Alaska Communications Reports Fourth Quarter and Year-end Results; Fif

Alaska Communications Reports Fourth Quarter and Year-end Results; Fifth Consecutive Quarter of Record Wireless Growth

    Business Editors

    ANCHORAGE, Ala.--(BUSINESS WIRE)--Feb. 24, 2005--

Net Cash Provided by Operating Activities Rose to $19.1 Million for the Fourth Quarter
    Alaska Communications Systems Group, Inc. ("ACS") (Nasdaq:ALSK) today reported financial results for its fourth quarter and year-ended December 31, 2004.
    "At the beginning of 2004, we set strategic priorities to shape ACS into a customer-driven operation, capitalize on the under-served wireless market with 3G CDMA technology, demonstrate growth and generate cash," stated Liane Pelletier, ACS president and chief executive officer. "ACS' execution is evident in our fourth quarter results, which include a fifth consecutive quarter of record wireless subscriber growth, an increase in our total retail relationships by 7,800 to 397,000 and strong cash generation with $19.1 million provided from operating activities."
    Pelletier added, "Another goal was to favorably position the company to avail itself of timely financing opportunities. Having developed a strong performance track record as the only statewide-integrated service provider in Alaska that owns local and long distance, Internet and wireless facilities, this month ACS substantially completed several capital markets transactions to provide the company greater financial flexibility and improved cash flow."

    Recent Financing Transactions

    In February, ACS issued and sold a total of 8,823,530 shares of its common stock at a public offering price of $8.50 per share. ACS received total net proceeds from the sale of such shares, after underwriting discounts, of approximately $71 million. In addition, ACS entered into a new $380 million senior secured credit facility, consisting of a $335 million term loan facility and an undrawn $45 million revolving credit facility. Term loan borrowings under the new senior credit facility generally bear interest at LIBOR plus 200 basis points, compared to term loan borrowings under the previous senior credit facility, which bore interest at an annual rate of LIBOR plus 325 basis points.
    ACS repaid its total outstanding balance of $198.0 million under its previous senior secured credit facility, repurchased approximately $59.4 million outstanding principal amount of its 9.875% senior notes due 2011, and repurchased or called for redemption the full $147.5 million outstanding principal amount of its 9.375% senior subordinated notes due 2009.
    David Wilson, ACS senior vice president and chief financial officer, said, "The recent series of debt and equity transactions we completed in February 2005 have de-levered our balance sheet and substantially lowered our borrowing costs. As a result, we look forward to significantly lower interest expense and increased cash flow in 2005.
    "Also, during the fourth quarter, we initiated a dividend program and declared our first quarterly dividend of $0.185 per share, which was paid on January 19, 2005 to stockholders of record at the close of business on December 31, 2004. Building on the success of this program, we are considering implementing a dividend reinvestment plan, which will offer investors the option to reinvest their dividends in ACS stock. Our dividend program is a key part of our strategy to share with our stockholders the benefits of the cash flow generating aspects of our business and to seek to offer investors growth and income."

    Quarterly Financial Highlights

    For the fourth quarter ending December 31, 2004, revenues were $75.1 million, which represented a 3.3 percent increase over fourth quarter 2003 revenues of $72.8 million, adjusted to exclude revenues from the discontinued State of Alaska contract. Including the State of Alaska contract revenues, reported revenues for the fourth quarter of 2003 were $77.2 million. Wireless subscribers grew at a record pace for the fifth consecutive quarter and wireless revenue rose to $15.4 million this quarter compared to $11.7 million a year ago.
    Also during the fourth quarter of 2004 compared to the fourth quarter of 2003:

--	Net loss declined to $7.1 million from $17.2 million and to a loss of $0.23 per share from $0.58 per share;
--	Adjusted EBITDA increased to $26.2 million from $24.1 million; and
--	Interest expense declined to $12.2 million from $20.0 million due to an $8.0 million charge for the early extinguishment of an interest rate swap in the fourth quarter of 2003.

    Wilson added, "Our focus on streamlining business operations is paying off, as we generated $19.1 million in cash from operating activities in the fourth quarter, following up on our strong results of $15.5 million in cash from operating activities in the third quarter. ACS closed the quarter with a cash balance of $85.9 million, and we are continuing to mine opportunities to improve cash generation. Recently, we organized process improvement teams as part of our strategy to drive cash flow; these teams will help ACS absorb and fund the growth of our underlying business and will also enhance the customer experience."

