<PAGE>

     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 7, 2004

                                                     REGISTRATION NO. 333-

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------

                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                             ---------------------

                        VALOR COMMUNICATIONS GROUP, INC.
             (Exact Name of Registrant as Specified in its Charter)
                             ---------------------

<Table>
<S>                                <C>                                <C>
             DELAWARE                             4813                            20-0792300
 (State or other jurisdiction of      (Primary Standard Industrial             (I.R.S. Employer
  incorporation or organization)      Classification Code Number)           Identification Number)
</Table>

                    201 E. JOHN CARPENTER FREEWAY, SUITE 200
                              IRVING, TEXAS 75062
                                 (972) 373-1000
  (Address, including zip code, and telephone number, including area code, of
                   Registrant's principal executive offices)

                          WILLIAM M. OJILE, JR., ESQ.
                             SENIOR VICE PRESIDENT,
                        CHIEF LEGAL OFFICER & SECRETARY
                        VALOR COMMUNICATIONS GROUP, INC.
                    201 E. JOHN CARPENTER FREEWAY, SUITE 200
                              IRVING, TEXAS 75062
                                 (972) 373-1000
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
                             ---------------------
                                   COPIES TO:

<Table>
<S>                                                 <C>
              JOSHUA N. KORFF, ESQ.                             DAVID J. GOLDSCHMIDT, ESQ.
               KIRKLAND & ELLIS LLP                              RICHARD L. MUGLIA, ESQ.
                 CITIGROUP CENTER                        SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
               153 EAST 53RD STREET                                 FOUR TIMES SQUARE
             NEW YORK, NEW YORK 10022                            NEW YORK, NEW YORK 10036
                  (212) 446-4800                                      (212) 735-3000
</Table>

                             ---------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
                                                        (continued on next page)
                             ---------------------
                        CALCULATION OF REGISTRATION FEE

<Table>
<Caption>
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
                                                               PROPOSED MAXIMUM
                    TITLE OF EACH CLASS                       AGGREGATE OFFERING       AMOUNT OF
               OF SECURITIES TO BE REGISTERED                      PRICE(1)       REGISTRATION FEE(1)
------------------------------------------------------------------------------------------------------
<S>                                                          <C>                  <C>
Income Deposit Securities (IDSs)(2).........................
------------------------------------------------------------------------------------------------------
Class A Common Stock, par value $0.01 per share(3)..........
------------------------------------------------------------------------------------------------------
    % Senior Subordinated Notes due 2014(4).................
------------------------------------------------------------------------------------------------------
Subsidiary Guarantees of % Senior Subordinated Notes due
  2014(5)...................................................
------------------------------------------------------------------------------------------------------
Total.......................................................     $875,000,000           $110,863
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
</Table>

(1) Estimated solely for the purpose of computing the amount of the registration
    fee pursuant to Rule 457(o) promulgated under the Securities Act of 1933, as
    amended.

(2) The IDSs represent         underlying shares of the Class A common stock and
    $    aggregate principal amount of underlying    % senior subordinated notes
    of Valor Communications Group, Inc. ("Valor"). Includes         IDSs subject
    to the underwriters' over-allotment option and an indeterminate number of
    IDSs of the same series which may be received by holders of IDSs in the
    future on one or more occasions in replacement of the IDSs being offered
    hereby in the event of a subsequent issuance of IDSs, upon an automatic
    exchange of portions of the senior subordinated notes for identical portions
    of such additional notes as discussed in note (4) below.

(3) Represents         shares of Valor's Class A common stock included in the
    IDSs described above.

(4) Includes $    million aggregate principal amount of Valor's    % senior
    subordinated notes included in the IDSs described above and $    million
    principal amount of senior subordinated notes of the same series that will
    be issued separately (not in the form of IDSs). Also includes an
    indeterminate principal amount of notes of the same series as the senior
    subordinated notes, which will be received by holders of senior subordinated
    notes in the future on one or more occasions in the event of a subsequent
    issuance of IDSs, upon an automatic exchange of portions of the senior
    subordinated notes for identical portions of such additional notes.

(5) Each of the subsidiary guarantors listed in the Table of Additional
    Registrants on the next page will guarantee the senior subordinated notes
    represented by the IDSs and the senior subordinated notes of the same series
    that will be issued separately from the IDSs. Pursuant to Rule 457(n) under
    the Securities Act of 1933, no separate fee for the guarantees is payable.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a),
MAY DETERMINE.
<PAGE>

(continued from previous page)

If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.  [ ]

If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, please check the following box
and list the Securities Act of 1933 registration statement number of the earlier
effective registration statement for the same offering.  [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, check the following box and list the Securities Act
of 1933 registration statement number of the earlier effective registration
statement for the same offering.  [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act of 1933, check the following box and list the Securities Act
of 1933 registration statement number of the earlier effective registration
statement for the same offering.  [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]
<PAGE>

                   TABLE OF ADDITIONAL REGISTRANT GUARANTORS

<Table>
<Caption>
                                                                                    ADDRESS INCLUDING ZIP CODE,
                                               STATE OR OTHER                             TELEPHONE NUMBER
                                              JURISDICTION OF    I.R.S. EMPLOYER       INCLUDING AREA CODE OF
EXACT NAME OF REGISTRANT GUARANTOR AS         INCORPORATION OR   IDENTIFICATION        REGISTRANT GUARANTOR'S
SPECIFIED IN ITS CHARTER                        ORGANIZATION         NUMBER         PRINCIPAL EXECUTIVE OFFICES
-------------------------------------         ----------------   ---------------   ------------------------------
<S>                                           <C>                <C>               <C>
Valor Telecommunications, LLC...............      Delaware         52-2171586      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications of Texas, LP.......         Texas         52-2194219      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications Equipment, LP......         Texas         75-2884400      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications Services, LP.......         Texas         75-2884846      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications Investments, LLC...      Delaware         47-0902124      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications Enterprises, LLC...      Delaware         75-2884398      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications LD, LP.............      Delaware         75-2884847      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Southwest Enhanced Network Services, LP.....      Delaware         75-2885419      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Western Access Services, LLC................      Delaware         20-0081823      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Western Access Services of Arizona, LLC.....      Delaware         20-0081863      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Western Access Services of Arkansas, LLC....      Delaware         20-0081902      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
</Table>
<PAGE>

<Table>
<Caption>
                                                                                    ADDRESS INCLUDING ZIP CODE,
                                               STATE OR OTHER                             TELEPHONE NUMBER
                                              JURISDICTION OF    I.R.S. EMPLOYER       INCLUDING AREA CODE OF
EXACT NAME OF REGISTRANT GUARANTOR AS         INCORPORATION OR   IDENTIFICATION        REGISTRANT GUARANTOR'S
SPECIFIED IN ITS CHARTER                        ORGANIZATION         NUMBER         PRINCIPAL EXECUTIVE OFFICES
-------------------------------------         ----------------   ---------------   ------------------------------
<S>                                           <C>                <C>               <C>
Western Access Services of Colorado, LLC....      Delaware         20-0081934      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Western Access Services of Oklahoma, LLC....      Delaware         20-0081944      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Western Access Services of New Mexico,
  LLC.......................................      Delaware         20-0081922      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Western Access Services of Texas, LP........      Delaware         20-0081952      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications Corporate Group,
  LP........................................         Texas         75-2895493      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications Southwest II,
  LLC.......................................      Delaware         75-2950066      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications Enterprises II,
  LLC.......................................      Delaware         75-2950064      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Kerrville Communications Corporation........         Texas         74-2197091      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Kerrville Communications Management, LLC....      Delaware         30-0135974      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Kerrville Communications Enterprises, LLC...      Delaware         32-0047694      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Advanced Tel-Com Systems, LP................         Texas         74-2228603      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Kerrville Telephone, LP.....................         Texas         74-0724580      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
</Table>
<PAGE>

<Table>
<Caption>
                                                                                    ADDRESS INCLUDING ZIP CODE,
                                               STATE OR OTHER                             TELEPHONE NUMBER
                                              JURISDICTION OF    I.R.S. EMPLOYER       INCLUDING AREA CODE OF
EXACT NAME OF REGISTRANT GUARANTOR AS         INCORPORATION OR   IDENTIFICATION        REGISTRANT GUARANTOR'S
SPECIFIED IN ITS CHARTER                        ORGANIZATION         NUMBER         PRINCIPAL EXECUTIVE OFFICES
-------------------------------------         ----------------   ---------------   ------------------------------
<S>                                           <C>                <C>               <C>
Kerrville Cellular, LP......................         Texas         74-2513782      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
KCC TelCom, LP..............................         Texas         74-2955898      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Kerrville Cellular Management, LLC..........      Delaware         51-0411886      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Kerrville Cellular Holdings, LLC............      Delaware         51-0411889      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Kerrville Mobile Holdings, Inc..............         Texas         74-3008924      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Kerrville Wireless Holdings, LP.............         Texas         74-3012850      201 E. John Carpenter Freeway,
                                                                                   Suite 200 Irving, TX 75062
                                                                                   (972) 373-1000
</Table>
<PAGE>

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED WITHOUT
NOTICE. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

                   SUBJECT TO COMPLETION, DATED APRIL 7, 2004

                        INCOME DEPOSIT SECURITIES (IDSS)
              $               % SENIOR SUBORDINATED NOTES DUE 2014
                        VALOR COMMUNICATIONS GROUP, INC.

We are selling          IDSs in the United States and Canada representing
         shares of our Class A common stock and $    million aggregate principal
amount of our   % senior subordinated notes due 2014. Each IDS initially
represents:
  - one share of our Class A common stock; and
  - a   % senior subordinated note with a $         principal amount.
We are also selling $      aggregate principal amount of our    % senior
subordinated notes separately (not in the form of IDSs). The completion of the
offering of separate senior subordinated notes is a condition to our sale of
IDSs. In addition, as part of our reorganization described elsewhere in this
prospectus, we are issuing          IDSs representing          shares of our
Class A common stock and $    million aggregate principal amount of our   %
senior subordinated notes to our existing equity holders, including management,
in exchange for the interests they hold in our subsidiaries, see "Detailed
Transaction Steps" on page 86.
This is the initial public offering of our IDSs and senior subordinated notes.
We anticipate that the public offering price of the IDSs will be between
$         and $         per IDS and the public offering price of the senior
subordinated notes will be    % of their stated principal amount.
Holders of IDSs will have the right to separate the IDSs into the shares of our
Class A common stock and senior subordinated notes represented thereby at any
time after the earlier of 45 days from the closing of this offering or the
occurrence of a change of control. Similarly, except as described below, any
holder of shares of our Class A common stock and senior subordinated notes may,
at any time, combine the applicable number of shares of Class A common stock and
principal amount of senior subordinated notes to form IDSs. Separation of all of
the IDSs will occur automatically upon the continuance of a payment default on
the senior subordinated notes for 90 days, upon the occurrence of any redemption
of the senior subordinated notes or upon the maturity of the senior subordinated
notes. Following any such automatic separation, shares of Class A common stock
and senior subordinated notes may no longer be combined to form IDSs.
Our senior subordinated notes mature on          , 2014 subject to our right to
extend their maturity for two additional successive five-year terms under
specified circumstances. We will be permitted to defer interest payments on our
senior subordinated notes subject to the limitations described in "Description
of Senior Subordinated Notes--Terms of the Notes--Interest Deferral" on page 98.
Deferred interest on our senior subordinated notes will bear interest quarterly
at a rate equal to the stated annual rate of interest on the notes divided by
four. Our obligations under the senior subordinated notes will be guaranteed by
each of our direct and indirect wholly-owned domestic subsidiaries.
UPON A SUBSEQUENT ISSUANCE BY US OF IDSS OR SENIOR SUBORDINATED NOTES OF THE
SAME SERIES (NOT IN THE FORM OF IDSS), A PORTION OF YOUR SENIOR SUBORDINATED
NOTES MAY BE AUTOMATICALLY EXCHANGED FOR AN IDENTICAL PRINCIPAL AMOUNT OF THE
SENIOR SUBORDINATED NOTES ISSUED IN SUCH SUBSEQUENT ISSUANCE, AND IN THAT EVENT
YOUR IDSS WILL BE REPLACED WITH NEW IDSS. IN ADDITION TO THE SENIOR SUBORDINATED
NOTES OFFERED HEREBY, THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A
PART ALSO REGISTERS THE SENIOR SUBORDINATED NOTES AND NEW IDSS TO BE ISSUED UPON
ANY SUCH SUBSEQUENT ISSUANCE. FOR MORE INFORMATION REGARDING THESE AUTOMATIC
EXCHANGES AND THE EFFECT THEY MAY HAVE ON YOUR INVESTMENT, SEE "DESCRIPTION OF
SENIOR SUBORDINATED NOTES--COVENANTS RELATING TO IDSS--PROCEDURES RELATING TO
SUBSEQUENT ISSUANCE" ON PAGE 103 AND "MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES--UNITED STATES HOLDERS--SENIOR SUBORDINATED NOTES--ADDITIONAL
ISSUANCES" ON PAGE 140.
We will apply to list the IDSs on the            under the trading symbol "  ."
We will apply to list the IDSs on the Toronto Stock Exchange under the trading
symbol "  " and our shares of Class A common stock under the symbol "  ."
INVESTING IN OUR IDSS (INCLUDING THE SHARES OF OUR CLASS A COMMON STOCK AND
SENIOR SUBORDINATED NOTES REPRESENTED THEREBY) AND IN OUR SENIOR SUBORDINATED
NOTES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 21.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<Table>
<Caption>
                                                          PER
                                                          IDS        TOTAL      PER NOTE      TOTAL
                                                        -------   -----------   --------   -----------
<S>                                                     <C>       <C>           <C>        <C>
Public offering price(1)..............................  $         $                   %    $
Underwriting discount.................................  $         $                   %    $
Proceeds to Valor Communications Group, Inc. (before
  expenses)(2)........................................  $         $                   %    $
</Table>

---------------------------

(1) The offering price in Canada is payable in Canadian dollars and is the
    approximate equivalent of the U.S. dollar offering price based on the noon
    buying rate on the date of this prospectus as quoted by the Federal Reserve
    Bank of New York.
(2) Approximately $    million of these proceeds will be paid to our existing
    equity holders. The table above does not reflect         IDSs being issued
    to our existing equity holders in exchange for their interests in our
    subsidiaries.

Certain holders of IDSs have granted the underwriters an option to purchase up
to          additional IDSs to cover over-allotments.
The underwriters expect to deliver the IDSs and the senior subordinated notes in
book-entry form only through the facilities of The Depository Trust Company to
purchasers on or about          , 2004.

