Good morning. My name is Arnika,and I will be your conference operator today. At this time, I would like towelcome everyone to the TDS and U.S. Cellular Third Quarter Earnings Call. Alllines have been placed on mute to prevent any background noise. After thespeaker's remarks, there will be a question-and-answer session. (OperatorInstructions). Thank you. Mr. Steinkrauss, youmay again the conference.

Okay. Thank you, Arnika, and goodmorning, everybody. Thanks for joining us for the call. With me today are KenMeyers, Executive VP, CFO with TDS; Steve Campbell, Executive VP, CFO U.S.Cellular; Bill Megan, Executive VP, CFO TDS Telecom, and also joining for thecall are Jack Rooney, CEO U.S. Cellular and Jay Ellison, Executive VPOperations, U.S. Cellular. A replay of this teleconferencewill be available today at 1:00 pm Chicagotime and run through midnight,Wednesday, November 7th. The replay number is 800-642-1687, pass code 22669548.For international callers the number is 706-645-9291, same pass code. This call is being simultaneouslywebcast on the Investor Relations section of both the TDS and U.S. Cellularwebsites. The webcast will be available for the next two weeks after which itwill be available in the conference call archive, and remember archived callsare not updated. We will be making someforward-looking statements today. So please review the Safe Harbor paragraphs in our releasesand the more extended versions on our website, as well as our filings with theSEC in this regard. Shortly after we released ourearnings results earlier this morning and before this call, TDS and U.S.Cellular filed 8-Ks. The 8-Ks include both the press releases we issued thismorning and some additional information, and our accounting and reportingstaffs at corporate in the business units have done a great job and filed bothcompanies' 10-Qs prior to this call. I encourage you to take a look atthese documents. Both press releases were posted to the TDS Internet homepagethis morning shortly after going out over the wire. U.S. Cellular posted itsrelease to its website as well. You’ll also find posted on ourwebsites additional information and reconciliation of non-GAAP financialmeasures that may be used by management when discussing the operating dataduring today's conference call as well as any changes to the company'sforward-looking guidance. U.S. Cellular did change itsguidance, and Steve Campbell will comment on that in just a few minutes. All ofthis information is now included on a separate page entitled Guidance andReconciliation to make it easier to define. TDS Telecom did not make anychanges to its guidance. The information can also beaccessed on the conference call page of the investor relations sections of bothcompany's websites. Please note that the comparisons made by the speakers todayand their prepared remarks, third quarter year-to-year compares unlessotherwise indicated. There were three non-operating orone-time entries on TDS's statement of operations this quarter. Two are underInvestment and Other Income, and the third is an extraordinary item. Ken willdiscuss these in a second, and it's important that we take them into accountfor modeling purposes. We will be meeting with investorsin Denver on November 14th. If youhave an interest in meeting with us, please let me know. Additionally we willbe attending the Citigroup, 18th Annual Entertainment, Media, andTelecommunication Conference on January 8th in Phoenix. I'm now going to turn the callover to Ken Meyers.

Thank you, Mark. Good morning,and thank you for joining us today. We're pleased to report solid third quarterresults with operating revenues at TDS up 11% driving a 22% increase inoperating income. Also TDS get $158.1 million incash flows from operating activities in the quarter. Since Steve Campbell andBill Megan will cover the operating results in some detail, let me comment onthe three non-operating items. First, TDS recorded a gain of$248.9 million related to the maturity of forward contracts covering 45.5million shares of Deutsche Telecom. TDS delivered 41 million shares againstthose contracts and sold the remaining shares. Also in the quarter, the companyrecorded a $54.8 million loss related to the fair value adjustment ofderivative instruments primarily related to the remaining shares of DeutscheTelecom owned by the company. Please recall that both thesenumbers affect TDS only as all of U.S. Cellular's prepaid over contractsmatured in the second quarter. For the fourth quarter, TDS had one othercontract for about $2.4 million, Vodafone ADR's, which matured last month. Finally, TDS telecom discontinuedwith regulatory accounting set forth under FAS or Statement of FinancialAccounting Standards 71 and recorded a one-time non-cash extraordinary gain of$42.8 million net of taxes. Bill Megan will expand on that. Other items below line you will see interestexpense down about 16%. That primarily related to the earlier prepaid forwardcontracts that matured, eliminating the related debt. We would anticipate thatwill continue to decline as other contracts mature in the fourth quarter ofthis year and the first three quarters of next year. For the quarter, the effectivetax rate on operations, that's excluding the gains and losses, was 39.4% atTDS. TDS repurchased nearly 1.3 million special common shares in the quarterand year-to-date has repurchased nearly 1.5 million shares for a total of $89.1million. The company has now completed alittle more than 35% of the $250 million stock repurchase authorizationapproved by the Board of Directors earlier this year. Now, to go to the detailson the operating results at U.S. Cellular, let me turn the phone call over toSteve Campbell.