    Fourth Quarter 2004 Metric Highlights

    -- Increased total number of retail customer relationships across
    all product lines by approximately 7,800 to over 397,000
    total, a doubling of net addition growth rate compared to the
    third quarter of 2004.

    -- Added over 5,100 wireless subscribers, growing 5.4 percent
    compared to the third quarter of 2004 and bringing the total
    to over 100,600 wireless subscribers. Churn remained low at
    1.7 percent per month.

    -- Recorded wireless average revenue per unit (ARPU) of $45.42
    compared to the seasonally stronger third quarter wireless
    ARPU of $47.43.

    -- Increased digital subscriber lines (DSL) 9.4 percent to over
    24,700 compared to the third quarter of 2004 as a result of
    consumer and business bundling programs.

    -- Increased long distance subscribers over 2,700 to 47,050
    customers, a 6.1 percent increase compared to the third
    quarter of 2004, principally as a result of a focused selling
    effort and the bundling of the long distance product with
    other ACS services.

    -- Recorded over 295,000 access lines representing a decrease of
    approximately 6,300 lines, or 2.1 percent, compared to the
    third quarter of 2004, which is in line with company
    expectations and reflective of industry trends.

    Wilson commented, "Wireless continues to be a key driver of growth for ACS. Supporting the momentum and economics of the business are four key factors where we are delivering compelling results and that demonstrate both the strength of our product offerings and customer loyalty. We are rapidly growing the absolute number of wireless subscribers, and we recorded our fifth consecutive quarter of record growth in subscribers. Wireless ARPU, allowing for normal seasonal factors, is moving higher in conjunction with the depth of our product offerings and was up 14.7 percent to $45.42 compared to the fourth quarter of last year. The cost of gross additions is consistently low for ACS and was less than $200 per subscriber in the fourth quarter, or a 50 percent cost advantage over market leaders in the lower 48 states. Lastly, our industry-leading churn rate remains consistently low and came in at 1.7 percent per month for the latest quarter."

    Annual Financial Review

    For the year ending December 31, 2004, total revenues were $302.7 million, which represented a 3.6 percent increase over 2003 adjusted revenues of $292.3 million. Including the State of Alaska contract and directory business revenues, reported revenues for 2003 were $323.8 million. Net loss for the year 2004 was $39.3 million, or $1.33 per share, as compared to a net loss of $6.6 million, or $0.22 per share in 2003. Net loss for 2003 was inclusive of a gain on the disposal of assets of $112.6 million and contract termination and asset impairment charges of $54.9 million. Adjusted EBITDA for the year 2004 was $97.4 million, an increase of 4.8 percent from $92.9 million in 2003. Net cash provided by operating activities for 2004 increased 15 percent to $57.8 million, as compared to $50.4 million in 2003.

    Business Outlook

    For the year 2005, ACS reiterates its previous outlook: Revenue for the full year is expected to be in the range of $310 million to $320 million and EBITDA to be in the range of $108 million to $112 million.
    Management provided more details. Net cash interest expense is expected to decline to approximately $31 million, primarily as a result of recent debt and equity transactions. ACS expects capital expenditures for 2005 to range from $65 million to $70 million, comprised of maintenance capital expenditure of approximately $35 million and pre-funded growth capex of between $30 million and $35 million. As a result of recent capital markets transactions, ACS expects to incur charges totaling approximately $26 million in the first quarter of 2005, comprised of tender premiums of $13 million and unamortized debt issuance costs and original issue discounts of $13 million.

    Conference Call

    The company will host a conference call and live webcast today at 5:00 p.m. Eastern Time to discuss fourth quarter results and year-end results. For parties in the United States and Canada, call 800-219-6110 to access the earnings call. International parties can access the call at 303-262-2131.
    The live webcast of the conference call is accessible from the "Investor Relations" section of the company's website www.alsk.com. The webcast will be archived for a period of 90 days. A telephonic replay of the conference call will also be available 2 hours after the call and will run until Monday, February 28, 2005 at 9:00 p.m., Pacific Time. To hear the replay, parties in the United States and Canada should call 800-405-2236 and enter pass code 11023480. International parties should call 303-590-3000 and enter pass code 11023480.

    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 our investor site at www.alsk.com.

    Forward Looking EBITDA Guidance

    This press release includes management's estimate of EBITDA for the year ended December 31, 2005. 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.

