310433--3/1/2007--COMMONWEALTH_TELEPHONE_ENTERPRISES_INC

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{stock, price, share}

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Risks related to regulation of the telecommunications industry The amounts we can charge for most of our services are subject to regulatory restrictions. Our financial results have been adversely affected by recent reductions in access rates and may be further adversely affected by future regulatory decisions. If any of the favorable regulatory provisions from which CT currently benefits were to be unfavorably modified or terminated, we could experience higher costs and lower revenues. Loss of our access to network elements from incumbent telephone companies or an increase in the prices we must pay for such elements would adversely affect CTSI s business. Risks related to the competitive nature of the telecommunications industry Verizon, as the incumbent local carrier in CTSI s markets, has competitive advantages over us which adversely affect our operating margins. We face intense competition in our markets for long-distance, Internet access and other ancillary services that are important to our business and to our growth strategy. Technological developments could increase our costs and cause a decline in demand for our services. Some of our competitors have superior resources that may place us at a cost and price disadvantage. Risks relating to the merger Our pending merger with Citizens may be delayed or may not occur at all, which could negatively affect the market price of our common stock and our business and financial results. Whether or not the merger is completed, the pendency of the transaction could cause disruptions in the business of CTE, which could have an adverse effect on our businesses and financial results. A substantial portion of CTSI s revenues are derived from Internet service providers, or ISPs. A decline in these ISP customers or their customer base could negatively impact our financial results. Changes in the jurisdictional mix of CTSI s traffic have adversely affected its results. Demand for our traditional dial-up Internet access services has matured. Demand for some of our services may be adversely affected by a downturn in the U.S., Pennsylvania or local economies in which we operate. Our future switched access lines in service will likely be lower than our historical levels, and this decline may adversely affect our results. Our growth strategy will require us to invest significant capital in services that may not achieve the desired returns. Any disruption in our services could potentially expose us to a loss of customers or claims for damages. We depend on third parties, over whom we have no control, to deliver our services. As a holding company, we will require dividends from subsidiaries to meet our cash requirements. The restrictive terms imposed by our current CoBank indebtedness may prevent us from achieving some of our business objectives. Risks relating to our common stock If we sell shares of our common stock the market price of our common stock could decline.

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