 percent, compared to $20.3 million of net cash in the same period a year ago. -- EBITDA was $30.1 million, an increase of 3.8 percent, compared to $29.0 million for the year ago period. David Wilson, ACS senior vice president and chief financial officer, stated, "Solid execution against our strategic goals continues to drive cash flow expansion at ACS, with 'Cash Flows from Operations' growing by 11.6 percent and EBITDA by 3.8 percent. Major investments and uses of cash in the quarter included construction and capital expenditures of $12.2 million, comprising $5.6 million in maintenance capital expenditures and $6.6 million from our pre-funded capital program, and $9.0 million in dividend payments. Cash, restricted cash and investment balance increased $10.5 million sequentially to $35.6 million, providing adequate liquidity to complete our pre-funded capital expenditure program this year." Metric Highlights: Second Quarter 2006 Compared to First Quarter 2006 -- Increased the total number of retail customer relationships across all product lines by approximately 7,600, or 1.8 percent, to more than 432,600. -- Increased wireless post-paid subscribers by 4.1 percent, or almost 4,600. Net of prepaid and wholesale wireless reductions, the company added over 4,700 wireless subscribers, bringing the total number of wireless subscribers to almost 123,900. -- Recorded average wireless monthly post-paid churn of 1.6 percent compared to 1.9 percent in the prior quarter. Overall average wireless monthly churn was 1.7 percent compared to 2.4 percent. -- Recorded wireless average revenue per user (ARPU) of $56.51, down from $57.30, inclusive of CETC revenue of $9.32 and $8.93, respectively. ARPU for the quarter was adversely impacted by an $800,000 increase in reserves, following a refinement in estimates for a customer segment based on collection history. -- Eighty-five percent of ACS retail subscribers are on the CDMA network, up from 77 percent at first quarter 2006. -- The ACS CDMA wireless network now covers 78 percent of the Alaskan population, approaching the 80 percent-plus population coverage target. -- Increased DSL by 4.7 percent, or 1,800 lines, to almost 40,000 lines. -- Increased long distance subscribers by over 2,000 to over 60,500 customers. -- Recorded over 197,000 retail local access lines, reflecting a retail access line decrease of approximately 380 lines, inclusive of the turn-down of 240 internal use lines. Pro forma for the turn-down of internal use lines, retail access decline was 0.1 percent. -- Recorded approximately 262,700 total local access lines. Total access lines decreased by 2,700, substantially all of which were wholesale and UNE lines. Six Months Financial Review For the six months ended June 30, 2006, total revenues were $167.7 million, which represented a 5.7 percent increase over revenues of $158.6 million for the same period last year. Net income for the six months ended June 30, 2006, was $5.1 million, or $0.12 per share, compared to a net loss of $28.8 million, or $0.74 per share, in the same period in 2005. Net cash provided by operating activities for the first half of 2006 was $37.9 million, as compared to $15.1 million in the same period in 2005. EBITDA for the six months ended June 30, 2006 was $58.4 million, an increase of 3.1 percent from $56.7 million in the same period last year. 2006 Business Outlook Reaffirming guidance for the full-year 2006, revenues are expected to be in the range of $335 million to $345 million, and EBITDA is expected to be in the range of $112 million to $116 million, exclusive of stock-based compensation. For the year 2006, net cash interest expense is expected to be approximately $28 million. ACS has also reaffirmed 2006 capital expenditure guidance to be approximately $58 million, comprised of maintenance capital expenditures of approximately $37 million and pre-funded growth capital expenditures, DSL footprint expansion and process improvement initiatives of approximately $21 million, with investment for both categories back loaded to