    Safe Harbor Statement

    Statements about future results and other expectations constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and the current economic environment. The company cautions that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. A number of factors in addition to those discussed herein could cause actual results to differ materially from expectations. The company's financial planning is affected by business and economic conditions and changes in customer order patterns. Any projections are inherently subject to significant economic and competitive uncertainties and contingencies, many of which are beyond the control of ACS. Important assumptions and other important factors, including risk factors, which could cause actual results to differ materially from those in the forward-looking statements, are specified in the company's Form 10-K for the year ended December 31, 2003 and other filings with the SEC, including under headings such as "Risk factors" and "Management's discussion and analysis of financial condition and results of operations." The company undertakes no obligation to update forward-looking statements, whether as a result of new information, future events, or otherwise.

Schedule 1

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months and Twelve Months Ended December 31, 2004 and 2003 (Unaudited, in Thousands, Except per Share Amounts)

Three Months Ended Twelve Months Ended December 31, December 31, ------------------ ------------------- 2004 2003 2004 2003 -------- --------- --------- --------- Operating revenues: Local telephone $50,961 $52,614 $211,187 $215,686 Wireless 15,428 11,680 56,694 46,548 Directory - - - 11,631 Internet 5,160 8,610 20,173 33,026 Interexchange 3,576 4,333 14,653 16,956 -------- --------- --------- --------- Total operating revenues 75,125 77,237 302,707 323,847

Operating expenses: Local telephone 30,862 31,786 127,918 116,653 Wireless 10,689 9,268 37,918 31,064 Directory - - - 5,249 Internet 4,535 9,694 25,739 45,523 Interexchange 4,262 7,656 19,773 25,542 Contract termination and asset impairment charges - 319 - 54,858 Depreciation and amortization 20,701 15,450 78,387 82,185 Loss (gain) on disposal of assets, net 29 (115) 2,854 (112,622) -------- --------- --------- --------- Goodwill impairment loss - - - - -------- --------- --------- --------- Total operating expenses 71,078 74,058 292,589 248,452

Operating income 4,047 3,179 10,118 75,395

Other income and expense: Interest expense (12,234) (19,992) (51,288) (71,470) Interest income and other 903 713 1,657 (9,408) -------- --------- --------- --------- Total other income (expense) (11,331) (19,279) (49,631) (80,878) -------- --------- --------- ---------

Loss before income taxes and discontinued operations (7,284) (16,100) (39,513) (5,483)

Income tax benefit (expense) 219 (1,095) 219 (1,095) -------- --------- --------- ---------

Loss from continuing operations (7,065) (17,195) (39,294) (6,578) Loss from discontinued operations - - - (52) -------- --------- --------- --------- Cumulative effect of change in accounting principle, net of tax - - - - -------- --------- --------- ---------

Net loss $(7,065) $(17,195) $(39,294) $(6,630) ======== ========= ========= =========

Loss per share - basic and diluted: Loss from continuing operations $(0.23) $(0.58) $(1.33) $(0.22) Loss from discontinued operations - - - (0.00) Net loss $(0.23) $(0.58) $(1.33) $(0.22) ======== ========= ========= =========

Weighted average shares outstanding: Basic 30,105 29,429 29,592 29,980 ======== ========= ========= ========= Diluted 30,105 29,429 29,592 29,980 ======== ========= ========= =========

Schedule 2

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. CONSOLIDATED BALANCE SHEETS (Unaudited, In Thousands Except Per Share Amounts)

Dec. 31, Dec. 31, Assets 2004 2003 ---------- ---------- Current assets: Cash and cash equivalents $85,860 $97,798 Restricted cash 4,690 3,635 Accounts receivable-trade, net of allowance of $4,869 and $4,865 39,413 41,718 Materials and supplies 6,623 10,099 Prepayments and other current assets 3,724 5,850 ---------- ---------- Total current assets 140,310 159,100

Property, plant and equipment 1,061,767 1,041,904 Less: Accumulated depreciation and amortization 649,455 603,760 ---------- ---------- Property, plant and equipment, net 412,312 438,144

Goodwill 38,403 38,403 Intangible Assets 21,871 22,055 Debt issuance costs 15,482 18,939 Deferred charges and other assets 8,749 8,750 ---------- ---------- Total assets $637,127 $685,391 ========== ==========