Thank you, Ken, and good morning,everyone. I'm very pleased to report that U.S. Cellular achieved solid growthand financial results in the third quarter of 2007. At September 30 ourcustomers totaled almost $6.1 million up 6% year-over-year. Our retail customers totaled $5.5million, up 7%. Total net activations for the quarter including both retail andre-seller customers were 57,000, up more than 100% from 25,000 in the prior year. Retailnet activations for the quarter were $52,000 up 86% driven by continued strongresults in the post pay segment, the part of the market where we focus. Post pay net activations for thequarter were 73,000, up 92%. And at September 30th, post paid customerswere approximately 95% of our total retail customers. We also achieved nicegrowth in the average monthly revenue per unit. ARPU rose to $52.71 for thequarter up 10%. The retail post paid churn ratefor the quarter was 1.6% compared to 1.7% in the prior year, and for the ninemonths the retail post paid churn rate was 1.4%. We achieved these strongresults across the majority of our markets due to a number of factors. First, the continuing strongpopularity and acceptance of our new suite of national wide area and familycalling plans, which were introduced in the second half of 2006. Customersappreciate the value inherent in these plans and continue to migrate to themfaster than we anticipated. By September 30th, roughly 54% of ourpost paid customer base was on these plans. Another factor is our expandedofferings of handsets and products. During the third quarter we introducedseven new handsets including two new smartphones, our first windows basedmobile phone, the Motorola Q, and the Blackberry 8830. We’re also excited to announcethat we expect to launch the powerful and stylish Blackberry Pearl anothersmartphone offering multimedia functionality in the first quarter of 2008. In addition, during the thirdquarter we…

Thank you, Steve, and goodmorning everyone. Let me begin with a brief description of the extraordinarygain we recorded at September 30th and then go on the review operatingperformance for the quarter. As of September 30th, TDS Telecomdiscontinued the application of FAS 71 for reporting its financial results. FAS71 specifies the accounting for the effects of certain types of regulation, andits application is required for businesses that meet three threshold criteria. Although we have applied FAS 71 toour ILEC operations since the effective date of the standard in 1984, we havedetermined that as a result of increasing competition in our markets, FAS 71should no longer be applied. The principle effect ofdiscontinuing FAS 71 is a reversal of the regulatory liabilities associatedwith the future estimated cost of removal of certain fixed assets. Removal ofburied cable and public write away would be an example. This resulted in aone-time after-tax gain of $42.8 million as Ken mentioned, and we recorded thatas extraordinary income. The company does not expect this change will havematerial effect on its continuing ILEC operations. Moving on to review, ouroperating performance for the quarter, combined ILEC and CLEC revenues declined3%, while operating cash flow increased by 1% compared to the third quarter ayear ago. I'll walk through the ILEC andCLEC results separately. ILEC revenues decreased 3%. The decline is dueprimarily to lower compensation for network access including compensation fromstate, national revenue pools and decreased local service. This decline wasmostly offset by the growth in revenues related to DSL and long distancecustomers. Operating cash flow decreased 5%primarily due to the decline in revenue particularly the decrease in highmargin network access revenues. Cash expenses decreased by $1.8 million or 2%for the quarter primarily due to savings realized in selling, general, andadministrative expenses associated with cost control efforts. ILEC access linesequivalents, access lines adjusted…

Thank you, Bill. Arnika, we'reready for questions and answers now.

(Operator Instructions). Yourfirst question comes from Ric Prentiss.

Yeah, good morning, guys. Coupleof questions on the U.S. Cellular side. First, you guys have talked about howyou're getting the higher equipment subsidy to get the higher data revenue and theincreased competition on the handset promotions. Give us a little thought onyour trends there. Theyare obviously data's got a lot of room to grow. But do you think we should expecthigher handset subsidies for the foreseeable future? And then I'll come backwith a couple others.