the second half of the year. Conference Call The company will host a conference call and live webcast today at 5:00 p.m. Eastern Time to discuss the second quarter results. For parties in the United States and Canada, call 866-250-2351 to access the earnings call. International parties can access the call at 303-262-2050. Additionally, ACS will offer a live webcast of the conference call, accessible from the "Investor Relations" section of the company's website (www.alsk.com). The webcast will be archived on the ACS website. A telephonic replay of the conference call will also be available two hours after the call and will run until Monday, July 31, 2006 at midnight ET. To hear the replay, parties in the United States and Canada should call 800-405-2236 and enter pass code 11065532. International parties should call 303-590-3000 and enter pass code 11065532. About Alaska Communications Systems ACS is the leading integrated communications provider in Alaska, offering local telephone service, wireless, long distance, data, and Internet services to business and residential customers throughout Alaska. More information can be found on the company's website at www.acsalaska.com or at its investor site at www.alsk.com. Forward Looking EBITDA Guidance This press release includes management's estimate of EBITDA for the year ending December 31, 2006. Management believes the most directly comparable GAAP measure would be "Net cash provided by operating activities." Due to the difficulty in forecasting and quantifying the amounts that would be required to be included in this comparable GAAP measure, the Company is not providing an estimate of year-end net cash provided by operating activities at this time. Forward-Looking Statements We have included in this press release certain "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's beliefs as well as on a number of assumptions concerning future events made using information currently available to management. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside ACS' control. Such factors are, without limitation, rapid technological developments and changes in the telecommunications industry; ongoing deregulation and increased competition; changes in our revenue from Universal Service Funds; regulatory limitations on our ability to change our pricing for communications services; changes in accounting policies or practices; our ability to bundle our products and services; changes in the demand for our products and services; changes in general industry and market conditions; changes in interest rates or other general national, regional or local economic conditions; governmental and public policy changes; our ability to generate sufficient earnings and cash flows to continue to make dividend payments to our stockholders; the continued availability of financing necessary to support our future business; and the success of any future acquisitions. For further information regarding risks and uncertainties associated with ACS' business, please refer to the company's SEC filings, including, but not limited to, the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" on our annual report on Form 10-K for the year ended December 31, 2005 and on Form 10-Q for the quarter ended March 31, 2006. Copies of our SEC filings may be obtained by contacting our investor relations department at (907) 564-7556 or by visiting our investor relations website at http://www.alsk.com. All information in this release is as of July 27, 2006. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations. Schedule 1 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in Thousands, Except per Share Amounts) Three Months Ended Six Months Ended June 30, June 30, ------------------- ------------------- 2006 2005 2006 2005 --------- --------- --------- --------- Operating revenues: Local telephone $ 47,486 $ 50,341 $ 95,761 $101,906 Wireless 26,946 21,354 51,454 38,410 Internet 6,089 5,508 12,075 10,569 Interexchange 4,550 4,022 8,423 7,748 --------- --------- --------- --------- Total operating revenues 85,071 81,225 167,713 158,633 Operating expenses: Local telephone 31,519 30,841 63,628 61,652 Wireless 14,931 11,990 28,745 22,020 Internet 6,696 5,590 14,588 10,839 Interexchange 3,322 3,929 5,426 7,911 Depreciation and amortization 16,034 20,692 33,131 41,105 Loss (gain) on disposal of assets, net 383 - 1,105 (68) --------- --------- --------- --------- Total operating expenses 72,885 73,042 146,623 143,459 Operating income 12,186 8,183 21,090 15,174 Other income and expense: Interest expense (7,643) (8,865) (15,617) (18,631) Loss on extinguishment of debt - - (9,650) (26,204) Interest income 402 412 794 906 Other 8,561 (42) 8,517 (87) --------- --------- --------- --------- Total other income (expense) 1,320 (8,495) (15,956) (44,016) --------- --------- --------- --------- Net profit (loss) $ 13,506 $ (312) $ 5,134 $(28,842) ========= ========= ========= ========= Profit (loss) per share: Basic $ 0.32 $ (0.01) $ 0.12 $ (0.74) ========= ========= ========= ========= Diluted $ 0.31 $ (0.01) $ 0.12 $ (0.74) ========= ========= ========= ========= Weighted average shares outstanding: Basic 41,989 40,896 41,891 38,824 --------- --------- --------- --------- Diluted 44,189 40,896 43,919 38,824 --------- --------- --------- --------- Schedule 2 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. CONSOLIDATED BALANCE SHEETS (Unaudited, In Thousands Except Per Share Amounts) June 30, December 31, Assets 2006 2005 ------------- ------------- Current assets: Cash and cash equivalents $ 32,123 $ 28,877 Restricted cash 3,450 4,415 Short-term investments - 10,525 Accounts receivable-trade, net of allowance of $6,742 and $6,206 38,289 41,080 Materials and supplies 10,318 7,885 Prepayments and other current assets 4,347 3,445 ------------- ------------- Total current assets 88,527 96,227 Property, plant and equipment 1,128,700 1,116,780 Less: accumulated depreciation and amortization 742,442 718,750 ------------- ------------- Property, plant and equipment, net 386,258 398,030 Goodwill 38,403 38,403 Intangible Assets 21,604 21,688 Debt issuance costs 10,395 11,733 Deferred charges and other assets 20,059 10,332 ------------- ------------- Total assets $ 565,246 $ 576,413 ============= ============= Liabilities and Stockholders' Equity (Deficit) Current liabilities: Current portion of long-term obligations $ 1,003 $ 683 Accounts payable-affiliate 2,963 2,844 Accounts payable, accrued and other current liabilities 51,007 54,920 Advance billings and customer deposits 9,735 9,712 ------------- ------------- Total current liabilities 64,708 68,159 Long-term obligations, net of current portion 437,538 444,895 Other deferred credits and long-term liabilities 80,411 82,223 ------------- ------------- Total liabilities 582,657 595,277 ------------- ------------- Stockholders' equity (deficit): Common stock, $.01 par value; 145,000 shares authorized, 46,625 and 46,230 shares issued and 42,076 and 41,681 shares outstanding, respectively 466 462 Treasury stock, 4,549 shares at cost (18,443) (18,443) Paid in capital in excess of par value 319,088 333,522 Accumulated deficit (329,593) (334,727) Accumulated other comprehensive income 11,071 322 ------------- ------------- Total stockholders' equity (deficit) (17,411) (18,864) ------------- ------------- Commitments and contingencies Total liabilities and stockholders' equity (deficit) $ 565,246 $ 576,413 ============= ============= Schedule 3 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited, in Thousands) Three Months Ended Six Months Ended June 30, June 30, ------------------- -------------------- 2006 2005 2006 2005 --------- --------- --------- ---------- Cash Flows from Operating Activities: Net profit (loss) $ 13,506 $ (312) $ 5,134 $ (28,842) Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 16,034 20,692 33,131 41,105 Loss (gain) on disposal of assets, net 383 - 1,105 (68) Gain on sale of long-term investments (6,685) - (6,685) - Amortization of debt issuance costs and original issue discount 479 670 4,213 14,477 Stock based compensation 1,647 209 3,223 