Liabilities and Stockholders' Equity (Deficit)

Current liabilities: Current portion of long-term obligations $2,298 $1,982 Accounts payable-affiliate 3,973 5,082 Accounts payable, accrued and other current liabilities 53,843 47,303 Income taxes payable - 1,095 Advance billings and customer deposits 8,948 8,766 ---------- ---------- Total current liabilities 69,062 64,228

Long-term obligations, net of current portion 523,591 548,238 Other deferred credits and long-term liabilities 77,916 71,065 Commitments and contingencies

Stockholders' equity (deficit): Preferred stock, no par, 5,000 authorized, no shares issued and outstanding - - Common stock, $.01 par value; 145,000 shares authorized, 35,245 and 33,611 shares issued and 30,695 and 29,343 outstanding, respectively 352 336 Common stock, $.01 par value; 0 and 267 shares subject to mandatory redemption - (1,198) Treasury stock, 4,549 and 4,268 shares, respectively, at cost (18,443) (17,118) Paid in capital in excess of par value 287,966 278,181 Accumulated deficit (298,786) (253,798) Accumulated other comprehensive loss (4,531) (4,543) ---------- ---------- Total stockholders' equity (deficit) (33,442) 1,860 ---------- ---------- Total liabilities and stockholders' equity $637,127 $685,391 ========== ==========

Schedule 3

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Years ended December 31, 2004 and 2003 (Unaudited, in Thousands)

2004 2003 -------- ---------

Net cash provided by operating activities $57,827 $50,411

Cash Flows from Investing Activities: Construction & capital expenditures, net of capitalized interest (51,422) (48,566) Net proceeds from sale of business - 155,269 Placement of funds in restricted account (1,055) (3,725) Release of funds from escrow - 3,539 -------- --------- Net cash used by investing activities (52,477) 106,517

Cash Flows from Financing Activities: Proceeds from the issuance of long-term debt, net of discounts - 375,970 Debt issuance costs - (14,000) Repayments of long-term debt (26,962) (434,102) Purchase of treasury stock (127) (5,830) Issuance of common stock 9,801 267 -------- --------- Net cash provided (used) by financing activities (17,288) (77,695)

Increase (decrease) in cash (11,938) 79,233

Cash, Beginning of period 97,798 18,565 -------- ---------

Cash, End of period $85,860 $97,798 ======== =========

Supplemental Cash Flow Data: Interest paid, net of capitalized interest $45,470 $51,372 ======== ========= Income taxes paid, net of refund $876 $- ======== =========

Supplemental Noncash Transactions: Interest rate swap marked to market $- $(14,152) ======== ========= Property acquired under a mortgage $- $2,340 ======== ========= Minimum pension liability adjustment $(12) $(191) ======== ========= Dividend declared, but not paid $(5,694) $- ======== =========

Schedule 4

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. SCHEDULE OF ADJUSTED REVENUES For the Three Months Ended March 31, 2001 and 2000 (Unaudited, in Thousands)

Three Months Ended Twelve Months Ended December 31, December 31, ------------------- ------------------- 2004 2003 2004 2003 --------- --------- --------- ---------

Total operating revenues $75,125 $77,237 $302,707 $323,847

Adjustment for termination of the State of Alaska TPA contract - (4,479) - (19,927)

Adjustment for sale of the Company's Directory business - Directory revenues - - - (11,631) --------- --------- --------- ---------

Total adjusted operating revenues $75,125 $72,758 $302,707 $292,289 ========= ========= ========= =========

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. Within this press release, the Company has disclosed its total operating revenues adjusted to exclude the impact of disposed of operations and the termination of the State of Alaska Telecommunications Partnering Agreement (TPA) as the Company believes that such data will facilitate more useful period-to-period comparisons of the Company's ongoing operations.