                        Joint Book-Running Lead Managers
CIBC WORLD MARKETS              MERRILL LYNCH & CO.              LEHMAN BROTHERS
              BANC OF AMERICA SECURITIES LLC              JPMORGAN

                                          , 2004
<PAGE>

         NOTICE TO PURCHASERS OF SEPARATE SENIOR SUBORDINATED NOTES AND
                      ACKNOWLEDGEMENT OF PURCHASER INTENT
     None of the separate senior subordinated notes purchased in connection with
this offering may be purchased, directly or indirectly, by persons who are also
(1) purchasing IDSs in this offering or (2) otherwise receiving IDSs or shares
of Class B common stock in connection with the reorganization. ACCORDINGLY, EACH
INVESTOR PURCHASING THE SEPARATE SENIOR SUBORDINATED NOTES IN THIS OFFERING MUST
NOT PURCHASE IDSS IN THIS OFFERING AND MUST NOT CONCURRENTLY ENTER INTO ANY PLAN
OR PRE-ARRANGEMENT WHEREBY IT WOULD ACQUIRE ANY IDSS OR OUR COMPANY EQUITY (AS
DEFINED BELOW) OR TRANSFER THE SEPARATE SENIOR SUBORDINATED NOTES TO ANY HOLDER
OF IDSS OR OUR COMPANY EQUITY. IN ADDITION, EACH PERSON RECEIVING IDSS OR SHARES
OF CLASS B COMMON STOCK IN CONNECTION WITH THE REORGANIZATION MUST NOT PURCHASE
SEPARATE SENIOR SUBORDINATED NOTES IN THIS OFFERING.
     EACH INVESTOR IN THIS OFFERING ASSUMES SOLE RESPONSIBILITY FOR ENSURING
THAT IT COMPLIES WITH THE RESTRICTIONS ABOVE. NEITHER WE NOR THE UNDERWRITERS
WILL ASSUME ANY RESPONSIBILITY TO ENSURE THAT ANY INVESTOR COMPLIES WITH THESE
RESTRICTIONS. If you are unsure whether the restrictions above would prohibit
you from purchasing the separate senior subordinated notes or our IDSs in this
offering, you should consult your own legal advisor with regard to the
application of these restrictions to your individual circumstances.
     Furthermore, each person purchasing separate senior subordinated notes in
this offering, by acquiring the separate senior subordinated notes, thereby
represents to us and the underwriters that:
     (a) neither such purchaser nor any entity, investment fund or account over
         which such purchaser exercises investment control is purchasing IDSs in
         this offering;
     (b) neither such purchaser nor any entity, investment fund or account over
         which such purchaser exercises investment control owns, or has the
         contractual right to acquire, our equity securities (including
         securities which are convertible, exchangeable or exercisable into or
         for our equity or our equity-linked securities, which we refer to
         collectively as our Company equity); and
     (c) such purchaser is not party to any plan or pre-arrangement whereby it
         would (1) acquire any IDSs or our Company equity or (2) transfer the
         separate senior subordinated notes to any holder of IDSs or our Company
         equity.
     For purposes of these representations, the "purchaser" shall be deemed to
be (1) the person who initially purchases the separate senior subordinated notes
from the underwriters in this offering and (2) the person(s), if any, pursuant
to whose instructions such purchase was made.
<PAGE>

                               TABLE OF CONTENTS

<Table>
<S>                                                           <C>
Summary.....................................................    1
Risk Factors................................................   21
Cautionary Statement Regarding Forward-Looking Statements...   34
Use of Proceeds.............................................   35
Dividend Policy.............................................   36
Capitalization..............................................   38
Dilution....................................................   39
Selected Historical Financial Information...................   40
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................   42
Business....................................................   60
Regulation..................................................   69
Management..................................................   75
Principal Stockholders......................................   83
Related Party Transactions..................................   84
Detailed Transaction Steps..................................   86
Description of Certain Indebtedness.........................   87
Description of IDSs.........................................   88
Description of Capital Stock................................   93
Description of Senior Subordinated Notes....................   97
IDSs Eligible For Future Sale...............................  135
Material United States Federal Income Tax Consequences......  136
Certain ERISA Considerations................................  145
Underwriting................................................  147
Legal Matters...............................................  151
Experts.....................................................  152
Where Can You Find More Information.........................  152
Index to Financial Statements...............................  F-1
</Table>

                                        i
<PAGE>

                                    SUMMARY

The following is a summary of the principal features of this offering of IDSs
and senior subordinated notes and should be read together with the more detailed
information and financial data and statements contained elsewhere in this
prospectus.

Throughout this prospectus, we refer to Valor Communications Group, Inc., a
Delaware corporation, as "Valor," and, together with its consolidated
operations, as "we," "our," and "us," unless otherwise indicated. Valor is a
holding company and has no direct operations. Valor's principal assets are the
direct and indirect equity interests of its subsidiaries, all of which will be
pledged to the creditors under the new credit facility, as described more fully
below.

                                  OUR COMPANY

OVERVIEW

We are one of the largest providers of telecommunications services in rural
communities in the southwestern United States and the seventh largest
independent local telephone company in the country. We operate approximately
550,000 telephone access lines in primarily rural areas of Texas, Oklahoma, New
Mexico and Arkansas. We believe that in many of our markets we are the only
service provider that offers customers an integrated package of local and long
distance voice, high-speed data and Internet access, and enhanced services such
as voicemail and caller identification. For the year ended December 31, 2003, we
generated revenues of $497.3 million.

We formed our company in 2000 in connection with the acquisition of select
telephone assets from GTE Southwest Corporation, which is now part of Verizon,
and have since acquired the local telephone company serving Kerrville, Texas.
The rural telephone businesses that we own have been operating in the markets we
serve for over 75 years. Since our inception, we have invested substantial
resources to improve and expand our network infrastructure to provide high
quality telecommunications services and superior customer care. This capital
investment, in combination with a focused selling effort, has contributed to an
increase in our revenue of $72.4 million, or 17.0%, from 2001 to 2003. We
believe that we are well positioned for future revenue and cash flow growth
through both expanded service offerings and acquisitions.

We operate our business through telephone company subsidiaries that qualify as
rural local exchange carriers, or RLECs, under the Telecommunications Act of
1996. Like many RLECs, our business is characterized by stable operating
results, revenue and cash flow and a relatively favorable regulatory
environment. We have historically experienced less competition than regional
Bell operating companies because of the low customer density and high
residential component of our customer base. Since our customer base is located
in areas that are generally less densely populated than areas served by other
RLECs, we believe that we are more insulated from competitive pressures than
many other local telecommunications providers.

OUR STRENGTHS

Ability to Generate Consistent Cash Flows. We have increased our operating cash
flow in each year since our inception. We have accomplished this by growing
revenues through providing additional services to our customers, reducing
expenses by improving operating efficiencies and negotiating favorable terms
with our suppliers and contractors, and optimizing our capital expenditures. In
addition, RLECs in general have been able to attain predictable and stable cash
flow from operations due to a steady demand for telecommunications services in
rural areas and public policies that support universal, affordable local
telephone service.

Leading Market Position. In the markets we serve, we are the leading provider of
telecommunications services. We generally face less competition from wireless
providers, cable television operators and other local exchange carriers than
other industry

                                        1
<PAGE>

participants because competitive entry into our markets is less attractive due
to the low population density and primarily residential customer base. We
reinforce our market position by providing reliable customer service, offering a
full range of voice and data services and maintaining a strong local presence in
the communities we serve.

Scalable, State-of-the-Art Network Infrastructure. We invested more than $300
million since our inception in 2000 to improve and expand our network
infrastructure. These initiatives have enabled us to provide additional services
to our customers and improve the overall quality of our network, as demonstrated
by our surpassing all applicable statewide regulatory service quality measures
in 2003. We believe that our prior capital investment in our network, combined
with our focus on the quality of our service, leaves us well positioned for
future cash flow growth.

Wide Array of Integrated Services. We believe that we are the only
telecommunications service provider in many of the markets we serve that has the
ability to provide an integrated package of local, long distance, high-speed
data and Internet access as well as a variety of enhanced services such as
voicemail and caller identification. By offering a bundled package of services,
we have improved our long distance and enhanced services penetration, resulting
in increased revenue and higher margins.

Experienced and Proven Management Team. We have a highly experienced senior
management team that has an average of over 20 years of experience in the local
telecommunications industry. Our senior executives have a solid track record of
managing the expansion of public telecommunications companies through both
internal growth and integration of acquisitions. Upon completion of this
offering, our management team will hold a significant investment in IDSs.

BUSINESS STRATEGY

Increase Penetration of Higher Margin Services. We intend to capitalize on our
ability to offer higher margin enhanced voice and data services as a bundled
package. We have been aggressively marketing enhanced services, and we have
witnessed an increasing demand for data services, including broadband services.
We believe that a significant opportunity exists for us to continue to increase
our revenue per customer by cross-selling enhanced voice and data services as
part of a bundled package.

Provide Superior Service and Customer Care. We seek to build long-term customer
relationships by offering a wide range of telecommunications services and
consistent customer support. We currently provide personalized customer care
through three call centers that support our business and residential customers.
We have automated many of our customer service functions and expanded our
customers' ability to interact with our company 24 hours a day, 365 days a year.

Improve Operating Efficiency and Profitability. We strive for greater
efficiencies and improved profit margins by consolidating corporate functions,
negotiating favorable terms with our suppliers and contractors and focusing
capital expenditures on projects that exceed our internal rate of return
thresholds. Our investment in customer service and focus on automation has
substantially reduced the number of customer service calls that we receive since
2001, with a resulting reduction in related cash operating costs. These
initiatives have led to increases in our profitability.

Pursue Selective Strategic Acquisitions. Our management team has a solid track
record of evaluating, acquiring and successfully integrating RLEC assets. We
believe that our network infrastructure and labor force can support significant
growth through strategic acquisitions. We believe that there are numerous
opportunities to acquire telecommunications assets that are accretive.

                                        2
<PAGE>

                              NEW CREDIT FACILITY

Concurrently with the closing of this offering, we will enter into a $     new
senior secured credit facility with a syndicate of financial institutions,
including Banc of America Securities LLC and CIBC World Markets Corp., as joint
lead arrangers and joint book-managers. CIBC is also acting as a joint
book-running lead manager of this offering. Throughout this prospectus, we refer
to this credit facility as the "new credit facility." We expect that the new
credit facility will be comprised of a senior secured revolving credit facility
in a total principal amount of up to $     million, which we refer to as the
"new revolver," and a senior secured term loan facility in an aggregate
principal amount of $     million, which we refer to as the "new term loan." We
expect that the new revolving credit facility and the new term loan will each
have an approximately five-year maturity with no amortization of principal prior
to maturity. The closing of this offering is conditioned upon the closing of the
new credit facility. See "Description of Certain Indebtedness--New Credit
Facility."

                               OUR REORGANIZATION

All the equity interests in Valor Telecommunications, LLC, or VTC, Valor
Telecommunications Southwest, LLC, or VTS, and Valor Telecommunications
Southwest II, LLC, or VTS II, are currently held by affiliates of Welsh, Carson
Anderson & Stowe, affiliates of Vestar Capital Partners, and affiliates of
Citicorp Venture Capital, to whom we refer to collectively as our "equity
sponsors," our management and employees, and a group of individuals. We refer to
these persons and entities collectively throughout this prospectus as our
"existing equity holders."

As discussed in "Detailed Transactions Steps" on page 86, immediately prior to
and in connection with this offering we will consummate a reorganization
pursuant to which our existing equity holders will contribute all their equity
interests in VTC, VTS and VTS II to Valor in exchange for           IDSs,
          shares of Class B common stock and $     in cash in the aggregate.
Following our reorganization, each of VTC, VTS and VTS II will be either a
direct or an indirect wholly-owned subsidiary of Valor. In addition, following
our reorganization our management will collectively hold an aggregate of
IDSs and will be eligible to receive an aggregate of        over time under an
incentive compensation plan.

                                USE OF PROCEEDS

We estimate that we will receive net proceeds from this offering of
approximately $     million after deducting underwriting discounts and
commissions and other estimated offering expenses payable by us. We will use
these net proceeds, together with $     million of borrowings under our new
credit facility as follows:

   --  $     million to repay all outstanding amounts owed under our existing
       senior credit facilities; and

   --  $     million to repurchase all our outstanding 10% senior subordinated
       notes held primarily by our equity sponsors.

All remaining proceeds will be paid to the existing equity holders as part of
the consideration for their contribution to us of their equity interests in our
subsidiaries.

Of the           IDSs offered by this prospectus,           IDSs in the
aggregate, having an aggregate implied value of $     million based on an
assumed initial public offering price of $     , will be issued to our existing
equity holders as part of the consideration for their contribution to us of
their equity interests in our subsidiaries. This amount is not included in our
net proceeds from this offering described above.

If the underwriters exercise their over-allotment option in full, the
underwriters will purchase an aggregate of           IDSs from our existing
equity holders for resale to the public. We will not receive any of the proceeds
from the sale of IDSs by our existing equity holders.

                                        3
<PAGE>

                  OUR CORPORATE STRUCTURE AFTER THIS OFFERING

The following chart reflects our capital structure immediately after the
offering:

                                  [FLOW CHART]

---------------
(1) Certain Valor Operating Entities and Kerville Operating Entities will also
    be borrowers under our new credit facility. We, Valor Telecommunications,
    LLC and certain of our operating subsidiaries will guarantee the obligations
    of these borrowers under the new credit facility.

We incorporated in Delaware in March 2004. Our principal executive offices are
located at 201 E. John Carpenter Freeway, Suite 200, Irving, Texas 75062 and our
telephone number is (972) 373-1000. Our website address is www.valortelecom.com.
Information included or referred to on our website is not a part of this
prospectus.
                                        4
<PAGE>

                                  THE OFFERING

We are offering           IDSs at an assumed initial public offering price of
$     per IDS, which represents the midpoint of the range set forth on the cover
page of this prospectus. We are also offering $          aggregate principal
amount of our      % senior subordinated notes separately (not in the form of
IDSs). Our sale of IDSs will be conditioned upon the consummation of our
separate offering of senior subordinated notes. In addition, no purchaser,
including our existing equity investors, or any affiliate of such purchaser, is
entitled to purchase both IDSs and senior subordinated notes in the offering. In
addition, as part of our reorganization described elsewhere in this prospectus,
we are issuing           IDSs to our existing equity holders, including
management, in exchange for the interests they hold in our subsidiaries, see
"Detailed Transaction Steps" on page 86.

SUMMARY OF THE IDSS

  What are IDSs?

IDSs are securities comprised of Class A common stock and senior subordinated
notes.

Each IDS initially represents:

   --  one share of our Class A common stock; and

   --  a   % senior subordinated note with a $     principal amount.

The ratio of Class A common stock to principal amount of senior subordinated
notes represented by an IDS is subject to change in the event of a stock split,
recombination or reclassification of our Class A common stock. For example, if
we effect a two-for-one stock split, from and after the effective date of the
stock split, each IDS will represent two shares of Class A common stock and the
same principal amount of senior subordinated notes as it previously represented.
Likewise, if we effect a recombination or reclassification of our Class A common
stock, each IDS will thereafter represent the appropriate number of shares of
Class A common stock on a recombined or reclassified basis, as applicable, and
the same principal amount of senior subordinated notes as it previously
represented.

  What payments can I expect to receive as a holder of IDSs?

Assuming we make our scheduled interest payments on the senior subordinated
notes and pay dividends in the amount contemplated by our anticipated dividend
policy, you will receive in the aggregate approximately $     per year in
interest on the senior subordinated notes and dividends on the Class A common
stock represented by each IDS. We expect to make interest and dividend payments
on the last day of each fiscal quarter to holders of record on the twentieth
day, or, if such day is not a business day, the last business day immediately
preceding such twentieth day, of the last month of such quarter.

You will be entitled to receive quarterly interest payments at an annual rate of
  % of the aggregate principal amount of senior subordinated notes represented
by your IDSs or approximately $     per IDS per year, subject to our right under
certain circumstances specified in the indenture governing the senior
subordinated notes to defer interest payments on our senior subordinated notes.
For a detailed description of these circumstances, see "Description of Senior
Subordinated Notes--Interest Deferral."