539 Other deferred credits (617) 666 (3,534) (3,416) Changes in components of working capital: Accounts receivable and other current assets (4,959) (3,733) (544) (3,888) Accounts payable and other current liabilities 2,310 881 1,772 (7,903) Deferred charges and other assets 570 1,244 44 3,113 --------- --------- --------- ---------- Net cash provided by operating activities $ 22,668 $ 20,317 $ 37,859 $ 15,117 Cash Flows from Investing Activities: Construction and capital expenditures (11,203) (22,783) (26,937) (29,965) Purchase of short-term investments (12,425) (16,795) (19,925) (67,745) Proceeds from the sale of short-term investments 14,425 28,200 30,450 83,000 Sale of long-term investments 7,663 - 7,663 - Placement of funds in restricted account - (300) - (300) Release of funds from escrow 965 445 965 445 --------- --------- --------- ---------- Net cash used by investing activities (575) (11,233) (7,784) (14,565) Cash Flows from Financing Activities: Payments of long-term debt (193) (173) (61,463) (405,330) Proceeds from the issuance of long-term debt - - 52,900 335,000 Debt issuance costs - - (1,349) (10,637) Payment of dividend on common stock (9,020) (8,123) (17,356) (13,802) Issuance of common stock 564 3,928 439 88,206 Stock issuance costs - - - (7,817) --------- --------- --------- ---------- Net cash used by financing activities (8,649) (4,368) (26,829) (14,380) Increase/(decrease) in cash and cash equivalents 13,444 4,716 3,246 (13,828) Cash and cash equivalents, beginning of period 18,679 32,116 28,877 50,660 --------- --------- --------- ---------- Cash and cash equivalents, end of period $ 32,123 $ 36,832 $ 32,123 $ 36,832 ========= ========= ========= ========== Supplemental Cash Flow Data: Interest paid $ 6,961 $ 5,237 $ 16,953 $ 21,539 (Increase)/decrease in accounts payable for construction and capital expenditures (1,040) - 6,279 - Supplemental Noncash Transactions: Interest rate swap $ (5,100) $ 4,631 $(10,749) $ 2,175 Dividend declared, but not paid (28) (163) (9,060) (8,303) Stock funding of pension plan - 599 - 599 Schedule 4 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. SCHEDULE OF LOCAL TELEPHONE REVENUES (Unaudited, in Thousands) Three Months Ended Six Months Ended June 30, June 30, ------------------- ------------------- 2006 2005 2006 2005 --------- --------- --------- --------- Local telephone revenue: Local network service $ 20,159 $ 21,512 $ 40,056 $ 43,730 Network access 22,093 22,798 46,119 46,148 Deregulated and other 5,234 6,031 9,586 12,028 --------- --------- --------- --------- Total local telephone revenue $ 47,486 $ 50,341 $ 95,761 $101,906 ========= ========= ========= ========= Schedule 5 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. SCHEDULE OF EBITDA CALCULATION (Unaudited, in Thousands) Three Months Ended Six Months Ended June 30, June 30, ------------------- ------------------- 2006 2005 2006 2005 --------- --------- --------- --------- Net cash provided (used) by operating activities $ 22,668 $ 20,317 $ 37,859 $ 15,117 Adjustments to reconcile net income to net cash (provided) used by operating activities: Depreciation and amortization (16,034) (20,692) (33,131) (41,105) Gain (loss) on disposal of assets, net (383) - (1,105) 68 Gain on sale of long-term investments 6,685 - 6,685 - Amortization of debt issuance costs and original issue discount (479) (670) (4,213) (14,477) Stock based compensation (1,647) (209) (3,223) (539) Other deferred credits 617 (666) 3,534 3,416 Changes in components of working capital: Accounts receivable and other current assets 4,959 3,733 544 3,888 Accounts payable and other current liabilities (2,310) (881) (1,772) 7,903 Deferred charges and other assets (570) (1,244) (44) (3,113) --------- --------- --------- --------- Net profit (loss) $ 13,506 $ (312) $ 5,134 $(28,842) Add (subtract): Interest expense 7,643 8,865 15,617 18,631 Loss on extinguishment of debt - - 9,650 26,204 Interest income (402) (412) (794) (906) Depreciation and amortization 16,034 20,692 33,131 41,105 (Gain) loss on disposal of assets, net 