Ric, this is Jay Ellison. Itseems to be the trend in this industry as Steve mentioned in his comments.We've seen it in virtually across the enterprise. We've seen a very shift inmix, and we kind of classify handsets good, better, and best, and we've seen avery strong shift out of the good into the better and best categories. Steve also mentioned we launchedthe Q which is our first windows operating system. We've just had tremendoussuccess across the enterprise with that handset which is a higher cost andhigher subsidy phone. But along with that we are seeing tremendous utilizationof all our data services, not only text messaging growing but we've seentremendous legs around picture messaging, which I think we have commented onearlier this year continue. We are seeing very good datarevenues on all of those smartphone devices, and we're putting significanteffort around and that many of the products that Steve mentioned earlier of theTone Room and location based services have contributed as well to higher ARPU.So, albeit we are seeing higher handset subsidies, we also feel very confidentthat that is also contributing too much greater functionality and utilizationof our data services.

As we think of CPGA versus ARPU,where is CPGA kind of headed? What kind of level?

That's almost too hard topredict. We committed to be competitive for our customers. That hasimplications on activations and retention. But there's five or six players inevery market, and we're going to stay right up where we can be competitive toget high quality customers.

Okay. I usually wait for thequeue, but what was CPGA within the quarter in that ARPU was up pretty high?

For the third quarter, it wasabout $500.

Okay. And then, any update onyour thoughts as far as 700-megahertz auctions, what your interest might be asfar as adding spectrum in your current footprint or maybe looking at some edgeout?

About that, as far as the700-megahertz auction is concerned, as you know, we've participated in recentauctions and currently it's our expectation, and what I mean by that is it'smore likely than not that we would participate in the upcoming auction. As we have said before, ourprincipal interest in net auction is to get spectrum to accommodate growth incustomers and their usage in our existing markets and to provide the spectrumthat we'll need for eventual deployment of either 3G or 4G technology.

Okay. And then final question,lot of M&A activity in the whole space starting in May, with Alltel PrivateEquity with going to Dobson going to rural, which I think helped you guys'investment out there. And then some comment at the end. What are you guys seeing as faras the M&A environment out there, as far as any licenses you might want topick up or any licenses you might want to divest of in your different clusters?

Hi Ric. This is Ken Meyers.There's been a lot on. As we have talked in the past, a lot of what's going onhas been other public companies where when we look at it. Only part of it isreally strategic or could be strategic to us. And we aren't about to take theARPU triage on buying 100% of something in order to get the 30% or 40% or 50%that makes sense for our footprint as it exists. We've seen it, but we haven'tbeen really involved in anything right now.

Okay. Thanks. Good luck, guys.

Your next question comes from PhilCusick.

Hi guys; thanks for taking thequestion. First a follow-up on Ric's question. Can you give a little moredetail on that smartphone space? First you said smartphones are 1.5 to 2 timestraditional ARPU. Is that data or total ARPU?

It's total.

It's total, and about how manysmartphones do you have in the base?

We don't have that number.

Okay. And then second of all, interms of the outlook for the fourth quarter, it seems like as one of the laterguys who are reporting in the economy, people keep wondering about it or atleast asking me about it. Can you give us an idea of what you're seeing on amonth-to-month basis and what's built into your fourth quarter guidance forsort of overall consumer growth? Thanks.

Well, so let's talk about addsactivity. We mentioned that we had strong growth in Q3 in the post phasesegment in particular, 73,000 net adds, which was up 92% year-over-year. Andrecognizing that Q4 is always a very competitive quarter, our guidance outthere is still where we've been all year at 375 to 425,000.

So no recent changes in customeractivity that would indicate any weakness?

No.

Great. Thanks, guys.

Your next question comes fromDavid Janazzo.

Good morning. On the roaming,both incoming and outgoing, Steve you ticked off some of the drivers. Are thosetrends sustainable, particularly on the inbound side? And you mentioned some ofthe new service plans. To what extent is that impacting the systems operationscosts?

As I mentioned, inbound and youreminded us, inbound was up pretty good year-over-year. I think it was 39% wasthe number that we quoted. And we're enjoying, that's largely a function ofinbound roaming minutes. We've had a significant increase in inbound minutesfrom our principal roaming partner. We'd certainly like to see that trendcontinue but certainly is subject to what our partner decides to do in terms ofmoving traffic. On the outbound side, we haveincluded some roaming minutes in our wide area national plan so we've hadincrease in terms of use. But frankly, as a percentage of our total usage, theoff network percentage has stayed the same at about 4%.