You will also receive quarterly dividends on the shares of our Class A common
stock represented by your IDSs, if and to the extent dividends are declared by
our board of directors and permitted by applicable law and the terms of the new
credit facility, the indenture governing our senior subordinated notes and any
of our other then outstanding indebtedness. Specifically, the indenture
governing our senior subordinated notes restricts our ability to declare and pay
dividends on our common stock as described under "Dividend Policy." In addition,
the new credit facility restricts our ability to declare and pay dividends on
our common stock as described under "Dividend Policy" and "Description of
Certain Indebtedness--New Credit Facility." Upon the closing of this offering,
our board of directors is expected to adopt a dividend

                                        5
<PAGE>

policy which contemplates that, subject to applicable law and the terms of our
then existing indebtedness, initial annual dividends will be approximately
$     per share of our Class A common stock. However, our board of directors
may, in its discretion, modify or repeal this dividend policy. We cannot assure
you that we will pay dividends at this level in the future or at all.

  Will my rights as a holder of IDSs be any different than the rights of a
  beneficial owner of separately held Class A common stock and senior
  subordinated notes?

No. As a holder of IDSs you are the beneficial owner of the Class A common stock
and senior subordinated notes represented by your IDSs. As such, through your
broker or other financial institution and The Depository Trust Company, or DTC,
you will have exactly the same rights, privileges and preferences, including
voting rights, rights to receive distributions, rights and preferences in the
event of a default under the indenture governing our senior subordinated notes,
ranking upon bankruptcy and rights to receive communications and notices as a
beneficial owner of separately held Class A common stock and senior subordinated
notes, as applicable, would have through its broker or other financial
institution and DTC.

  Will the IDSs be listed on an exchange?

We will apply to list the IDSs for trading on the           under the trading
symbol "  ." We will apply to list the IDSs on the Toronto Stock Exchange under
the trading symbol "  " and our shares of Class A common stock under the symbol
"  ."

  Will the terms of the notes represented by IDSs be the same as the notes sold
  separately (not in the form of IDSs)?

Yes. The terms of the notes sold separately (not in the form of IDSs) will be
identical in all respects to the notes represented by IDSs and will be part of
the same series of notes issued under the same indenture. Accordingly, holders
of notes sold separately and holders of notes represented by IDSs will vote
together as a single class, in proportion to the aggregate principal amount of
notes they hold, on all matters on which they were eligible to vote under the
indenture.

  Will the shares of our Class A common stock and senior subordinated notes
  represented by the IDSs be separately listed on an exchange?

We will apply to list the shares of our Class A common stock on the Toronto
Stock Exchange under the trading symbol   . We cannot assure you that our Class
A common stock will trade on the Toronto Stock Exchange or any other exchange or
that our senior subordinated notes will trade separately from the IDSs on any
exchange. We currently do not expect an active trading market for our Class A
common stock or senior subordinated notes to develop. However, we will use
reasonable efforts to list our Class A common stock for separate trading on the
          if a sufficient number of shares of our Class A common stock are held
separately to meet the minimum requirements for separate trading on the
          for at least 30 consecutive trading days. The shares of Class A common
stock and senior subordinated notes offered hereby will be freely tradable
without restriction or further registration under the Securities Act of 1933,
unless they are held by "affiliates" as that term is defined in Rule 144 under
the Securities Act.

  In what form will IDSs and the shares of our Class A common stock and senior
  subordinated notes represented by the IDSs be issued?

The IDSs and the shares of our Class A common stock and senior subordinated
notes represented by the IDSs will be issued in book-entry form only. This means
that you will not be a registered holder of IDSs or the securities represented
by the IDSs and you will not receive a certificate for your IDSs or the
securities represented by your IDSs. You must rely on your broker or other
financial institution that will maintain your book-entry position to receive the
benefits and exercise the rights of a holder of IDSs.

                                        6
<PAGE>

  Can I separate my IDSs into shares of Class A common stock and senior
  subordinated notes or recombine shares of Class A common stock and senior
  subordinated notes to form IDSs?

Yes. Holders of IDSs, whether purchased in this offering or in a subsequent
offering of IDSs of the same series, may, at any time after the earlier of 45
days from the date of the closing of this offering or the occurrence of a change
of control, through their broker or other financial institution, separate the
IDSs into the shares of our Class A common stock and senior subordinated notes
represented thereby. Any holder of shares of our Class A common stock and senior
subordinated notes may, at any time, through his or her broker or other
financial institution, combine the applicable number of shares of Class A common
stock and senior subordinated notes to form IDSs unless the IDSs have previously
been automatically separated as a result of the continuance of a payment default
on the senior subordinated notes for 90 days, or the redemption or maturity of
any senior subordinated notes. Separation and recombination of IDSs may involve
transaction fees charged by your broker and/or financial intermediary. See
"Description of IDSs--Book-Entry Settlement and Clearance--Separation and
Combination."

  Will my IDSs automatically separate into shares of Class A common stock and
  senior subordinated notes upon the occurrence of certain events?

Yes. Separation of all of the IDSs will occur automatically upon the continuance
of a payment default on the senior subordinated notes for 90 days, upon the
occurrence of any redemption, whether in whole or in part, of the senior
subordinated notes or upon the maturity of the senior subordinated notes.
Following any such automatic separation, shares of Class A common stock and
senior subordinated notes may be no longer be combined to form IDSs.

  What will happen if we issue additional IDSs of the same series in the future?

We may conduct future financings by selling additional IDSs of the same series,
which will have terms that are identical to those of the IDSs being sold in this
offering and will represent the same proportion of Class A common stock and
senior subordinated notes as is represented by the then outstanding IDSs. In
addition, we may in the future issue IDSs in exchange for shares of Class B
common stock, see "Related Party Transactions--Equity Sponsors--Investor Rights
Agreement." Although the senior subordinated notes represented by such IDSs will
have terms that are identical (except for the issuance date) to the senior
subordinated notes being sold in this offering and will be part of the same
series of senior subordinated notes for all purposes under the indenture, it is
possible that the new senior subordinated notes will be sold or issued with
original issue discount, or OID, for United States federal income tax purposes.
If such senior subordinated notes are issued with OID, all IDSs of the same
series (including the IDSs being offered hereby) and all senior subordinated
notes, whether held directly or in the form of IDSs, will be automatically
exchanged for IDSs and senior subordinated notes, respectively, with new CUSIP
numbers. As a result of such exchanges, the OID associated with the sale of the
new senior subordinated notes effectively will be spread among all holders of
senior subordinated notes on a pro rata basis, which may adversely affect your
tax treatment.

  What will be the United States federal income tax consequences of an
  investment in the IDSs?

The United States federal income tax consequences of the purchase, ownership and
disposition of IDSs or senior subordinated notes in this offering are not
entirely clear.

Treatment of Purchase of IDSs.  The purchase of IDSs in this offering should be
treated for United States federal tax purposes as the purchase of shares of our
Class A common stock and senior subordinated notes, rather than as the purchase
of a single integrated security, and, by purchasing IDSs, you will agree to such
treatment. You must allocate the purchase price of the IDSs between those shares
of Class A common stock and senior subordinated notes in proportion to their
respective initial fair market values, which will establish your initial tax
basis in each component of the IDSs. The value attributed to the shares of Class
A common stock and senior subordinated notes represented by the IDSs have been

                                        7
<PAGE>

established based on the fair market value of such shares of Class A common
stock and senior subordinated notes. We will report the initial fair market
value of each share of Class A common stock as $     and the initial fair market
value of each $     principal amount of senior subordinated notes as $     , and
by purchasing IDSs, you will agree to such allocation.

Treatment of Senior Subordinated Notes.  The senior subordinated notes should be
treated as debt for United States federal income tax purposes. If the senior
subordinated notes were treated as equity rather than as debt for United States
federal income tax purposes, then the stated interest on the senior subordinated
notes could be treated as a dividend, and interest on the senior subordinated
notes would not be deductible by us for United States federal income tax
purposes, which could significantly reduce our future cash flow. In addition,
payments on the senior subordinated notes to foreign holders would be subject to
United States federal withholding tax at rates up to 30%. Payments to foreign
holders would not be grossed-up on account of any such taxes.

  What will be the United States federal income tax consequences of a subsequent
  issuance of senior subordinated notes?

The United States federal income tax consequences to you of the subsequent
issuance of senior subordinated notes with OID (or any issuance of senior
subordinated notes thereafter) are not entirely clear.

Exchange of Senior Subordinated Notes.  The indenture governing the senior
subordinated notes will provide that, in the event that there is a subsequent
issuance of senior subordinated notes with a new CUSIP number having terms that
are otherwise identical (other than the issuance date) in all material respects
to the senior subordinated notes represented by the IDSs, including an issuance
of senior subordinated notes upon an exchange of shares of Class B common stock,
each holder of IDSs or separately held senior subordinated notes, as the case
may be, agrees that a portion of such holder's senior subordinated notes will be
exchanged for a portion of the senior subordinated notes acquired by the holders
of such subsequently issued senior subordinated notes. Consequently, immediately
following such subsequent issuance, each holder of subsequently issued senior
subordinated notes, held either as part of IDSs or separately, and each holder
of existing senior subordinated notes, held either as part of IDSs or
separately, will own an inseparable unit composed of a proportionate percentage
of both the old senior subordinated notes and the newly issued senior
subordinated notes. The aggregate principal amount of senior subordinated notes
owned by each holder will not change as a result of such subsequent issuance and
exchange. Because a subsequent issuance will affect the senior subordinated
notes in the same manner, regardless of whether these senior subordinated notes
are held as part of IDSs or separately, the combination of senior subordinated
notes and shares of Class A common stock to form IDSs, or the separation of
IDSs, should not affect your tax treatment.

It is unclear whether the exchange of senior subordinated notes for subsequently
issued senior subordinated notes will result in a taxable exchange for United
States federal income tax purposes, and it is possible that the Internal Revenue
Service, or IRS, might successfully assert that such an exchange should be
treated as a taxable exchange. In such case, a holder would recognize any gain
realized on such exchange, but a loss realized might be disallowed. If the
exchange of senior subordinated notes is treated as a taxable exchange, then
your initial tax basis in the senior subordinated notes deemed to have been
received in the exchange would be the fair market value of such senior
subordinated notes on the date of the deemed exchange (adjusted to reflect any
disallowed loss), and your holding period for such senior subordinated notes
would begin on the day after the deemed exchange.

Reporting of OID.  Regardless of whether the exchange of senior subordinated
notes is treated as a taxable event, such exchange could result in holders
having to include OID in taxable income prior to the receipt of cash. Following
any subsequent issuance of senior subordinated notes with OID (or any issuance
of senior subordinated notes thereafter) and resulting exchange, we (and our
agents) will report any OID on the subsequently issued senior subordinated notes
ratably among all holders of IDSs and separately held senior subordinated notes,
and each holder of IDSs and separately held senior subordinated notes will, by
                                        8
<PAGE>

purchasing IDSs or senior subordinated notes, agree to report OID in a manner
consistent with this approach. However, we cannot assure you that the IRS will
not assert that any OID should be reported only by the persons that initially
acquired such subsequently issued senior subordinated notes (and their
transferees) and they may challenge a holder's reporting of OID on its tax
returns.

Because there is no statutory, judicial or administrative authority directly
addressing the tax treatment of the IDSs or instruments similar to the IDSs, we
urge you to consult your own tax advisor concerning the tax consequences of an
investment in the IDSs. For additional information, see "Material United States
Federal Income Tax Consequences."

                                        9
<PAGE>

                          SUMMARY OF THE CAPITAL STOCK

Issuer.....................  Valor Communications Group, Inc.

Common stock...............  We have      shares of authorized Class A common
                             stock, par value $0.01 per share,      shares of
                             authorized Class B common stock, par value $0.01
                             per share, and      shares of authorized Class C
                             common stock, par value $0.01 per share. Class A
                             common stock, Class B common stock and Class C
                             common stock are identical in all respects, except
                             that only Class A common stock is eligible to be
                             included in IDSs and each class carries different
                             dividend rights, as more fully described in
                             "Dividend Policy" and "Description of Capital
                             Stock--Common Stock--Dividends." In addition, we
                             have entered into an agreement with our equity
                             sponsors that provides that following the second
                             anniversary of the consummation of this offering,
                             at the option of our equity sponsors, upon any
                             subsequent sale of any shares of Class B common
                             stock, we will automatically exchange with the
                             purchasers of such shares, one IDS for each share
                             of Class B common stock, subject to compliance with
                             law and applicable agreements more fully described
                             in "Related Party Transactions--Equity
                             Sponsors--Investor Rights Agreement." Furthermore,
                             our bylaws provide that we may only issue
                             additional shares of Class A common stock and IDSs
                             pursuant to a registration statement that has been
                             declared effective by the Securities and Exchange
                             Commission. Unless the context otherwise requires,
                             references to our "common stock" throughout this
                             prospectus refer to our Class A common stock, Class
                             B common stock and Class C common stock.

Shares of Class A common
stock represented by IDSs
being offered to the
public:

  by Valor.................            shares.

  by our existing equity
holders....................            shares if the underwriters'
                             over-allotment option is exercised in full (which
                             shares shall be offered from the shares of Class A
                             common stock represented by IDSs that we are
                             issuing to our existing equity holders in this
                             offering).

Shares of Class A common
stock represented by IDSs
being issued to our
existing equity holders....            shares.

Shares of common stock to
be outstanding following
the offering...............            shares of Class A common stock and
                             shares of Class B common stock. No shares of Class
                             C common stock will be outstanding following the
                             consummation of this offering.

Voting rights..............  Each outstanding share of our common stock will
                             carry one vote per share and all classes of common
                             stock will vote as a single class on all matters
                             presented to the stockholders for a vote.

Dividends..................  You will receive dividends on the shares of our
                             common stock if and to the extent dividends are
                             declared by our board of directors and permitted by
                             applicable law and the terms of our then
                             outstanding indebtedness. Specifically, the senior
                             subordinated notes indenture and the new credit
                             facility both restrict our ability to declare and
                             pay dividends on our common stock, as described in
                             detail under

                                        10
<PAGE>

                             "Dividend Policy." Upon the closing of this
                             offering, our board of directors is expected to
                             adopt a dividend policy which contemplates that,
                             subject to applicable law and the terms of our then
                             existing indebtedness, initial annual dividends
                             will be approximately $     per share of our Class
                             A common stock. Our amended and restated
                             certificate of incorporation contains dividend
                             provisions with respect to our Class B common stock
                             that are intended to replicate the yield on our IDS
                             units. Any time a dividend is paid to holders of
                             Class A common stock, holders of Class B common
                             stock will be paid a dividend equal to the amount
                             per share paid to holders of Class A common stock.
                             In addition to any such dividend, shares of our
                             Class B common stock accrue dividends at a rate of
                                  % per annum on a deemed issuance price of
                             $          per share, as more fully described in
                             "Description of Capital Stock -- Common
                             Stock -- Dividends." Following the consummation of
                             this offering, no shares of Class C common stock
                             will be outstanding and we do not anticipate that
                             we will issue any shares of Class C common stock or
                             declare dividends thereon in the near future. Our
                             board of directors may, in its discretion, modify
                             or repeal this dividend policy. We cannot assure
                             that we will pay dividends at this level or at all
                             in the future.

