DBRS Downgrades ALLTEL Corporation to B; Assigns ALLTEL Communications Inc. a BB (low) Issuer Rating and BB (high)/B (high) Ratings to New Debt

DBRS has today downgraded the legacy debt rating of ALLTEL Corporation (ALLTEL or the Company) to B from “A” and assigned an Issuer Rating of BB (low) to ALLTEL Communications Inc. (ALLTEL Comm. Inc.), a wholly owned subsidiary of ALLTEL, along with BB (high)/B (high) ratings on the secured/unsecured debt at this level. DBRS has also discontinued its R-1 (low) rating on ALLTEL’s Commercial Paper program. The trends are Stable. This follows the expected announcement that the Company has closed the planned sale of the Company to TPG Capital Partners and GS Capital Partners (the Buyers).

Today’s action resolves DBRS’s Under Review with Negative Implications status that was placed on ALLTEL’s ratings on May 22, 2007, shortly following the announcement of this transaction. The all cash deal values ALLTEL’s equity at $24.6 billion and a total enterprise value of approximately $27.5 billion.

DBRS notes that the transaction is expected to be largely completed as DBRS discussed in its report dated August 30, 2007. This shortly followed shareholder approval on August 29, 2007. DBRS does note some minor changes to the final tranches of the ALLTEL Communications Inc. $14.75 billion secured credit facility and the unsecured bridge/notes offer, but these changes do not materially alter the Company’s capital structure.

DBRS’s Issuer Rating of BB (low) for ALLTEL Communications Inc. is largely supported by ALLTEL’s business risk profile that DBRS expects will remain intact. This includes its strong position in the regional wireless market, solid wireless operating metrics including churn below 2.0% per month, and good EBITDA margins in the mid-30% range. Additionally, the Issuer Rating is based on: (a) significantly higher consolidated debt levels (roughly $24 billion on a pro forma basis versus $2.7 billion at September 31, 2007) with debt-to-EBITDA expected to increase to roughly 7.82 times at the end of 2007 from currently below 1.0 times; (b) leverage expected to improve in 2008 to below 7.0 times due to organic EBITDA growth; and (c) free cash flow expected to be well below its current level ($934 million) but expected to remain positive into 2008.

DBRS notes that Senior Secured Credit Facility (up to $16.25 billion available under a three-tranche term facility and a $1.5 billion revolver) at ALLTEL Communications Inc. is rated two notches above the Issuer Rating at BB (high). This is a result of: (1) the strong, but not superior, recovery prospects; (2) security on the operating assets of ALLTEL’s operating subsidiaries; (3) guarantees from ALLTEL and all of its operating subsidiaries; and (4) secured leverage of just under 5.0 times debt-to-EBITDA on a F2007 basis.

Given the significant secured debt at ALLTEL Communications Inc. (roughly 60%) along with only modest recovery prospects for the unsecured debt at this level, the new Senior Unsecured Bridge/Notes and Senior Unsecured PIK Bridge/Notes (both are guaranteed by ALLTEL and all of its operating subsidiaries) are rated B (high). This is one notch below ALLTEL Communications Inc.’s BB (low) Issuer Rating.

Furthermore, the $2.3 billion of legacy existing Unsecured Notes and Debentures at ALLTEL have been downgraded to a B rating. This is a result of: (1) their structural subordination relative to ALLTEL Comm. Inc.’s secured and unsecured debt (roughly $21.6 billion); (2) minimal recovery prospects; and (3) no evidence that these notes will benefit from an operating subsidiary guarantee.

As part of the transaction, DBRS notes that the Buyers have agreed to inject up to $4.6 billion in equity or just under 20% of the total equity value of ALLTEL (roughly $24.6 billion) with the remaining portion funded with debt. DBRS has estimated that the remaining financing required will be approximately $22.4 billion which will be funded with a secured and unsecured financing package at ALLTEL Communications Inc. As part of this transaction the Company has recently closed a tender offer to refinance approximately $400 million in existing operating company debt. Additionally, ALLTEL is expected to redeem its two classes of preferred shares for roughly $1.0 billion and pay roughly $900 million of transaction fees.

DBRS will host a teleconference Monday November 19, 2007, at 2:30 p.m. ET to discuss these rating actions. To participate in the teleconference, please dial the appropriate numbers listed below at least 15 minutes before the start of the call, quoting confirmation code 3242990.

Local callers: 416-641-6137
North American callers (toll free): 866-225-6564
International callers (toll free): 800-4222-8835

A replay of the teleconference will be available for one week and can be accessed in North America by dialing 1-800-408-3053 or internationally by dialing +1-416-695-5800, quoting confirmation code 3242990# for both.

For more information on the teleconference, please contact Jane Foster at jfoster@dbrs.com.

Note:
All figures are in U.S. dollars unless otherwise noted.