Schedule 5

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. SCHEDULE OF LOCAL TELEPHONE REVENUES For the Three Months and Twelve Months Ended December 31, 2004 and 2003 (Unaudited, in Thousands)

Three Months Ended Twelve Months Ended December 31, December 31, ------------------- ------------------- 2004 2003 2004 2003 --------- --------- --------- ---------

Local telephone revenues: Local network service $22,697 $22,686 $91,669 $96,656 Network access revenue 22,174 23,808 97,536 97,759 Deregulated and other 6,090 6,120 21,982 21,271 --------- --------- --------- ---------

Local telephone revenues $50,961 $52,614 $211,187 $215,686 ========= ========= ========= =========

Schedule 6

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. SCHEDULE OF EBITDA CALCULATION For the Three Months and Year Ended December 31, 2004 and 2003 (Unaudited, in Thousands)

Three Months Ended Twelve Months Ended December 31, December 31, ------------------ ------------------- 2004 2003 2004 2003 -------- --------- --------- ---------

Net cash provided (used) by operating activities $19,093 $(59) $57,827 $50,411 Adjustments to reconcile net income to net cash provided by operating activities:

Loss on discontinued operations - - - (52) Loss (gain) on disposal of assets and asset impairments (29) 115 (2,854) 48,863 Depreciation and amortization (20,701) (15,450) (78,387) (82,185) Amortization of debt issuance costs, warrants and original issue discount (1,085) (935) (6,088) (17,048) Non-cash stock compensation expense - (900) (900) Other non-cash expenses (12) (4,118) (12) (4,118) Other deferred credits (1,478) 100 (3,048) (1,643) Changes in components of working capital: Accounts receivable and other current assets (2,811) 1,604 (7,907) (7,451) Accounts payable and other current liabilities 404 1,932 1,176 6,380 Deferred charges and other assets (446) 515 (1) 1,072 Net cash used in discontinued operations - 1 - 41 -------- --------- --------- ---------

Net income (loss) $(7,065) $(17,195) $(39,294) $(6,630) Add (subtract): Interest expense 12,234 19,992 51,288 71,470 Income tax (benefit) expense (219) 1,095 (219) 1,095 Depreciation and amortization 20,701 15,450 78,387 82,185 (Gain) loss on disposal of assets and asset impairment charges, net 29 (115) 2,854 (112,622) Gain on foreign exchange - - - (4,261) Goodwill impairment loss - - - - Impairment charges related to SOA - - - 63,759 Stock based compensation - 900 - 900 Non-cash pension expense 150 238 699 238 Non-cash litigation reserves - 3,880 (300) 3,880 -------- --------- --------- --------- EBITDA 25,830 24,245 93,415 100,014

Adjustment for discontinued operations - - - 52 Adjustment for the termination of airplane lease - - 2,854 - Adjustment for Neptune capped commitment - - 750 - Adjustment for sale of the Company's directory business - Directory EBITDA - (164) - (7,165) IDS transaction costs 375 - 375 - -------- --------- --------- ---------

Adjusted EBITDA $26,205 $24,081 $97,394 $92,901 ======== ========= ========= =========

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. Within this press release, the Company has disclosed its net gain before interest expense, provisions for taxes, depreciation expense, amortization expense and other non-cash charges inclusive of non cash pension expense and a non cash release of litigation reserves following legal settlement (EBITDA) because the Company believes it is an important indicator because it provides information about our ability to service debt, pay dividends and fund capital expenditures. The calculation of "Adjusted EBITDA" as presented in this press release differs from the calculation of, and therefore is not directly comparable to, "Indenture EBITDA" as presented in ACS' prospectus supplement, dated January 26, 2005, primarily because the calculation of "Adjusted EBITDA" only includes adjustments that meet the criteria of being "non recurring" under Regulation G. To further assist the reader in understanding operations, EBITDA has also been adjusted to exclude the impact of discontinued and disposed of operations (Adjusted EBITDA) as the Company believes that such data will facilitate more useful period-to-period comparisons of the Company's ongoing operations. EBITDA and Adjusted EBITDA are not GAAP measures and should not be considered a substitute for net income and loss and other measures of financial performance recorded in accordance with GAAP.

Schedule 7A

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. KEY OPERATING STATISTICS (Unaudited)

Dec. 31, Sept. 30, Dec. 31, --------- --------- --------- 2004 2004 2003 --------- --------- ---------

Local telephone: Retail access lines (a) 207,905 209,442 218,058 Wholesale access lines 16,590 17,500 19,159 UNE loop lines 64,589 68,524 68,916 UNE platform lines 6,365 6,251 5,333 --------- --------- --------- Total local telephone access lines 295,449 301,717 311,466 ========= ========= =========

Average local telephone access lines for the quarter 298,583 304,512 312,333 Average local telephone revenue per line for the quarter $56.18 $56.10 $56.15 Quarterly growth rate in local telephone access lines -2.1% -1.8% -0.6%