And Ken, you've got sharebuybacks going on in a couple of places. Can you pull that together for us andgive us your overall strategy on the share buybacks across the three classes?

Sure. Starting at U.S. Cellular, wehave a share buyback program in place to offset the dilution caused by ongoingcompensation programs. And over the last couple of years, the company wasn'table to repurchase any shares. And we are simply in every quarter picking upabout 1%, which is what's allowed under a diminimus program we have in place.That's 1% of the public shares. Separate from that at the TDSlevel, we have a $250 million repurchase program that was authorized by theboard earlier this year primarily focused on taking advantage of the discountsthat we see in the special common. When we launched that program, it was a setdollar amount over about a three-year period, and we're about 35% of the waythrough in less than six months. I expect that we'll continue toexecute that plan as long as we see the opportunity in the marketplace. Andonce that is done, we'll look at what our next steps are. There's currently norepurchase program underway affecting the regular common shares at TDS.

Thank you.

(Operator Instructions). Yournext question comes from [Robert Shipman].

Good morning. From my perspective,it looks like with business risk, financial risk and now with accountingproblems gone, it suggests that credit ratings should be closer to single Athan certainly BB+ at S&P. I was wondering if you've had any recentconversations with them and when you anticipate ratings to go up?

Hi, Robert. This is Ken. We stayin very close contact with the rating agencies. And as disclosed in their priorreleases, the credit metrics themselves as true measures look pretty good andcontinue to improve, and the company is making progress on re-mediating itsmaterial weaknesses. My expectation as we continue tomarch down this path, the rating agencies will take note of our business andthe credit ratings as well as our improved controls, and we'll make appropriateadjustments as we go forward.

Okay. Great. If you could press on,that would be appreciated.

Right.

Your next question comes fromKevin Roe.

Thank you. Good morning. A couplewireless questions. Given the importance of data growth and smartphones, canyou give us an update on your EVDO plans, and also on wireless, can you give usan update on bad debt expense trends there and any change in credit scoringthat may or may not have taken place year-to-date? Thanks.

On the EVDO, as you know, we havelaunched kind of a market trial is up in Milwaukee.And that is going very well. As a matter of fact, we just added this past weekor so the selling of EVDO data cards in our retail arm up in the Milwaukeemarket so that we can further use that type of data information to evaluatewhat we may do next with EVDO. I think we've always expressedthat we won't rule anything out until rev A is available and ready for primetime, and at this point in time, quite frankly, rev A is mostly in the datacards themselves. So, that's why we're rolling that in Milwaukee.Then, we'll use that data along with some other more for doing here to evaluateour next steps or next markets that we would consider rolling out next year orbeyond. So, really, no concrete answersbeyond taking those data from the data card trial we're putting up there alongwith the handset trial and looking at the metrics around that and backing thatinto some of our business case work. On the bad debt, I think it's…

On the bad debt, we actuallyrelaxed our standards a bit late last year with the intention of promoting ordriving more gross ads for the business. But over the year, bad debt expensehas been in line with what we expected. In fact, for the nine months, it'sright in line as a percentage of revenue with what we have seen in the prioryear. And in fact, under 2% of revenue. About 1.7% actually.

And one more wireless question.On your unbilled markets, you've got a big license for Indianapolisand Minneapolis. And you mentionedin your prepared remarks that you're not looking to build out new markets inthe fourth quarter and into '08. I think in '08 maybe, and you commentI'm not sure, but given that, are those two licenses still important to yourportfolio? Are they strategic? Could they be something that you could monetize?

Hi. This is Ken. Yeah, they arecurrently immediately adjacent to where we operate, which gives them an extravalue in terms of how we think about them. However, as we have said in thepast, it was important for us to meet some of the credit metrics that were thrownout in front of us, and we're going to launch any of those until such time aswe had the current markets up and running, built out and strengthened ourmanagement team before we moved forward. And given that it takes at least18 months to build out something like that, and none of that has started,that’s why we're able to say nothing in '08, and that is not a new statementaround '08.

So, no launch in '08, but youcould theoretically start building one or either of those markets in '08.

We haven't built all of these plans.So, to comment now I think it would be inappropriate, and when we talk aboutour fourth quarter results, we'll be talking about our guidance and plans fornext year.