383 - 1,105 (68) Gain on Crest asset purchase (1,979) - (1,979) - Gain on sale of long-term investment (6,685) - (6,685) - Stock based compensation 1,647 209 3,223 539 --------- --------- --------- --------- EBITDA $ 30,147 $ 29,042 $ 58,402 $ 56,663 ========= ========= ========= ========= Note: In an effort to provide investors with additional information regarding the Company's results as determined by generally accepted accounting principles (GAAP), the Company also discloses certain non-GAAP information which management utilizes to assess performance and believes provides useful information to investors. The Company has disclosed its net gain before interest expense, provisions for taxes, depreciation expense, amortization of intangibles and stock based compensation expense (EBITDA) because the Company believes it is an important indicator as it provides information about our ability to service debt, pay dividends and fund capital expenditures. EBITDA is not a GAAP measure and should not be considered a substitute for net cash provided by operating activities and other measures of financial performance recorded in accordance with GAAP. Schedule 6 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. Allocation of Stock Based Compensation between Segments (Unaudited, in Thousands) Three Months Ended Three Months Ended June 30, 2006 June 30, 2005 ---------------------------- ---------------------------- As As reported Stock reported Stock on Based on Based Schedule Compen- Schedule Compen- 1 sation Adjusted 1 sation Adjusted --------- -------- --------- --------- -------- --------- Operating expenses: Local telephone 31,519 (1,416) 30,103 30,841 (182) 30,659 Wireless 14,931 (158) 14,773 11,990 (19) 11,971 Internet 6,696 (63) 6,633 5,590 (7) 5,583 Inter- exchange 3,322 (10) 3,312 3,929 (1) 3,928 Depreci- ation and amorti- zation 16,034 - 16,034 20,692 - 20,692 Loss on disposal of assets, net 383 - 383 - - - --------- -------- --------- --------- -------- --------- Total operating expenses $ 72,885 $(1,647) $ 71,238 $ 73,042 $ (209) $ 72,833 ========= ======== ========= ========= ======== ========= Six Months Ended Six Months Ended June 30, 2006 June 30, 2005 ---------------------------- ---------------------------- As As reported Stock reported Stock on Based on Based Schedule Compen- Schedule Compen- 1 sation Adjusted 1 sation Adjusted --------- -------- --------- --------- -------- --------- Operating expenses: Local telephone 63,628 (2,774) 60,854 61,652 (470) 61,182 Wireless 28,745 (308) 28,437 22,020 (48) 21,972 Internet 14,588 (122) 14,466 10,839 (19) 10,820 Inter- exchange 5,426 (19) 5,407 7,911 (2) 7,909 Depreci- ation and amorti- zation 33,131 - 33,131 41,105 - 41,105 (Gain) loss on disposal of assets, net 1,105 - 1,105 (68) - (68) --------- -------- --------- --------- -------- --------- Total operating expenses $146,623 $(3,223) $143,400 $143,459 $ (539) $142,920 ========= ======== ========= ========= ======== ========= The balances reported on Schedule 1 - Statement of Operations, include the company's adoption of FAS 123R Accounting for Stock-Based Compensation. This schedule shows the company's operating performance prior to that expense being recorded to allow analysis of the operating segments without these noncash charges. Prior year comparison numbers have also been adjusted for a reclassification of costs from Interexchange to Wireless to better reflect underlying product profitability. Schedule 7 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. Investment in Construction and Capital Expenditures (Unaudited, in Thousands) Three Months Six Months Twelve Months Ended Ended Ended June 30, June 30, December 31, 2006 2006 2005 ------------- ------------- --------------- Construction and capital expenditures 11,203 26,937 58,422 Increase/(decrease) in accounts payable for construction and capital expenditures 1,040 (6,279) 5,975 ------------- ------------- --------------- Investment in construction and capital $ 12,243 $ 20,658 $ 64,397 ============= ============= =============== Growth 