Wireless Covered population 482,251 480,422 480,422

Ending subscribers 100,657 95,529 87,017 Average subscribers for the quarter 98,093 93,306 85,505 Quarterly growth rate 5.4% 4.9% 3.6%

Activations for the quarter 10,642 9,219 6,865 Deactivations for the quarter 5,514 4,773 3,841 Average monthly churn for the quarter 1.7% 1.7% 1.4%

Penetration 20.9% 19.9% 18.1% Quarterly minutes of use (000's) (b) 90,483 93,100 69,117

Average revenue per subscriber for the quarter (c) $45.42 $47.43 $39.59

Long Distance: Long distance subscribers 47,050 44,334 43,166 Quarterly minutes of use (000's) 34,779 36,614 35,795 Average subscribers for the quarter 45,692 43,494 43,333 Average revenue per subscriber for the quarter $26.09 $29.72 $33.33

Internet: DSL subscribers 24,711 22,596 17,784 Dial-Up and other service subscribers 22,842 23,699 28,277 --------- --------- --------- Total Internet subscribers 47,553 46,295 46,061 ========= ========= =========

Average subscribers for the quarter 46,924 45,739 45,706 Average DSL & dial up revenue per subscriber for the quarter (d) $28.86 $28.98 $29.83

(a) Prior period retail access lines impacted by change in line count methodology.

(b) Wireless MOU have been restated to include prepaid airtime certificates.

(c) Wireless ARPU has been restated to better reflect ongoing revenue derived from ACS's wireless customers. The restated ARPU excludes equipment sales, foreign roaming (non-ACS customers roaming on ACS's network) and access termination revenue. Previously, wireless ARPU was based on all wireless revenues, including those that were not derived from ACS's customer base.

(d) Internet ARPU has been restated to include only DSL and dial-up revenues. Previously, internet ARPU included all internet revenues; however, the customer base included only DSL and dial- up subscribers. The restated ARPU provides consistency between revenues and customer counts.

Schedule 7B

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. KEY OPERATING STATISTICS (Unaudited)

Dec. 31, Sept. 30, Net 2004 2004 Movement --------- --------- -----------

Local telephone retail access lines 207,905 209,442 (1,537)

Wireless subscribers 100,657 95,529 Less adjustment for resellers (6,425) (6,655) --------- --------- 94,232 88,874 5,358 --------- ---------

Long distance subscribers 47,050 44,334 2,716

DSL and dial up subscribers 47,553 46,295 1,258 --------- --------- -----------

396,740 388,945 7,795 ========= ========= ===========

Schedule 8

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. SCHEDULE OF FREE CASHFLOWS (Unaudited, in Thousands)

Three Twelve Months Months Ended Ended Dec. 31, Dec. 31, ---------- ---------- 2004 2004 ---------- ----------

Net cash provided by operating activities $19,093 $57,827

Total construction and capital expenditures (13,338) (51,422) ---------- ----------

Free Cashflow 5,755 6,405

CDMA Growth & Neptune optical fiber capacity(e) 1,918 16,021 ---------- ----------

Adjusted free cashflow $7,673 $22,426 ========== ==========

(e) CDMA Growth & Neptune optical fiber capacity is inclusive of a $1.3 million capital investment to support wireless number portability.

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. Within this press release, the Company has disclosed net cashflow provided by operations net of total construction and capital expenditures (free cashflow) and free cashflow adjusted for growth capital investments in CDMA wireless technology and Neptune optical fiber capacity, which the Company plans to fund from existing cash reserves (Adjusted free cashflow). The Company believes it is an important indicator because it provides information about our ability to service debt and pay dividends. Free cashflow and adjusted free cashflow are not GAAP measures and should not be considered a substitute for increase (decrease) in cash and other measures of financial performance recorded in accordance with GAAP.

--30--MC/sf*

CONTACT: Alaska Communications Systems Mary Ann Pease, 907-297-3000 mpease@acsalaska.com or Lippert/Heilshorn & Associates Kirsten Chapman, 415-433-3777 (ACS Investors) David Barnard, CFA, 415-433-3777 (ACS Investors) david@lhai-sf.com

KEYWORD: ALASKA INDUSTRY KEYWORD: TELECOMMUNICATIONS INTERNET E-COMMERCE EARNINGS CONFERENCE CALLS SOURCE: Alaska Communications Systems, Inc.

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