Okay, thanks, Ken.

Your next question comes fromStephen Mead.

Hi, it's Stephen Mead. Just onthe cellular side. Can you talk a little bit about - do you have a sense of interms of the customer mix how many customers were actually paying for data servicesand as you look at the non-data ARPU? In terms of the percentage of the groupthat don't pay up for database services in terms of just voice business, whatare the ARPU doing in that sort of segment of the market? There's two questions there. Do youhave a sense of what the mix looks like in terms of how many customers arepaying for data?

Well, one of the unique thingsabout the way we rolled out data at U.S. Cellular was we enhanced our billingsystem, so that people can use and experience it without buying a data package. They can use it after they walkout of the store. And so while others can talk about a number of customers thatare data capable or whatever, almost every phone that goes out the door at U.S.Cellular is data capable. So, the numbers aren't measured just the ways you arelooking for.

Okay. Then what -- do you have a senseof sort of what the, more commodity end of the business is doing in terms ofARPU trends?

Not answerable right now, especiallygiven the whole repackaging of a new rate plan that moved out last year.Wouldn't be surprised to see if they have increased also.

Okay. What about if you look atthe hit to operating results from the loss on equipment sold, how much of theequipment sales are associated with people upgrading to another phone versusnew customers?

Obviously, we've reportedextremely strong churn rates anda piece of that is one component of that is the competitiveness outlinedin the marketplace. Existing customers expect to be treated as would a newcustomer. We offer basically the sameprograms on the handsets to our existing customers as well, and they areshifting mix as well to those better and best phones as they come in for contractrenewal. We see a pretty big balance about on an ongoing basis. Probably, we say about 70% of ourgross number generally is about what we're retaining on our monthly basis, andthat goes through cyclical time based on the holiday buying seasons whetherit's the Christmas holiday, Valentine's Day, Mom, Dad's, Grads and then back-to-school,we see kind of peaks and valleys of that.

I was just wondering, as we lookat 2008, whether in terms of the cost of equipment and stuff like that, what doyou see as far as that trend? I mean is it going to be similar to 2007? Orcould you actually getsome benefit of the maturing of basically more customers have updated equipment,and they don't need to replace it.

I think two things. One, I thinkit's going to be more of the same, and two, I think we've all seen over thelast two or three years the rapid introduction and then end of life of manyhandsets clearly, with each reintroduction of either a refreshed look of ahandset or a new form factor. We're talking increasedfunctionality and user interoperability on those handsets. So, I really thinkit's looking very similar go forward.

And at this stage of the wirelessbusiness in the country, where does your new business come from?

We do a significant amount - weget our business a lot from those churning, through dissatisfaction with their currentcarriers, and we're very targeted in all of our markets try to get equal to or more than fair shareof those intenders new to the market. I think our strategy focusing oncustomer satisfaction lends very much towards getting those that aredissatisfied with other carriers out there.

I mean, of the net adds in thethird quarter, how many of those were churned from some other network versusabsolutely new cellular users?

This is Jack Rooney, there's noway for us to determine that. I mean it's, when you're sitting there trying tofigure out what your gross adds are and trying to sit down and figure out howmany are they. So, you know you're getting asignificant portion of your net adds or gross adds from another carrier. Buttry and sit down, we measure things like flow share or whatever. So, we know,what our, how our customers intake is measured against what our competitors aredoing.

I’d just two more questions. Onthe SG&A line the increase, how much of that was advertising?

Advertising year-over-year was upabout $8 million.

And then LA, what was the LAcomparison as far as the equity and earnings this year versus last year?

I have it here, hang on a second.LA was $18 million this year and was $16 million for the comparable quarterlast year.

Up 11%.

Up about $2 million and changefrom last year.

Alright. Thanks.

Your next question comes from [MartinLoha].

Thank you. Is it too early to getsome general guidance regarding your 2008 capital spending plans?

Yes. As Ken mentioned, we'restill in the process of planning. And it would be premature to say anythingabout that right now. When we meet later to discuss full year results, we mayhave some guidance at that point.

Thank you.

At this time there are no furtherquestions.

Okay. Arnika, I think then thecall is concluded. Thank you everybody for joining us, and I'm available forthe rest of the day if you have any additional questions. You may terminate thecall.

This concludes today's conferencecall. You may now disconnect.