Dividend payment dates.....  If declared, dividends on our Class A common stock
                             and Class B common stock will be paid quarterly on
                             the last day of each fiscal quarter to holders of
                             record on the twentieth day, or, if such day is not
                             a business day, the business day immediately
                             preceding such twentieth day, of the last month of
                             such quarter. To the extent not previously paid,
                             the      % dividend that accrues on shares of Class
                             B common stock will be paid at such time when such
                             shares of Class B common stock are exchanged for
                             IDSs.

Listing....................  We will apply to list the IDSs on the
                                                     under the trading symbol
                             "       ." We will apply to list the IDSs on the
                             Toronto Stock Exchange under the trading symbol
                             "       " and our shares of Class A common stock
                             under the symbol "       ." We cannot assure you
                             that our Class A common stock will trade separately
                             from the IDSs on the Toronto Stock Exchange or any
                             other exchange and we currently do not expect an
                             active trading market for our Class A common stock
                             to develop. However, we will use reasonable efforts
                             to list our Class A common stock for separate
                             trading on the                         if a
                             sufficient number of shares of our Class A common
                             stock are held separately to meet the minimum
                             requirements for separate trading on the
                                                     for at least 30 consecutive
                             trading days. Our Class A common stock will be
                             freely tradable without restriction or further
                             registration under the Securities Act, unless held
                             by "affiliates" as that term is defined in Rule 144
                             under the Securities Act.

                                        11
<PAGE>

                    SUMMARY OF THE SENIOR SUBORDINATED NOTES

Issuer.....................  Valor Communications Group, Inc.

Senior subordinated notes
represented by IDSs being
offered to the public:

  by Valor.................  $     million aggregate principal amount of      %
                             senior subordinated notes.

  by our existing equity
holders....................  $     million aggregate principal amount of      %
                             senior subordinated notes if the underwriters'
                             over-allotment option to purchase IDSs is exercised
                             in full (which notes shall be offered from the
                             notes represented by IDSs that we are issuing to
                             our existing equity holders in this offering).

Senior subordinated notes
represented by IDSs being
issued to our existing
equity holders.............  $     million aggregate principal amount of      %
                             senior subordinated notes.

Senior subordinated notes
being offered to the public
separately (and not in the
form of IDSs)..............  $     million aggregate principal amount of      %
                             senior subordinated notes.

Senior subordinated notes
to be outstanding following
the offering...............  $     million aggregate principal amount of      %
                             senior subordinated notes.

Interest rate..............       % per year.

Interest payment dates.....  Interest will be paid quarterly in arrears on the
                             last day of each quarter, commencing           ,
                             2004, to holders of record on the twentieth day,
                             or, if such day is not a business day, the last
                             business day immediately preceding such twentieth
                             day, of the last month of such quarter.

Interest deferral..........  Prior to           , 2009, we may, subject to
                             certain restrictions, defer interest payments on
                             our senior subordinated notes on one or more
                             occasions for up to an aggregate period of eight
                             quarters. In addition, after           , 2009 but
                             before           , 2014, and during the term of
                             each additional five-year term of the senior
                             subordinated notes, if any, we may, subject to
                             certain restrictions, defer interest payments on
                             our senior subordinated notes on two occasions for
                             up to an aggregate period of two quarters; provided
                             that at the end of any interest deferral period
                             following           , 2009, we may not defer
                             interest unless and until all deferred interest is
                             paid in full.

                             During any interest deferral period and so long as
                             any deferred interest or interest on deferred
                             interest remains outstanding, we will not be
                             permitted to declare or pay dividends on the common
                             stock.

                             For a detailed description of the interest deferral
                             provisions of the indenture, see "Description of
                             Senior Subordinated Notes--Interest Deferral."

                                        12
<PAGE>

                             In the event that interest payments on the senior
                             subordinated notes are deferred, you would be
                             required to continue to include the yield on the
                             senior subordinated notes in your income for United
                             States federal income tax purposes as it accrues,
                             even if you do not receive any cash interest
                             payments.

Maturity date..............  The senior subordinated notes will mature on
                                       , 2014. We may extend the maturity of the
                             senior subordinated notes for two additional
                             successive five-year terms if the following
                             conditions are satisfied:

                                --  during the twelve month period ending on the
                                    last day of the most recent fiscal quarter
                                    ending at least 45 days before the end of
                                    the then-current term, our leverage ratio as
                                    calculated in accordance with the indenture
                                    is less than           to 1.0;

                                --  no event of default, including certain
                                    events of bankruptcy, insolvency or
                                    reorganization of us or our subsidiaries,
                                    under the indenture has occurred and is
                                    continuing;

                                --  no event of default has occurred and is
                                    continuing with respect to any of our other
                                    indebtedness having a principal amount of
                                    $     million or more outstanding or would
                                    occur as a result of the extension; and

                                --  there are no overdue payments of interest on
                                    our senior subordinated notes or any of our
                                    other outstanding indebtedness.

Optional redemption........  We may, at our option, redeem the senior
                             subordinated notes on the terms set forth in the
                             indenture governing the senior subordinated notes.
                             If the senior subordinated notes are redeemed in
                             whole or in part, the senior subordinated notes and
                             Class A common stock represented by each IDS will
                             be automatically separated. See "Description of
                             Senior Subordinated Notes -- Optional Redemption."

Change of control..........  Upon the occurrence of a change of control, as
                             defined under "Description of Senior Subordinated
                             Notes--Change of Control," each holder of senior
                             subordinated notes will have the right to require
                             us to repurchase that holder's senior subordinated
                             notes at a price equal to 101% of the principal
                             amount of the senior subordinated notes being
                             repurchased, plus any accrued but unpaid interest
                             to but not including the repurchase date. If senior
                             subordinated notes are held in the form of IDSs, in
                             order to exercise that right, a holder of IDSs must
                             separate its IDSs into the shares of Class A common
                             stock and senior subordinated notes represented
                             thereby and hold the senior subordinated notes
                             separately.

Guarantees of senior
subordinated notes.........  The senior subordinated notes will be fully and
                             unconditionally guaranteed, on an unsecured senior
                             subordinated basis, by each of our direct and
                             indirect wholly-owned domestic subsidiaries
                             existing on the closing of this offering and each
                             of our future wholly-owned domestic restricted
                             subsidiaries that has total assets of more than
                             $500,000. The guarantees will be subordinated to
                             the guarantees issued by the subsidiary guarantors
                             under the new credit facility.

                                        13
<PAGE>

Subsequent issuances may
affect tax treatment.......  The indenture governing the senior subordinated
                             notes will provide that in the event we issue
                             additional senior subordinated notes with a new
                             CUSIP number having terms that are otherwise
                             identical to the senior subordinated notes (except
                             for the issuance date), including any issuance of
                             IDSs in exchange for shares of Class B common
                             stock, each holder of IDSs or separately held
                             senior subordinated notes, as the case may be,
                             agrees that a portion of such holder's senior
                             subordinated notes, whether held as part of IDSs or
                             separately, will be exchanged for a portion of the
                             senior subordinated notes acquired by the holders
                             of such subsequently issued senior subordinated
                             notes, and our records of any record holders of
                             senior subordinated notes will be revised to
                             reflect such exchanges. Consequently, following
                             each such subsequent issuance and exchange, each
                             holder of IDSs or separately held senior
                             subordinated notes, as the case may be, will own
                             senior subordinated notes of each separate issuance
                             in the same proportion as each other holder.
                             However, the aggregate principal amount of senior
                             subordinated notes owned by each holder will not
                             change as a result of such subsequent issuance and
                             exchange. Any subsequent issuance of senior
                             subordinated notes by us may affect the tax
                             treatment of the IDSs and senior subordinated
                             notes. See "Material United States Federal Income
                             Tax Consequences--United States Holders--Senior
                             Subordinated Notes--Additional Issuances."

Ranking of senior
subordinated notes and
guarantees.................  Valor is a holding company and derives all of its
                             operating income and cash flow from its
                             subsidiaries. The senior subordinated notes will be
                             our and any guarantor's unsecured senior
                             subordinated indebtedness, will be subordinated in
                             right of payment to all our and any guarantor's
                             existing and future senior indebtedness, including
                             our borrowings and all guarantees of the subsidiary
                             guarantors under the new credit facility. The
                             senior subordinated notes and guarantees will rank
                             pari passu in right of payment with all of our and
                             any guarantor's existing and future senior
                             subordinated indebtedness. The senior subordinated
                             notes will also be effectively subordinated to any
                             of our and any guarantor's secured indebtedness to
                             the extent of the value of the assets securing the
                             indebtedness.

                             The indenture governing the senior subordinated
                             notes will permit Valor and the subsidiary
                             guarantors to incur additional indebtedness,
                             including senior indebtedness, subject to specified
                             limitations. On a pro forma basis as of December
                             31, 2003:

                                --  Valor would have had no senior or pari passu
                                    indebtedness outstanding except for its
                                    guarantee under the new credit facility, as
                                    described below; and

                                --  VTC would have had $     million aggregate
                                    principal amount of senior secured
                                    indebtedness outstanding under the new
                                    credit facility plus approximately $
                                    million of letters of credit, which would
                                    have been guaranteed on a senior secured
                                    basis by the subsidiary guarantors, and
                                    approximately $     million of capital
                                    leases.

                                        14
<PAGE>

Restrictive covenants......  The indenture governing the senior subordinated
                             notes will contain covenants with respect to us and
                             our restricted subsidiaries that will restrict:

                                --  the incurrence of additional indebtedness
                                    and the issuance of preferred stock and
                                    certain redeemable capital stock;

                                --  the payment of dividends on, and redemption
                                    of, capital stock;

                                --  a number of other restricted payments,
                                    including investments;

                                --  specified sales of assets;

                                --  specified transactions with affiliates;

                                --  the creation of a number of liens; and

                                --  consolidations, mergers and transfers of all
                                    or substantially all of our assets.

                             The indenture will also prohibit certain
                             restrictions on distributions from our restricted
                             subsidiaries. There will be no restriction in the
                             indenture, however, on our ability to incur
                             indebtedness in connection with the issuance of
                             additional IDSs so long as the ratio of the
                             aggregate principal amount of the additional senior
                             subordinated notes to the number of the additional
                             shares of Class A common stock will not exceed the
                             equivalent ratio represented by the then existing
                             IDSs. In addition, all the limitations and
                             prohibitions described above are subject to a
                             number of other important qualifications and
                             exceptions described under "Description of Senior
                             Subordinated Notes--Certain Covenants."

Listing....................  We do not anticipate that our senior subordinated
                             notes will be listed separately on any exchange.

                                        15
<PAGE>

                                  RISK FACTORS

You should carefully consider the information under the heading "Risk Factors"
and all other information in this prospectus before investing in the IDSs
(including the shares of our Class A common stock and senior subordinated notes
represented by the IDSs) or in our senior subordinated notes.

                   GENERAL INFORMATION ABOUT THIS PROSPECTUS

Throughout this prospectus, unless otherwise noted, we have assumed:

   --  that our reorganization will be consummated;

   --  no exercise of the underwriters' over-allotment option;

   --  a   % annual interest rate on the senior subordinated notes, which is
       subject to change depending on market conditions prior to the pricing
       date;

   --  an initial public offering price of $     per IDS, the midpoint of the
       range set forth on the cover page of this prospectus, comprised of $
       allocated to one share of Class A common stock and $     allocated to the
       $     senior subordinated note included in each IDS, which equals 100% of
       the principal amount thereof; and

   --  an initial public offering price of the senior subordinated notes that
       are being offered separately and not in the form of IDSs, of      % of
       their stated principal amount.

Unless the context otherwise requires, references in this prospectus to the
"offering" refer collectively to the offering of:

   --  an aggregate of      IDSs to the public;

   --  an aggregate of      IDSs to our existing equity holders; and

   --  $     aggregate principal amount of senior subordinated notes to the
       public separately (not in the form of IDSs).

Furthermore, unless the context otherwise requires, references in this
prospectus to "senior subordinated notes" refer to both senior subordinated
notes underlying IDSs as well as senior subordinated notes issued separately
(not in the form of IDSs).

                                        16
<PAGE>

                   SUMMARY CONSOLIDATED FINANCIAL INFORMATION

Valor is a holding company and has no direct operations. Valor was formed for
the sole purpose of reorganizing our corporate structure and consummating this
offering. Valor's principle assets are the direct and indirect equity interests
of its subsidiaries. As a result, we have not provided separate historical
financial results for Valor and present only the historical consolidated
financial results of Valor Telecommunications, LLC. The following table sets
forth our summary consolidated financial information derived from our audited
consolidated financial statements for each of the years ended December 31, 2001
through December 31, 2003.

The information in the table below is only a summary and should be read together
with our audited consolidated financial statements for the years ended December
31, 2001, 2002 and 2003 and the related notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," all as included
elsewhere in this prospectus.

<Table>
<Caption>
                                                                YEAR ENDED DECEMBER 31,
                                                           ----------------------------------
                                                             2001        2002(1)       2003
                                                           ---------    ---------    --------
                                                                 (Dollars in thousands)
   <S>                                                     <C>          <C>          <C>
   STATEMENT OF OPERATIONS DATA:
   Operating revenues....................................  $ 424,916    $ 479,883    $497,334
   Operating income......................................    103,298      159,251     182,273
   Net (loss) income(2)..................................    (53,355)      16,302      58,233
   CASH FLOW DATA FROM CONTINUING OPERATIONS:
   Net cash provided by operating activities.............  $ 100,301    $ 150,383    $166,065
   Net cash used in investing activities.................   (106,614)    (216,773)    (66,299)
   Net cash provided by (used in) financing activities...      8,117       71,015     (99,465)
   OTHER DATA:
   Capital expenditures..................................  $ 107,869    $  89,527    $ 69,850
   Acquisition of Kerrville Communications
     Corporation(3)......................................  $       -    $ 128,135    $      -
   Depreciation and amortization(4)......................  $ 110,843    $  73,273    $ 81,638
   Adjusted EBITDA(5)....................................  $ 215,141    $ 240,595    $262,707
   Ratio of earnings to fixed charges(6).................          -         1.1x        1.5x
   Total access lines(7).................................    551,599      571,308     556,745
</Table>

<Table>
<Caption>
                                                                    DECEMBER 31, 2003
                                                       -------------------------------------------
                                                                                      PRO FORMA
                                                         ACTUAL      ADJUSTMENTS    AS ADJUSTED(8)
                                                       ----------    -----------    --------------
                                                                 (Dollars in thousands)
   <S>                                                 <C>           <C>            <C>
   BALANCE SHEET DATA:
   Cash and cash equivalents.........................  $    1,414        $               $
   Net property, plant and equipment.................  $  769,570        $               $
   Total assets......................................  $2,039,043        $               $
   Long-term debt (including current maturities).....  $1,463,973        $               $
   Redeemable preferred interests....................  $  370,231        $               $
   Total common owners' equity.......................  $   49,862        $               $
</Table>

---------------------------
(1)  We acquired all the outstanding common stock, preferred stock and common
     stock equivalents of Kerrville Communications Corporation ("KCC") on
     January 31, 2002 and have included the assets, liabilities and results of
     operations of KCC from that date.
(2)  Net (loss) income reported on the table above is after the effect of
     minority interest of $(3,595), $615 and $3,568 in 2001, 2002 and 2003,
     respectively, relating to individual investors' interests in our
     subsidiaries.
(3)  Reflects the purchase price for our acquisition of KCC, net of cash
     acquired.