6,650 10,716 26,735 Maintenance 5,593 9,942 35,044 Investment funded by excess 2005 cash - - 2,618 ------------- ------------- --------------- Investment in construction and capital $ 12,243 $ 20,658 $ 64,397 ============= ============= =============== Schedule 8A ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. KEY OPERATING STATISTICS (Unaudited) June 30, March 31, June 30, 2006 2006 2005 --------- --------- --------- Local telephone: Retail access lines 197,031 197,415 203,224 Resale access lines 12,504 13,030 15,109 UNE loop lines 46,482 48,231 59,271 UNE platform lines 6,749 6,805 6,454 --------- --------- --------- Total local telephone access lines 262,766 265,481 284,058 ========= ========= ========= Average local telephone access lines for the quarter 264,124 268,183 286,021 Average monthly local telephone revenue per line for the quarter $ 59.93 $ 60.00 $ 58.67 Quarterly growth rate in local telephone access lines -1.0% -2.0% -1.4% Wireless: Covered population 533,930 527,509 508,628 Post-paid wireless subscribers 115,770 111,178 95,145 Average post-paid wireless subscribers 113,474 109,161 91,660 Quarterly growth rate -- post-paid wireless subscribers 4.1% 3.8% 7.9% Activations for the quarter 10,412 10,654 12,089 Deactivations for the quarter 5,820 6,620 5,118 Average monthly churn for the quarter 1.6% 1.9% 1.7% Average monthly revenue per subscriber for the quarter(a) $ 58.85 $ 60.36 $ 60.19 Prepaid wireless subscribers 4,540 4,103 7,280 Resale wireless subscribers 3,582 3,859 5,296 Total wireless subscribers 123,892 119,140 107,721 Average subscribers for the quarter 121,516 118,339 105,000 Quarterly growth rate 4.0% 1.4% 5.3% Activations for the quarter 11,441 10,714 12,912 Deactivations for the quarter 6,689 9,111 7,470 Average monthly churn for the quarter 1.7% 2.4% 2.2% Penetration 23.2% 22.6% 21.2% Quarterly minutes of use (000's) 198,821 152,220 128,063 Average monthly revenue per subscriber for the quarter(a) $ 56.51 $ 57.30 $ 55.55 Long Distance: Long distance subscribers 60,556 58,552 50,701 Quarterly minutes of use (000's) 53,905 47,737 41,297 Average subscribers for the quarter 59,554 57,435 49,622 Average monthly revenue per subscriber for the quarter $ 25.47 $ 22.48 $ 27.02 Internet: DSL subscribers 39,982 38,179 29,502 Dial-up subscribers 14,738 15,846 20,915 --------- --------- --------- Total Internet subscribers 54,720 54,025 50,417 ========= ========= ========= Average subscribers for the quarter 54,373 53,635 49,758 Average monthly DSL & dial-up revenue per subscriber for the quarter $ 29.09 $ 29.23 $ 30.38 (a) Wireless ARPU has been restated to exclude late fees and early termination charges and to allocate competitive eligible telecommunications carrier (CETC) revenue only to postpaid and wholesale subscribers. CETC added $7.63 to postpaid wireless ARPU in the second quarter of 2005 and $9.33 and $9.66 in the first and second quarter of 2006. CETC added $7.31 to total wireless ARPU in the second quarter of 2005 and $8.93 and $9.32 in the first and second quarter of 2006. Schedule 8B ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. KEY OPERATING STATISTICS (Unaudited) June 30, March 31, 2006 2006 Net Movement ----------- ------------ ------------ Local telephone retail access lines 197,031 197,415 (384) Add back: internal lines disconnected 240 ------------ (144) Post-paid wireless subscribers 115,770 111,178 Prepaid wireless subscribers 4,540 4,103 ----------- ------------ 120,310 115,281 5,029 ----------- ------------ Long distance subscribers 60,556 58,552 2,004 DSL and dial up subscribers 54,720 54,025 695 ----------- ------------ ------------ Total retail relationships 432,617 425,273 7,584 (a) =========== ============ ============ (a) Net movement in total retail relationships inclusive of a 240 adjustment for disconnected internal use lines. CONTACT: Alaska Communications Systems Meghan Stapleton, 907-297-3000 (Media) meghan.stapleton@acsalaska.com or Lippert/Heilshorn & Associates Kirsten Chapman, 415-433-3777 (Investors) kirsten@lhai-sf.com