                                        17
<PAGE>

(4)  In accordance with Statement of Financial Accounting Standards ("SFAS") No.
     142, "Goodwill and Other Intangible Assets", effective January 1, 2002, we
     discontinued the amortization of goodwill. Amortization expense associated
     with goodwill was $53,900 for the year ended December 31, 2001.
(5)  Adjusted EBITDA, as defined in the indenture governing our senior
     subordinated notes, is calculated as net (loss) income, as adjusted for the
     following items:

     - Income tax expense;
     - Interest expense;
     - Depreciation and amortization;
     - Minority interest;
     - Loss on interest rate hedging arrangements;
     - Earnings from unconsolidated cellular partnerships;
     - Other income and expense, net;
     - Loss on discontinued operations;
     - Cumulative effect of change in accounting principle;
     - Management fees paid to equity sponsors; and
     - Other non-recurring items, as defined in the indenture.

     We consider Adjusted EBITDA an important indicator to investors in IDSs
     because it provides information related to our ability to provide cash
     flows to service debt, pay dividends and fund capital expenditures. We
     present this discussion of Adjusted EBITDA because covenants in the
     indenture governing our senior subordinated notes contain ratios based on
     this measure. As such, the summary historical financial information
     presented above includes our historical Adjusted EBITDA. For example, our
     ability to incur additional debt and make restricted payments requires a
     ratio of total leverage to Adjusted EBITDA of     to     , except that we
     may incur certain debt and make certain restricted payments without regard
     to the ratio, including our ability to incur an unlimited amount of
     indebtedness in connection with the issuance of additional IDSs so long as
     the ratio of the aggregate principal amount of the additional subordinated
     notes to the number of the additional shares of our common stock will not
     exceed the equivalent ratio represented by the then existing IDSs. Adjusted
     EBITDA is not a measure in accordance with GAAP, and should not be
     considered a substitute for, operating income (loss), net income (loss),
     and other measures of financial performance reported in accordance with
     GAAP. In addition, Adjusted EBITDA should not be used as a substitute for
     the Company's various cash flow measures (e.g., operating, investing and
     financing cash flows), which are discussed in "Management's Discussion and
     Analysis of Financial Condition and Results of Operations."

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
   <S>                                                       <C>         <C>         <C>
   CALCULATION OF ADJUSTED EBITDA:
   Net (loss) income.......................................  $(53,355)   $ 16,302    $ 58,233
   Adjustments:
     Income tax expense(a).................................         -       1,649       2,478
     Interest expense......................................   133,156     127,365     119,185
     Depreciation and amortization.........................   110,843      73,273      81,638
     Minority interest.....................................    (3,595)        615       3,568
     Loss on interest rate hedging arrangements............    14,292      12,348       2,113
     Earnings from unconsolidated cellular partnerships....         -      (2,757)     (3,258)
     Other income and expense, net.........................      (358)        268          62
     Loss (income) on discontinued operations..............     8,443       3,461        (108)
     Cumulative effect of change in accounting principle...     4,715           -           -
     Management fees paid to equity sponsors...............     1,000       1,000       1,000
                                                             --------    --------    --------
   Total adjustments.......................................   268,496     217,222     206,678
                                                             --------    --------    --------
   Other non-recurring items, as defined in the indenture:
     Termination benefits associated with workforce
        reduction..........................................         -       1,768           -
     MCI bankruptcy........................................         -       4,998      (3,386)
     Transaction fees for acquisitions not consummated.....         -         305       1,182
                                                             --------    --------    --------
   Total other non-recurring items, as defined in the
     indenture.............................................         -       7,071      (2,204)
                                                             --------    --------    --------
   ADJUSTED EBITDA.........................................  $215,141    $240,595    $262,707
                                                             ========    ========    ========
</Table>

         (a)    Relates to the federal income tax expense of Valor
                Telecommunications Southwest II, LLC, the holding company of the
                operating entities relating to our KCC business, which has
                elected to be taxed as a corporation.

                                        18
<PAGE>

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001      2002(1)       2003
                                                             --------    --------    --------
                                                                  (DOLLARS IN THOUSANDS)
   <S>                                                       <C>         <C>         <C>
   RECONCILIATION OF NET CASH PROVIDED BY OPERATING
     ACTIVITIES TO ADJUSTED EBITDA:
   Net cash provided by operating activities...............  $100,301    $150,383    $166,065
   Adjustments:
     Interest expense......................................   133,156     127,365     119,185
     Amortization of debt issuance costs...................    (5,735)     (6,801)     (8,105)
     Non-cash interest expense.............................   (29,025)    (32,612)    (17,788)
     Provision for doubtful accounts receivable............   (11,378)    (11,393)     (3,298)
     Changes in working capital............................    29,923      (3,291)        (33)
     Other, net............................................    (2,743)      7,049       5,795
     Income tax expense....................................         -       1,649       2,478
     Deferred income taxes.................................         -         (93)       (450)
     Other income and expense, net.........................      (358)        268          62
     Management fees paid to equity sponsors...............     1,000       1,000       1,000
   Other non-recurring items, as defined in the indenture:
     Termination benefits associated with workforce
        reduction..........................................         -       1,768           -
     MCI bankruptcy........................................         -       4,998      (3,386)
     Transaction fees for acquisitions not consummated.....         -         305       1,182
                                                             --------    --------    --------
   ADJUSTED EBITDA.........................................  $215,141    $240,595    $262,707
                                                             ========    ========    ========
</Table>

---------------------------
(6)  For purposes of determining the ratio of earnings to fixed charges,
     earnings are defined as pretax income from continuing operations before
     adjustment for minority interest, less earnings from unconsolidated
     cellular partnerships and interest capitalized plus fixed charges,
     amortization of capitalized interest and distributed income from
     unconsolidated cellular partnerships. Fixed charges include interest costs,
     both expensed and capitalized, on all indebtedness, amortization of
     deferred financing costs and one-third of the rental expense on operating
     leases, representing the portion of rental expense we consider to be
     attributable to interest. In 2001, earnings were insufficient to cover
     fixed charges by $47.0 million.
(7)  We calculate our access lines in service by counting the number of working
     communication facilities that provide local service that terminate in a
     central office or to a customers premise. Non-revenue producing lines
     provisioned for company official use and for test purposes are included in
     our total access line counts. There were 11,305, 11,258 and 11,703
     non-revenue producing lines included in our total access line count at
     December 31, 2001, 2002 and 2003 which represented 2.1%, 2.0% and 2.0% of
     our total access line counts, respectively.
(8)  The pro forma as adjusted balance sheet data have been prepared assuming
     the closing of this offering, the repurchase of 100% of our senior
     subordinated notes and completion of the bank refinancing, including
     payment of related fees and expenses. The pro forma as adjusted balance
     sheet data give effect to those transactions as if they had occurred on
     December 31, 2003. As described in "Risk Factors" and further described in
     "Material United States Federal Income Tax Consequences," we plan to
     account for the issuance of the IDSs as representing shares of common stock
     and senior subordinated notes. We will deduct the interest expense on the
     senior subordinated notes from taxable income for income tax purposes and
     report the full benefit of the income tax deduction in our consolidated
     financial statements. We cannot assure you that the Internal Revenue
     Service will not seek to challenge the treatment of these senior
     subordinated notes as debt and the amount of interest expense deducted. If
     the Internal Revenue Service were to challenge this treatment successfully,
     we would have to provide an additional liability for the previously
     recorded benefit for the interest deductions.

                                        19
<PAGE>

                 INTEREST AND DIVIDEND PAYMENTS TO IDS HOLDERS

The table below shows certain information relating to our available cash for the
year ended December 31, 2003 on a pro forma basis to give effect to this
offering, including the use of proceeds from this offering, our reorganization,
and to give effect to our new credit facility. For purposes of this
presentation, we have assumed that our reorganization has been consummated.

The information in the table below assumes that these transactions occurred on
January 1, 2003.

<Table>
<Caption>
                                                                   PRO FORMA
                                                                 --------------
                                                                   YEAR ENDED
                                                                  DECEMBER 31,
                                                                      2003
                                                                 --------------
                                                                 (In Thousands)
   <S>                                                           <C>
   Adjusted EBITDA (actual)(1).................................     $262,707
   Deductions:
     Capital expenditures(2)...................................       69,850
     Interest expense on new credit facility(3)................
     Interest expense on senior subordinated notes(4)..........
     State and federal income tax expense(5)...................        2,478
     Estimated additional public company administrative
        expense(6).............................................        2,500
                                                                    --------
     Increase in available cash before dividend payments.......     $
                                                                    --------
   Dividends on shares of common stock.........................
                                                                    --------
     Net change in available cash..............................     $
                                                                    ========
</Table>

---------------------------

(1) Adjusted EBITDA excludes (a) $  in compensation expense associated with
    management's exchange of all of their outstanding stock options and phantom
    stock units for   IDSs; (b) $  in expense from the writeoff of deferred
    financing costs associated with the existing indebtedness; (c) $  in expense
    from the excess of the fair value of the IDSs, Class B common stock and cash
    received over the carrying amount of the redeemable preferred interests
    contributed by our existing equity holders to Valor as part of our
    reorganization; and (d) $  in expenses associated with our reorganization,
    redemption of existing indebtedness and other professional fees.

(2) Represents our capital expenditures for the year ended December 31, 2003. We
    estimate that we will have capital expenditure requirements of approximately
    $68.8 million in each of 2004 and 2005.

(3) Assumes interest at current rates, estimated as     % average interest, on
    $    million outstanding borrowings under the new term loan and a     %
    commitment fee on the average unused balance of         million under the
    new revolver.

(4) Assumes     % interest on $    million of senior subordinated notes
    represented by the IDSs and $    million of senior subordinated notes issued
    separately (not in the form of IDSs).

(5) Represents our income tax expense for the year ended December 31, 2003. This
    does not reflect the impact of our reorganization and we expect that our
    income tax expense will be $    in 2004.

(6) Consists of estimated incremental accounting and audit fees, director and
    officer liability insurance, expenses relating to the annual stockholders
    meeting, printing expenses, investor relations expenses, additional filing
    fees, additional trustee fees, registrar and transfer agent expenses,
    directors fees, additional legal fees, listing fees and miscellaneous fees.

Under the dividend policy we expect to establish upon consummation of this
offering with respect to shares of Class A common stock underlying IDSs, the pro
forma use of the available cash before additional public company administrative
expenses, and dividend payments shown in the above table is as follows:

Dividend payments are discretionary. See "Dividend Policy."

Interest payments on the senior subordinated notes may be deferred for up to
eight quarters in the aggregate prior to           , 2009 and may be deferred at
our option for not more than two quarters between           , 2009 and
          , 2014, or any additional five-year term.

Based on the foregoing, aggregate payments to IDS holders and holders of
separate senior subordinated notes for the year ended December 31, 2003 would
have been as follows:

<Table>
<Caption>
                                                               AGGREGATE   PER IDS    PER NOTE
                                                               ---------   --------   --------
                                                                       (In Thousands)
   <S>                                                         <C>         <C>        <C>
   Interest on senior subordinated notes.....................  $           $          $
   Dividends on shares of Class A common stock represented by
     IDSs....................................................
                                                               --------    --------   --------
        Total................................................  $           $          $
                                                               ========    ========   ========
</Table>

                                        20
<PAGE>

                                  RISK FACTORS

Before you invest in the IDSs (including the shares of our Class A common stock
and our senior subordinated notes represented by the IDSs) or the senior
subordinated notes, you should carefully consider the various risks of the
investment, including those described below, together with all of the other
information included in this prospectus. If any of these risks actually occur,
our business, financial condition or operating results could be adversely
affected. In that case, the trading price of the IDSs and the senior
subordinated notes could decline and you could lose all or part of your
investment.

RISKS RELATING TO THE IDSS, THE SHARES OF CLASS A COMMON STOCK AND SENIOR
SUBORDINATED NOTES REPRESENTED BY THE IDSS, THE SENIOR SUBORDINATED NOTES
OFFERED SEPARATELY (NOT IN THE FORM OF IDSS), AND OUR NEW CREDIT FACILITY

WE HAVE SUBSTANTIAL INDEBTEDNESS THAT COULD RESTRICT OUR ABILITY TO PAY INTEREST
AND PRINCIPAL ON THE SENIOR SUBORDINATED NOTES AND TO PAY DIVIDENDS WITH RESPECT
TO SHARES OF OUR CLASS A COMMON STOCK REPRESENTED BY THE IDSS AND IMPACT OUR
FINANCING OPTIONS AND LIQUIDITY POSITION.

Our ability to make distributions, pay dividends or make other payments will be
subject to applicable law and contractual restrictions contained in the
instruments governing our indebtedness, including the new credit facility which
we guarantee on a senior secured basis. The degree to which we are leveraged on
a consolidated basis could have important consequences to the holders of the
IDSs and of separate senior subordinated notes, including:

   --  our ability to obtain additional financing in the future for working
       capital, capital expenditures or acquisitions may be limited;

   --  we may be unable to refinance our indebtedness on terms acceptable to us
       or at all;

   --  a significant portion of our cash flow from operations is likely to be
       dedicated to the payment of the principal of and interest on our
       indebtedness, thereby reducing funds available for other corporate
       purposes; and

   --  our substantial indebtedness may make us more vulnerable to economic
       downturns and limit our ability to withstand competitive pressures.

Although our new credit facility will contain total leverage, senior leverage
and interest coverage covenants that will restrict our ability to incur debt as
described under "Description of Certain Indebtedness--New Credit Facility," the
indenture governing the senior subordinated notes allows us to issue an
unlimited amount of senior subordinated notes so long as we issue additional
shares of Class A common stock in the appropriate proportionate amounts to
represent additional IDSs.

WE MAY AMEND THE TERMS OF OUR NEW CREDIT FACILITY OR WE MAY ENTER INTO NEW
AGREEMENTS THAT GOVERN OUR SENIOR INDEBTEDNESS AND THE AMENDED OR NEW TERMS MAY
SIGNIFICANTLY AFFECT OUR ABILITY TO PAY INTEREST ON OUR SENIOR SUBORDINATED
NOTES AND DIVIDENDS ON SHARES OF OUR COMMON STOCK.

Our new credit facility contains significant restrictions on our ability to pay
interest on the senior subordinated notes and dividends on shares of common
stock based on meeting our interest coverage ratio and senior leverage ratio and
compliance with other conditions (including timely delivery of applicable
financial statements). As a result of general economic conditions, conditions in
the lending markets, the results of our business or for any other reason, we may
elect or be required to amend or refinance our new credit facility, at or prior
to maturity, or enter into additional agreements for senior indebtedness.
Regardless of any protection you have in the indenture governing the senior
subordinated notes, any such amendment, refinancing or additional indebtedness
may contain covenants that could limit in a significant manner our ability to
make interest payments and pay dividends to you.

                                        21
<PAGE>

WE ARE SUBJECT TO RESTRICTIVE DEBT COVENANTS THAT LIMIT OUR BUSINESS FLEXIBILITY
BY IMPOSING OPERATING AND FINANCIAL RESTRICTIONS ON OUR OPERATIONS.

The agreements governing our indebtedness impose significant operating and
financial restrictions on us. These restrictions prohibit or limit, among other
things:

   --  the incurrence of additional indebtedness and the issuance of preferred
       stock and certain redeemable capital stock;

   --  a number of other restricted payments, including investments and
       acquisitions;

   --  specified sales of assets;

   --  specified transactions with affiliates;

   --  the creation of a number of liens;

   --  consolidations, mergers and transfers of all or substantially all of our
       assets; and

   --  our ability to change the nature of our business.

The terms of the new credit facility include other and more restrictive
covenants and prohibit us from prepaying our other indebtedness, including the
senior subordinated notes, while indebtedness under the new credit facility is
outstanding. The new credit facility also requires us to maintain certain
specified financial ratios and satisfy financial condition tests, including,
without limitation, a maximum total leverage ratio, maximum senior leverage
ratio and a minimum interest coverage ratio. Our ability to comply with the
ratios or tests may be affected by events beyond our control, including
prevailing economic, financial and industry conditions.

A breach of any of these covenants, ratios or tests could result in a default
under the new credit facility and/or the indenture. Events of default under the
new credit facility would prohibit us from making payments on the senior
subordinated notes in cash, including payment of interest when due. In addition,
upon the occurrence of an event of default under the new credit facility, the
lenders could elect to declare all amounts outstanding under the new credit
facility, together with accrued interest, to be immediately due and payable. If
we were unable to repay those amounts, the lenders could proceed against the
security granted to them to secure that indebtedness. If the lenders accelerate
the payment of the indebtedness, our assets may not be sufficient to repay in
full this indebtedness and our other indebtedness, including the senior
subordinated notes.

WE ARE A HOLDING COMPANY AND RELY ON DIVIDENDS AND OTHER PAYMENTS, ADVANCES AND
TRANSFERS OF FUNDS FROM OUR SUBSIDIARIES TO MEET OUR DEBT SERVICE AND OTHER
OBLIGATIONS.

We are a holding company and conduct all of our operations through our
subsidiaries. We currently have no significant assets other than equity
interests in our subsidiaries which will be pledged to the creditors under the
new credit facility which we guarantee. As a result, we will rely on dividends
and other payments or distributions from our subsidiaries to meet our debt
service obligations and enable us to pay dividends. The ability of our
subsidiaries to pay dividends or make other payments or distributions to us will
depend on their respective operating results and may be restricted by, among
other things, the laws of their jurisdiction of organization (which may limit
the amount of funds available for the payment of dividends), agreements of those
subsidiaries, the terms of the new credit facility and the covenants of any
future outstanding indebtedness we or our subsidiaries incur.

SUBJECT TO RESTRICTIONS SET FORTH IN THE INDENTURE, WE MAY DEFER THE PAYMENT OF
INTEREST TO YOU FOR A SIGNIFICANT PERIOD OF TIME.

Prior to           , 2009, we may, subject to restrictions set forth in the
indenture, defer interest payments on our senior subordinated notes on one or
more occasions for up to an aggregate period of eight quarters.

                                        22
<PAGE>

In addition, after           , 2009 but before           , 2014, and during any
additional five-year term of the senior subordinated notes, if any, we may,
subject to certain restrictions, defer interest payments on our senior
subordinated notes on two occasions for up to an aggregate period of two
consecutive quarters. Deferred interest will bear interest at the same rate as
the senior subordinated notes. For any interest deferred during the first five
years, we are not obligated to pay any deferred interest until           , so
you may be owed a substantial amount of deferred interest that will not be due
and payable until such date. For any interest deferred after           , we are
not obligated to pay all of the deferred interest until           so you may be
owed a substantial amount of deferred interest that will not be due and payable
until such date.

YOU MAY NOT RECEIVE THE LEVEL OF DIVIDENDS PROVIDED FOR IN THE DIVIDEND POLICY
OUR BOARD OF DIRECTORS IS EXPECTED TO ADOPT UPON THE CLOSING OF THIS OFFERING OR
ANY DIVIDENDS AT ALL.

Our board of directors may, in its discretion, amend or repeal the dividend
policy it is expected to adopt upon the closing of this offering. Our board of
directors may decrease the level of dividends provided for in this dividend
policy or entirely discontinue the payment of dividends. Future dividends with
respect to shares of our capital stock, if any, will depend on, among other
things, our results of operations, cash requirements, financial condition,
contractual restrictions, business opportunities, provisions of applicable law
and other factors that our board of directors may deem relevant. The indenture
governing our senior subordinated notes and the new credit facility contain
significant restrictions on our ability to make dividend payments, including, if
we defer interest on the senior subordinated notes under the indenture,
restrictions on the payment of dividends until we have paid all deferred
interest.

In addition, our after-tax cash flow available for dividend and interest
payments would be reduced if the senior subordinated notes were treated as
equity rather than as debt for United States federal income tax purposes. In
that event, the stated interest on the senior subordinated notes could be
treated as a dividend and interest on the senior subordinated notes would not be
deductible by us for United States federal income tax purposes. Our inability to
deduct interest on the senior subordinated notes could materially increase our
taxable income and, thus, our United States federal and applicable state income
tax liability.

YOU WILL BE IMMEDIATELY DILUTED BY $     PER SHARE OF CLASS A COMMON STOCK IF
YOU PURCHASE IDSS IN THIS OFFERING.

If you purchase IDSs in this offering, based on the book value of the assets and
liabilities reflected on our balance sheet, you will experience an immediate
dilution of $     per share of Class A common stock represented by the IDSs
which exceeds the entire price allocated to each share of Class A common stock
represented by the IDSs in this offering because there will be a net tangible
book deficit for each share of Class A common stock outstanding immediately
after this offering. Our net tangible book value as of December 31, 2003, after
giving effect to this offering, was approximately $     million, or $     per
share of Class A common stock.

OUR INTEREST EXPENSE MAY INCREASE SIGNIFICANTLY AND COULD CAUSE OUR NET INCOME
AND DISTRIBUTABLE CASH TO DECLINE SIGNIFICANTLY.

The new credit facility will be subject to periodic renewal or must otherwise be
refinanced. We may not be able to renew or refinance the new credit facility, or
if renewed or refinanced, the renewal or refinancing may occur on less favorable
terms. Borrowings under the revolving facility will be made at a floating rate
of interest. In the event of an increase in the base reference interest rates,
our interest expense will increase and could have a material adverse effect on
our ability to make cash dividend payments to our shareholders. Our ability to
continue to expand our business will, to a large extent, be dependent upon our
ability to borrow funds under our new credit facility and to obtain other third
party financing, including through the sale of IDSs or other securities. We
cannot assure you that such financing will be available to us on favorable terms
or at all.

                                        23
<PAGE>

WE MAY NOT GENERATE SUFFICIENT FUNDS FROM OPERATIONS TO PAY OUR INDEBTEDNESS AT
MATURITY OR UPON THE EXERCISE BY HOLDERS OF THEIR RIGHTS UPON A CHANGE OF
CONTROL.

A significant portion of our cash flow from operations will be dedicated to
servicing our debt requirements and making capital expenditures to maintain the
quality of our physical plant. In addition, we currently expect to distribute a
significant portion of any remaining cash earnings to our stockholders in the
form of quarterly dividends. Moreover, prior to the maturity of our senior
subordinated notes, we will not be required to make any payments of principal on
our senior subordinated notes. We may not generate sufficient funds from
operations to repay the principal amount of our indebtedness at maturity or in
case you exercise your right to require us to purchase your notes upon a change
of control. We may, therefore, need to refinance our debt or raise additional
capital. These alternatives may not be available to us when needed or on
satisfactory terms due to prevailing market conditions, a decline in our
business or restrictions contained in our senior debt obligations.

OUR NEW CREDIT FACILITY AND THE INDENTURE GOVERNING OUR SENIOR SUBORDINATED
NOTES PERMIT US TO PAY A SIGNIFICANT PORTION OF OUR FREE CASH FLOW TO
STOCKHOLDERS IN THE FORM OF DIVIDENDS.

Although our new credit facility and the indenture governing our senior
subordinated notes have some limitations on our payment of dividends, they
permit us to pay a significant portion of our free cash flow to stockholders in
the form of dividends. Following completion of this offering, we intend to pay
quarterly dividends. Specifically, the indenture governing our senior
subordinated notes permits us to pay up to the quarterly base dividend level in
any fiscal quarter, which equals   % of our excess cash (which is Adjusted
EBITDA, as defined in the indenture, minus the sum of cash interest expense,
cash income tax expense and capital expenditures) for the 12 fiscal month period
divided by four, as more fully described in "Description of Senior Subordinated
Notes--Certain Covenants." In addition, if the actual dividends paid in any
fiscal quarter are less than the quarterly base dividend level, the indenture
permits us to use the difference between the aggregate amounts of dividends
actually paid and the quarterly base dividend level for such quarter for the
payment of dividends at a later date. The new credit facility permits us to use
up to   % of the distributable cash, as defined in the new credit facility, plus
certain other amounts under certain limited circumstances, to fund dividends on
our shares of common stock. Any amounts paid by us in the form of dividends will
not be available in the future to satisfy our obligations under the senior
subordinated notes.

THE REALIZABLE VALUE OF OUR ASSETS UPON LIQUIDATION MAY BE INSUFFICIENT TO
SATISFY CLAIMS.

At December 31, 2003, our assets included goodwill of $1,057 million and
deferred financing costs of $54 million. Combined, these items represent
approximately 54.5% of our total consolidated assets. The value of these assets
will continue to depend significantly upon the success of our business as a
going concern and the growth in cash flows. As a result, in the event of a
default under our new credit facility or on our senior subordinated notes or any
bankruptcy or dissolution of our company, the realizable value of these assets
may be substantially lower and may be insufficient to satisfy the claims of our
creditors.

DEFERRAL OF INTEREST PAYMENTS WOULD HAVE ADVERSE TAX CONSEQUENCES FOR YOU AND
MAY ADVERSELY AFFECT THE TRADING PRICE OF THE SENIOR SUBORDINATED NOTES.

If we defer interest payments on the senior subordinated notes, you will be
required to recognize interest income for United States federal income tax
purposes in respect of the senior subordinated notes before you receive any cash
payment of this interest. In addition, we will not pay you this cash if you sell
the IDSs or the senior subordinated notes, as the case may be, before the end of
any deferral period or before the record date relating to interest payments that
are to be paid.

The IDSs or the senior subordinated notes may trade at a price that does not
fully reflect the value of accrued but unpaid interest on the senior
subordinated notes if we defer interest payments. In addition, the requirement
that we defer payments of interest on the senior subordinated notes under
certain

                                        24
<PAGE>

circumstances may mean that the market price for the IDSs or the senior
subordinated notes may be more volatile than other securities that do not have
this requirement.

BECAUSE OF THE SUBORDINATED NATURE OF THE NOTES, HOLDERS OF OUR SENIOR
SUBORDINATED NOTES MAY NOT BE ENTITLED TO BE PAID IN FULL, IF AT ALL, IN A
BANKRUPTCY, LIQUIDATION OR REORGANIZATION OR SIMILAR PROCEEDING.

As a result of the subordinated nature of our notes and related guarantees, upon
any distribution to our creditors or the creditors of the subsidiary guarantors
in bankruptcy, liquidation or reorganization or similar proceeding relating to
us or the subsidiary guarantors or our or their property, the holders of our
senior indebtedness and senior indebtedness of the subsidiary guarantors will be
entitled to be paid in full in cash before any payment may be made with respect
to our senior subordinated notes or the subsidiary guarantees.

In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to us or the subsidiary guarantors, holders of our senior
subordinated notes will participate with all other holders of unsecured
indebtedness of ours or the subsidiary guarantors that are similarly
subordinated in the assets remaining after we and the subsidiary guarantors have
paid all senior indebtedness. In any of these cases, we and the subsidiary
guarantors may not have sufficient funds to pay all of our creditors. Holders of
our senior subordinated notes may, therefore, receive less, ratably, than the
holders of our senior indebtedness.

On a pro forma basis as of December 31, 2003, our senior subordinated notes and
the associated subsidiary guarantees would have ranked junior, on a consolidated
basis, to $     million of outstanding senior secured indebtedness plus
approximately $100,000 of letters of credit and the subsidiary guarantees would
have ranked junior to no senior unsecured debt and pari passu with approximately
$     million of outstanding indebtedness of ours and the subsidiary guarantors.
In addition, as of December 31, 2003, on a pro forma basis, we would have had
the ability to borrow up to an additional amount of $     million under the new
credit facility (less amounts reserved for letters of credit), which would have
ranked senior in right of payment to our senior subordinated notes.

Holders of our senior subordinated notes will be structurally subordinated to
the debt of our non-guarantor subsidiaries. Our partially owned domestic
subsidiaries will not be guarantors of our senior subordinated notes. As a
result, no payments are required to be made to us from the assets of these
subsidiaries.

In the event of a bankruptcy, liquidation or reorganization or similar
proceeding of any of the non-guarantor subsidiaries, holders of their
indebtedness, including their trade creditors, would generally be entitled to
payment of their claims from the assets of those subsidiaries before any assets
are made available for distribution to us for payment to you.

IN THE EVENT OF BANKRUPTCY OR INSOLVENCY, THE NOTES COULD BE EQUITABLY
SUBORDINATED OR RECHARACTERIZED AS EQUITY.

In the event of bankruptcy or insolvency, a party in interest may seek to
subordinate the notes under principles of equitable subordination or to
recharacterize the subordinated notes as equity. While we believe that any such
attempt should fail, there can be no assurance as to the outcome of such
proceedings. In the event a court subordinates the notes or recharacterizes them
as equity, we cannot assure you that you would recover any amounts owed on the
notes and you may be required to return any payments made to you on account of
the notes, potentially for up to six years prior to our bankruptcy. In addition,
should the court recharacterize the notes as equity you may not be able to
enforce the guaranties.

                                        25
<PAGE>

THE GUARANTEES OF THE SENIOR SUBORDINATED NOTES BY OUR SUBSIDIARIES MAY BE
UNENFORCEABLE.

Under federal bankruptcy law and comparable provisions of state fraudulent
transfer laws, a guarantee could be voided, or claims in respect of a guarantee
could be subordinated to all other debt of the guarantor, if, among other
things, the guarantor, at the time that it assumed the guarantee:

   --  issued the guarantee to delay, hinder or defraud present or future
       creditors;

   --  received less than reasonably equivalent value or fair consideration for
       issuing the guarantee and, at the time it issued the guarantee;

   --  was insolvent or rendered insolvent by reason of issuing the guarantee
       and the application of the proceeds of the guarantee;

   --  was engaged or about to engage in a business or a transaction for which
       the guarantor's remaining assets available to carry on its business
       constituted unreasonably small capital;

   --  intended to incur, or believed that it would incur, debts beyond its
       ability to pay the debts as they mature; or

   --  was a defendant in an action for money damages, or had a judgment for
       money damages docketed against it if, in either case, after final
       judgment, the judgment is unsatisfied.

In addition, any payment by the guarantor under its guarantee could be voided
and required to be returned to the guarantor or to a fund for the benefit of the
creditors of the guarantor or the guarantee could be subordinated to other debt
of the guarantor. What constitutes insolvency for the purposes of fraudulent
transfer laws varies depending upon the law applied in any proceeding to
determine if a fraudulent transfer has occurred. Generally, however, a person
would be considered insolvent if, at the time it incurred the debt:

   --  the sum of its debts, including contingent liabilities, was greater than
       the fair saleable value of its assets;

   --  the present fair saleable value of its assets was less than the amount
       that would be required to pay its probable liability on its existing
       debts, including contingent liabilities, as they become absolute and
       mature; or

   --  it could not pay its debts as they become due.

We believe that immediately after the issuance of the senior subordinated notes
and the guarantees, we and each of the guarantors will be solvent, have
sufficient capital to carry on our respective businesses and be able to pay our
respective debts as they mature. We cannot be sure, however, as to what standard
a court would apply in making these determinations or that a court would reach
the same conclusions with regard to these issues. Regardless of the standard
that the court uses, we cannot be sure that the issuance by the subsidiary
guarantors of the subsidiary guarantees would not be voided or the subsidiary
guarantees would not be subordinated to their other debt.

The guarantee of our senior subordinated notes by any subsidiary guarantor could
be subject to the claim that since the guarantee was incurred for the benefit of
Valor and only indirectly for the benefit of the subsidiary guarantor, the
obligations of the subsidiary guarantor were incurred for less than fair
consideration. If such a claim were successful and it was proven that the
subsidiary guarantor was insolvent at the time the guarantee was issued, a court
could void the obligations of the subsidiary guarantor under the guarantee or
subordinate these obligations to the subsidiary guarantor's other debt or take
action detrimental to holders of the subordinated notes. If the guarantee of any
subsidiary guarantor were voided, our senior subordinated notes would be
effectively subordinated to the indebtedness and other credit obligations of
that subsidiary guarantor.

                                        26
<PAGE>

THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF IDSS AND SENIOR SUBORDINATED NOTES ARE UNCLEAR.

No statutory, judicial or administrative authority directly addresses the
treatment of the IDSs or the senior subordinated notes, or instruments similar
to the IDSs or the senior subordinated notes, for United States federal income
tax purposes. As a result, the United States federal income tax consequences of
the purchase, ownership and disposition of IDSs and senior subordinated notes
are unclear. We believe that an IDS should be treated as a unit representing a
share of common stock and senior subordinated notes, and that the senior
subordinated notes should be classified as debt for United States federal income
tax purposes. However, the IRS or the courts may take the position that the IDSs
are a single security classified as equity, or that the senior subordinated
notes are properly classified as equity for United States federal income tax
purposes, which could adversely affect the amount, timing and character of
income, gain or loss in respect of your investment in IDSs or senior
subordinated notes, and materially increase our taxable income and, thus, our
United States federal and applicable state income tax liability. This would
reduce our after-tax cash flow and materially and adversely impact our ability
to make interest and dividend payments on the senior subordinated notes and the
common stock. Foreign holders could be subject to withholding or estate taxes
with regard to the senior subordinated notes in the same manner as they will be
with regard to the common stock. Payments to foreign holders would not be
grossed-up for any such taxes. For discussion of these tax-related risks, see
"Material United States Federal Income Tax Consequences."

THE ALLOCATION OF THE PURCHASE PRICE OF THE IDSS MAY NOT BE RESPECTED.

The purchase price of each IDS must be allocated for tax purposes between the
share of common stock and senior subordinated notes comprising the IDS in
proportion to their respective fair market values at the time of purchase. If
our allocation is not respected (because, for example, the separately issued
senior subordinated notes are sold to the public for a price that differs
materially from our allocation), then it is possible that the senior
subordinated notes will be treated as having been issued with original issue
discount, or OID (if the allocation to the senior subordinated notes were
determined to be too high), or amortizable bond premium (if the allocation to
the senior subordinated notes were determined to be too low). You generally
would be required to include OID in income in advance of the receipt of cash
attributable to that income and would be able to elect to amortize bond premium
over the term of the senior subordinated notes.

THE IRS MAY NOT VIEW THE INTEREST RATE ON THE SENIOR SUBORDINATED NOTES AS AN
ARM'S LENGTH RATE.

We plan to deduct the interest expense on the senior subordinated notes from
taxable income for income tax purposes and to report the full benefit of the
income tax deductions in our consolidated financial statements. If the IRS were
to determine that the interest rate on the senior subordinated notes did not
represent an arm's length rate, then any excess of the amount paid on the senior
subordinated notes over the arm's length rate would not be deductible and could
be recharacterized as a dividend payment instead of an interest payment. In
addition, the reclassification of interest payments as dividend payments may
give rise to an event of default under our new credit facility. In such case,
our taxable income and thus, our United States federal income tax liability
could be materially increased and we would have to provide an additional
liability in our consolidated financial statements for the previously recorded
benefit for the interest deductions. In addition, foreign holders could be
subject to withholding taxes with regard to the recharacterized amounts in the
same manner as they will be with regard to dividends paid on the common stock.
If the interest rate on the senior subordinated notes were determined to be less
than an arm's length rate, the senior subordinated notes could be treated as
issued with OID, which you would be required to include in income over the term
of the senior subordinated notes in advance of the receipt of cash attributable
to that income.

                                        27
<PAGE>

BECAUSE OF THE DEFERRAL OF INTEREST PROVISIONS, THE SENIOR SUBORDINATED NOTES
MAY BE TREATED AS ISSUED WITH OID.

Under applicable Treasury regulations, a "remote" contingency that stated
interest will not be timely paid is disregarded in determining whether a debt
instrument is issued with OID. Although there is no authority directly on point,
based on our financial forecasts, we believe that the likelihood of deferral of
interest payments on the senior subordinated notes is remote within the meaning
of the Treasury regulations. Based on the foregoing, although the matter is not
free from doubt because of the lack of direct authority, the senior subordinated
notes should not be considered to be issued with OID at the time of their
original issuance. If deferral of any payment of interest were determined not to
be "remote," then the senior subordinated notes would be treated as issued with
OID at the time of issuance. In such case, all stated interest on the senior
subordinated notes would be treated as OID, with the consequence that all
holders would be required to include the yield on the senior subordinated notes
in income as it accrued on a constant yield basis, possibly in advance of their
receipt of the associated cash and regardless of their method of tax accounting.

SUBSEQUENT ISSUANCES OF SENIOR SUBORDINATED NOTES MAY CAUSE YOU TO RECOGNIZE
TAXABLE GAIN AND/OR ORIGINAL ISSUE DISCOUNT AND MAY REDUCE YOUR RECOVERY IN THE
EVENT OF BANKRUPTCY.

The United States federal income tax consequences to you of the subsequent
issuance of senior subordinated notes with OID (or any issuance of senior
subordinated notes thereafter) are unclear. In the future, we may issue senior
subordinated notes underlying IDSs in exchange for shares of our Class B common
stock. The indenture governing the senior subordinated notes and the agreements
with DTC will provide that, in the event that there is a subsequent issuance of
senior subordinated notes having terms substantially identical to the senior
subordinated notes offered hereby, each holder of senior subordinated notes or
IDSs, as the case may be, agrees that a portion of such holder's senior
subordinated notes will be automatically exchanged for a portion of the senior
subordinated notes acquired by the holders of such subsequently issued senior
subordinated notes.

The aggregate stated principal amount of senior subordinated notes owned by you
and each other holder will not change as a result of such subsequent issuance
and exchange. However, under applicable law, it is possible that the holders of
subsequently issued senior subordinated notes (to the extent issued with OID)
will not be entitled to a claim for the portion of their principal amount that
represents unaccrued OID in the event of an acceleration of the senior
subordinated notes or a bankruptcy proceeding occurring prior to the maturity of
the senior subordinated notes. Whether the receipt of subsequently issued senior
subordinated notes in exchange for previously issued senior subordinated notes
in this automatic exchange constitutes a taxable exchange for United States
federal income tax purposes depends on whether the subsequently issued senior
subordinated notes are viewed as differing materially from the senior
subordinated notes exchanged. Due to a lack of applicable guidance, it is
unclear whether the subsequently issued senior subordinated notes would be
viewed as differing materially from the previously issued senior subordinated
notes for this purpose. Consequently, it is unclear whether an exchange of
senior subordinated notes for subsequently issued senior subordinated notes
results in a taxable exchange for United States federal income tax purposes, and
it is possible that the IRS might successfully assert that such an exchange
should be treated as a taxable exchange. In such case, you would recognize any
gain realized on the exchange, but a loss realized might be disallowed.

Regardless of whether the exchange is treated as a taxable event, such exchange
may result in an increase in the amount of OID, if any, that you are required to
accrue with respect to senior subordinated notes. Following any subsequent
issuance of senior subordinated notes with OID (or any issuance of senior
subordinated notes thereafter) and resulting exchange, we (and our agents) will
report any OID on any subsequently issued senior subordinated notes ratably
among all holders of senior subordinated notes and IDSs, and each holder of
senior subordinated notes and IDSs will, by purchasing senior subordinated notes
or IDSs, as the case may be, agree to report OID in a manner consistent with
this approach. Consequently, you may be required to report OID as a result of a
subsequent issuance (even though you

                                        28
<PAGE>

purchased senior subordinated notes having no OID). This will generally result
in you reporting more interest income over the term of the senior subordinated
notes than you would have reported had no such subsequent issuance and exchange
occurred. However, the IRS may assert that any OID should be reported only to
the persons that initially acquired such subsequently issued senior subordinated
notes (and their transferees). In such case, the IRS might further assert that,
unless a holder can establish that it is not such a person (or a transferee
thereof), all of the senior subordinated notes held by such holder will have
OID. Any of these assertions by the IRS could create significant uncertainties
in the pricing of IDSs and senior subordinated notes and could adversely affect
the market for IDSs and senior subordinated notes.

IF WE SUBSEQUENTLY ISSUE SENIOR SUBORDINATED NOTES WITH SIGNIFICANT OID, THEN WE
MAY BE UNABLE TO DEDUCT ALL THE INTEREST ON THE SENIOR SUBORDINATED NOTES.

It is possible that the senior subordinated notes that we issue in a subsequent
issuance will be issued at a discount to their face value and, accordingly, may
have "significant OID" and thus be classified as "applicable high yield discount
obligations." If any such senior subordinated notes were so treated, then a
portion of the OID on such notes could be nondeductible by us and the remainder
would be deductible only when paid. This treatment would have the effect of
increasing our taxable income and may adversely affect our cash flow available
for interest payments and distributions to our shareholders.

BEFORE THIS OFFERING, THERE HAS NOT BEEN A PUBLIC MARKET FOR OUR IDSS, SHARES OF
OUR CLASS A COMMON STOCK OR SENIOR SUBORDINATED NOTES. THE PRICE OF THE IDSS MAY
FLUCTUATE SUBSTANTIALLY, WHICH COULD NEGATIVELY AFFECT IDS HOLDERS.

None of the IDSs, the shares of our Class A common stock or the senior
subordinated notes has a public market history. In addition, there has not been
an established market in the United States or in Canada for securities similar
to the IDSs. We cannot assure you that an active trading market for the IDSs
will develop in the future, and we currently do not expect that an active
trading market for the shares of our Class A common stock will develop until the
senior subordinated notes are redeemed or mature. If the senior subordinated
notes represented by your IDSs are redeemed or mature, the IDSs will
automatically separate and you will then hold the shares of our Class A common
stock. We do not intend to list our senior subordinated notes on any securities
exchange.

The initial public offering price of the IDSs has been determined by
negotiations among us, the existing equity holders and the representatives of
the underwriters and may not be indicative of the market price of the IDSs after
the offering. Factors such as quarterly variations in our financial results,
announcements by us or others, developments affecting us, our clients and our
suppliers, general interest rate levels and general market volatility could
cause the market price of the IDSs to fluctuate significantly.

FUTURE SALES OR THE POSSIBILITY OF FUTURE SALES OF A SUBSTANTIAL AMOUNT OF IDSS,
SHARES OF OUR COMMON STOCK OR OUR SENIOR SUBORDINATED NOTES MAY DEPRESS THE
PRICE OF THE IDSS AND THE SHARES OF OUR COMMON STOCK AND OUR SENIOR SUBORDINATED
NOTES.

Future sales or the availability for sale of substantial amounts of IDSs or
shares of our common stock or a significant principal amount of our senior
subordinated notes in the public market could adversely affect the prevailing
market price of the IDSs and the shares of our common stock and senior
subordinated notes and could impair our ability to raise capital through future
sales of our securities.

We may issue shares of our common stock and senior subordinated notes, which may
be in the form of IDSs, or other securities from time to time as consideration
for future acquisitions and investments. In the event any such acquisition or
investment is significant, the number of shares of our common stock and the
aggregate principal amount of senior subordinated notes, which may be in the
form of IDSs, or the number or aggregate principal amount, as the case may be,
of other securities that we may issue may in turn be significant. In addition,
we may also grant registration rights covering those IDSs, shares of our

                                        29
<PAGE>

common stock, senior subordinated notes or other securities in connection with
any such acquisitions and investments.

REGULATORY RISKS

REGULATORY DEVELOPMENTS REGARDING THE TEXAS AND FEDERAL UNIVERSAL SERVICE FUND
COULD CURTAIL OUR PROFITABILITY.

We receive Texas and federal Universal Service Fund, or USF, revenues to support
the high cost of providing affordable telecommunications services in rural
markets. Such support payments represented 24.1% of our revenues for the year
ended December 31, 2003, of which $103.1 million, or 20.7% of our revenues, was
received from the Texas USF. In addition, we are required to make contributions
to the Texas USF and federal USF each year. Current regulations allow us to
recover these costs by including a surcharge on our customers' bills. We incur
no incremental costs associated with the support payments we receive or the
contributions we are required to make, and therefore if we were unable to
receive support, if such support was reduced, or if we are unable to recover the
amounts we contribute to the Texas USF and federal USF from our customers, our
earnings would be directly and adversely affected.

Our receipt of USF support and the manner in which we may recover our costs of
contributing to the Texas USF and federal USF is governed by rules established
by the Public Utility Commission of Texas, or TPUC, and the Federal
Communications Commission, or FCC, respectively. The rules governing USF could
be altered or amended as a result of regulatory, legislative or judicial action
and impact the amount of USF support that we receive and our ability to recover
our USF contributions by assessing surcharges on our customers' bills. It is not
possible to predict at this time whether state or federal regulators or
legislatures will order modification to those rules or statutes, or the ultimate
impact any such modification might have on us.

Since the payments we receive from the Texas USF constitute a significant
portion of our revenues, reductions in the amount of USF support that we receive
from Texas could have a material impact on our revenues and earnings. The
enabling statute for the Texas USF will become subject to review and renewal in
late 2005. In addition, the Texas USF rules provide that the TPUC must open an
investigation within 90 days after any changes are made to the federal USF.
Therefore, changes to the federal USF may prompt similar or conforming changes
to the Texas USF. The outcome of any of these legislative or regulatory changes
could affect the amount of Texas USF support that we receive, and could have an
adverse effect on our business, revenue or profitability.

FCC regulations can also affect the amount of USF support that we receive. We
received $16.7 million, or 3.4% of our revenues, from the federal USF for the
year ended December 31, 2003. Presently, there are many issues before the FCC
that could affect the amount of federal USF that we collect. If the FCC resolves
any of these issues in a way that reduces the amount of federal USF support that
we collect, our revenue and profitability could be adversely impacted.

REDUCTIONS IN THE AMOUNT OF NETWORK ACCESS REVENUE THAT WE RECEIVE COULD
NEGATIVELY IMPACT OUR RESULTS OF OPERATIONS.

In the year ended December 31, 2003, we derived $132.0 million, or 26.6% of our
revenues from network access charges. Our network access revenue consists of (1)
usage sensitive fees we charge to long distance companies for access to our
network in connection with the completion of interstate and intrastate long
distance calls, (2) fees charged for use of dedicated circuits and (3) end user
fees, which are monthly flat-rate charges assessed on access lines. Federal and
state regulatory commissions set these access charges, and they could change the
amount of the charges or the manner in which they are charged at any time. Also,
as people in our markets decide to use Internet, wireless or cable television
providers for their local or long distance calling needs, rather than using our
wireline network, the reduction in the number of access lines or minutes of use
over our network could reduce the amount of access revenue we collect. As

                                        30
<PAGE>

penetration rates for these technologies increase in rural markets, our revenues
could decline. In addition, if our customers take advantage of favorable calling
plans offered by wireless carriers for their long distance calling needs, it
could reduce the number of long distance calls made over our network, thereby
decreasing our access revenue. Furthermore, disputes are pending as to whether
providers of Voice over Internet Protocol, or VoIP services, which allow
customers to make voice calls over the Internet or using Internet Protocol, are
subject to FCC or state regulations that would require them to pay network
access charges. With the emergence of VoIP technology, the FCC and state
commissions are considering the status of VoIP and other Internet services and
there can be no assurance that the FCC and state regulators will require such
providers to pay access charges. Any reduction in the amount of access revenue
that we receive could negatively impact our revenues and profitability.

REGULATORY CHANGES COULD IMPACT THE NUMBER OF AND TYPE OF COMPETITORS WE FACE
WHICH COULD IMPACT OUR RESULTS OF OPERATIONS.

Changes in regulations that open our markets to more competitors offering
substitute services could impact our profitability because of increases in the
costs of attracting and retaining customers and decreases in revenues due to
lost customers and the need to offer competitive prices. We face competition
from current and potential market entrants, including:

   --  domestic and international long distance providers seeking to enter,
       reenter or expand entry into the local telecommunications marketplace;

   --  other domestic and international competitive telecommunications
       providers, wireless carriers, resellers, cable television companies and
       electric utilities; and

   --  providers of broadband and Internet services.

Regulatory requirements designed to facilitate the introduction of competition,
the applicability of different regulatory requirements among our competitors and
us, or decisions by legislators or regulators to exempt certain providers or
technologies from the same level of regulation that we face, could adversely
impact our market position and our ability to offer competitive alternatives. In
November 2003, the FCC ordered us to adopt wireline-to-wireless local number
portability. This may help wireless carriers compete against us because if
customers switch from traditional local telephone service to wireless service,
they now have the ability to transfer their local telephone number to their
wireless provider. In addition, federal and state regulators and courts are
addressing many aspects of our obligations to provide unbundled network elements
and discounted wholesale rates to competitors. The introduction of new
competitors or the better positioning of existing competitors due to regulatory
changes could cause us to lose customers and impede our ability to attract new
customers.

NEW REGULATIONS AND CHANGES IN EXISTING REGULATIONS MAY FORCE US TO INCUR
SIGNIFICANT EXPENSES.

Our business also may be impacted by legislation and regulation imposing new or
greater obligations related to assisting law enforcement, bolstering homeland
security, minimizing environmental impacts, or addressing other issues that
impact our business. For example, existing provisions of the Communications
Assistance for Law Enforcement Act, or CALEA, and FCC regulations implementing
CALEA require telecommunications carriers to ensure that their equipment,
facilities, and services are able to facilitate authorized electronic
surveillance. We cannot predict whether and when the FCC might modify its CALEA
rules or any other rules or what compliance with new rules might cost.
Similarly, we cannot predict whether or when federal or state legislators or
regulators might impose new security, environmental or other obligations on our
business.

For a more thorough discussion of the regulation of our company and how that
regulation may affect our business, see "Regulation."

                                        31
<PAGE>

RISKS RELATING TO OUR BUSINESS

WE MAY CONTINUE TO LOSE ACCESS LINES.

Our business generates revenue by delivering voice and data services over access
lines. We have experienced net access line loss over the past few years, and
during the year ended December 31, 2003, the number of access lines we serve
declined by 2.6% due to challenging economic conditions and increased
competition. We may continue to experience net access line loss in our markets
for an unforeseen period of time. Our inability to retain access lines could
adversely affect our revenue and earnings.

RAPID AND SIGNIFICANT CHANGES IN TECHNOLOGY IN THE TELECOMMUNICATIONS INDUSTRY
COULD ADVERSELY AFFECT OUR ABILITY TO COMPETE EFFECTIVELY IN THE MARKETS IN
WHICH WE OPERATE.

The rapid introduction and development of enhanced or alternative services that
are more cost effective, more efficient or more technologically advanced than
the services we offer is a significant source of potential competition in the
telecommunications industry. Technological developments may reduce the
competitiveness of our networks, make our service offerings less attractive or
require expensive and time-consuming capital improvements. If we fail to adapt
successfully to technological changes or fail to obtain timely access to
important new technologies, we could lose customers and have difficulty
attracting new customers or selling new services to our existing customers.

We cannot predict the impact of technological changes on our competitive
position, profitability or industry. Wireless and cable technologies that have
emerged in recent years provide certain advantages over traditional wireline
voice and data services. The mobility afforded by wireless voice services and
its competitive pricing appeal to many customers. The ability of cable
television providers to offer voice, video and data services as an integrated
package provides an attractive alternative to traditional voice services from
local exchange carriers. In addition, as the emerging VoIP services develop,
some customers may be able to bypass network access charges. Increased
penetration rates for these technologies in our markets could cause our revenues
to decline.

THE COMPETITIVE NATURE OF THE TELECOMMUNICATIONS INDUSTRY COULD ADVERSELY AFFECT
OUR REVENUES, RESULTS OF OPERATIONS AND PROFITABILITY.

The telecommunications industry is very competitive. Increased competition could
lead to price reductions, declining sales volumes, loss of market share, higher
marketing costs and reduced operating margins. Significant and potentially
larger competitors could enter our markets at any time, including local service
providers, cable television companies and wireless telecommunications providers.

For a more thorough discussion of the competition that may affect our business,
see "Business--Competition."

WEAK ECONOMIC CONDITIONS MAY DECREASE DEMAND FOR OUR SERVICES.

We are sensitive to economic conditions and downturns in the economy. Downturns
in the economies in the markets we serve could cause our existing customers to
reduce their purchases of our basic and enhanced services and make it difficult
for us to obtain new customers.

WE DEPEND ON A FEW KEY VENDORS AND SUPPLIERS TO CONDUCT OUR BUSINESS.

We rely on vendors and suppliers to support many of our administrative functions
and to enable us to provide long distance services. For example, we currently
outsource much of our operational support services to ALLTEL, including our
billing and customer care services. Transitioning these support services to
another provider could take a significant period of time and involve substantial
costs. In addition, we

                                        32
<PAGE>

have resale agreements with MCI and Sprint to provide our long distance
transmission services. Replacing these resale agreements could be difficult as
there are a limited number of national long distance providers. Any disruptions
in our relationship with these third party providers could have an adverse
effect on our business and operations.

RECENT DIFFICULTIES IN THE TELECOMMUNICATIONS INDUSTRY COULD NEGATIVELY IMPACT
OUR REVENUES AND RESULTS OF OPERATIONS.

We originate and terminate long distance phone calls on our networks for other
interexchange carriers, some of which are our largest customers in terms of
revenues. In the year ended December 31, 2003, we generated 17.5% of our total
revenues from originating and terminating phone calls for interexchange
carriers. Several of these interexchange carriers have declared bankruptcy
during the past two years or are experiencing substantial financial
difficulties. MCI WorldCom (now MCI), which declared bankruptcy in 2002, is one
of the major interexchange carriers with which we conduct business. We recorded
a net $1.6 million charge due to MCI's failure to pay amounts owed to us.
Further bankruptcies or disruptions in the businesses of these interexchange
carriers could have an adverse effect on our financial results and cash flows.

OUR EQUITY SPONSORS OWN A SUBSTANTIAL INTEREST IN OUR VOTING SECURITIES AND
THEIR INTERESTS MAY DIVERGE FROM THE INTERESTS OF THE HOLDERS OF THE IDSS.

Following the consummation of this offering, affiliates of Welsh, Carson,
Anderson & Stowe, or WCAS, affiliates of Vestar Capital Partners, or Vestar, and
affiliates of Citicorp Venture Capital, or CVC, will beneficially own    %,    %
and    %, respectively, of our outstanding shares of Class A common stock as
part of the IDSs, and    %,    % and    %, respectively, of our outstanding
shares of Class B common stock. As a result, WCAS, Vestar and CVC collectively
exercise substantial influence over matters requiring stockholder approval,
including decisions about our capital structure. In addition, WCAS has two
designees and Vestar has one designee serving on our board of directors. The
interests of our equity sponsors may conflict with your interests as a holder of
the IDSs.

OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS AND SEVERAL
OTHER FACTORS COULD LIMIT ANOTHER PARTY'S ABILITY TO ACQUIRE US AND DEPRIVE OUR
INVESTORS OF THE OPPORTUNITY TO OBTAIN A TAKEOVER PREMIUM FOR THEIR SECURITIES.

A number of provisions in our amended and restated certificate of incorporation
and by-laws will make it difficult for another company to acquire us and for you
to receive any related takeover premium on our securities. For example, our
amended and restated certificate of incorporation provides that stockholders may
not act by written consent and that only our board of directors may call a
special meeting. In addition, stockholders are required to provide us with
advance notice if they wish to nominate any persons for election to our board of
directors or if they intend to propose any matters for consideration at an
annual stockholders meeting. Our amended and restated certificate of
incorporation authorizes the issuance of preferred stock without stockholder
approval and upon such terms as the board of directors may determine. The rights
of the holders of shares of our common stock will be subject to, and may be
adversely affected by, the rights of holders of any class or series of preferred
stock that may be issued in the future.

                                        33
<PAGE>

           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements under "Summary," "Risk Factors," "Management's Discussion
and Analysis of Financial Condition and Results of Operations," "Business,"
"Regulation" and elsewhere in this prospectus may include forward-looking
statements which reflect our current views with respect to future events and
financial performance. Statements which include the words "may," "will,"
"should," "could," "would," "predicts," "potential," "continue," "future,"
"estimates," "expect," "intend," "plan," "believe," "project," "anticipate" and
similar statements of a future or forward-looking nature identify
forward-looking statements for purposes of the federal securities laws or
otherwise.

All forward-looking statements address matters that involve risks and
uncertainties. Accordingly, there are or will be important factors that could
cause actual results to differ materially from those indicated in these
statements. We believe that these factors include the following:

   --  our high degree of leverage and significant debt service obligations;

   --  our ability to amend our new credit facility in ways that restrict our
       right to pay dividends on our common stock and interest on our senior
       subordinated notes;

   --  any adverse changes in government regulation;

   --  the risk that we may not be able to retain existing customers or obtain
       new customers;

   --  the risk of technological innovations outpacing our ability to adapt or
       replace our equipment to offer comparable services;

   --  the risk of increased competition in the markets we serve; and

   --  the risk of weaker economic conditions within the United States.

We undertake no obligation to publicly update or review any forward-looking
statement, whether as a result of new information, future developments or
otherwise.

                                        34
<PAGE>

                                USE OF PROCEEDS

The table below sets forth our estimate of the sources and uses of funds
required to effect the transactions contemplated hereby. See "Detailed
Transaction Steps." The estimated sources and uses are based on an assumed
initial public offering price of $     per IDS and      % of the stated
principal amount of the senior subordinated notes being sold separately (not in
the form of IDSs). Actual amounts will vary from the amounts shown below.

<Table>
<Caption>
   SOURCES                                       USES
   -------                                       ----
   <S>                                <C>        <C>                                <C>
   New credit facility(1)...........   $         Repayment of existing
                                                   indebtedness(2)................   $
   IDSs sold hereby.................             Fees and expenses(3).............
   Senior subordinated notes sold                Proceeds to existing equity
     separately hereby..............             holders(4)
     Total sources of funds.........  $            Total uses of funds............  $
                                                                                    ========
                                      ========
</Table>

(1)  Represents a $        term loan. No amounts will be drawn on the new
     revolver in connection with the contemplated transactions.

(2)  Includes $    million of outstanding principal and unpaid interest on our
     existing credit facilities and $    million aggregate principal amount of
     our outstanding senior subordinated notes due August 31, 2010 and accrued
     and unpaid interest thereunder. In connection with the repayment of
     existing indebtedness, we will be required to write-off approximately $
     in deferred financing costs.

(3)  Includes an estimated $    million payable to the underwriters of our IDS
     offering, approximately $    million payable to the lenders under our new
     credit facility, approximately $    million in the aggregate payable to
     affiliates of Welsh, Carson, Anderson & Stowe and affiliates of Vestar
     Capital Partners for transaction fees in respect of our reorganization and
     this offering, and approximately $    million in other professional fees
     and expenses associated with our redemption of existing indebtedness.

(4)  The proceeds to our existing equity holders shown on the table above does
     not include IDSs that we are issuing to them in this offering in connection
     with our reorganization. These IDSs have an aggregate value of $    million
     based on an assumed initial public offering price of $    . In addition, if
     the underwriters' over-allotment option is exercised in full, existing
     equity holders will offer an aggregate of         IDSs to the public and
     will receive all proceeds from the sale thereof, less any underwriters'
     discount and commissions.

As indicated in the table above, we expect to repay all amounts outstanding
under both the revolving facility and term loan facility under our existing
senior credit facility for Valor Telecommunications Southwest, LLC and our
existing senior credit facility for Valor Telecommunications Southwest II, LLC.
The term loans under both the Valor Telecommunications Southwest, LLC and Valor
Telecommunications Southwest II, LLC senior credit facilities are comprised of
tranches that have maturity dates ranging from June 30, 2007 through October 31,
2013. Amounts outstanding under the revolvers under the Valor Telecommunications
Southwest, LLC and the Valor Telecommunications Southwest II, LLC senior credit
facilities will mature on June 30, 2007 and July 31, 2010, respectively. As of
December 31, 2003, amounts outstanding under the revolver and the term loan bore
interest at a weighted average annual rate of 6.2%.

We also expect to use the net proceeds of this offering to repay all amounts
payable pursuant to our outstanding senior subordinated notes. These
subordinated notes have a stated interest rate of 10.0% per annum. The maturity
date of these subordinated notes is August 31, 2010.

                                        35
<PAGE>

                                DIVIDEND POLICY

Upon the closing of this offering, our board of directors is expected to adopt a
dividend policy with respect to our shares of Class A common stock pursuant to
which, in the event and to the extent we have any available cash for
distribution to the holders of shares of our Class A common stock as of the
twentieth day, or the business day immediately preceding such twentieth day, of
the last month of any calendar quarter, and subject to applicable law, as
described below, and the terms of the new credit facility, the indenture
governing our senior subordinated notes and any other then outstanding
indebtedness of ours, our board of directors will declare cash dividends on our
Class A common stock. The initial dividend rate is expected to be equal to
$     per share of Class A common stock per annum, subject to adjustment. We
will pay those dividends on or about the last day of each quarter.

Our amended and restated certificate of incorporation contains dividend
provisions with respect to our shares of Class B common stock which are intended
to replicate the yield on our IDS units. Any time a dividend is paid to holders
of Class A common stock, holders of Class B common stock will be paid a dividend
equal to the amount per share paid to holders of Class A common stock. In
addition to any such dividend, shares of our Class B common stock will accrue
dividends at a rate of      % per annum on the deemed issuance price of $
per share; provided that during the continuation of any event of default under
the indenture governing the senior subordinated notes, dividends will accrue at
a rate of      % per annum. Such dividends will accrue, and to the extent not
paid, accumulate, whether or not declared and whether or not we have funds
legally available for the payment of dividends. Such dividends will be paid, if
declared by the board, on the last day of each fiscal quarter, or, to the extent
not previously paid, at such time as such shares of Class B common stock are
exchanged for IDSs; provided, that such dividends may only be paid to the extent
allowable under applicable law, the terms of our new credit facility and the
indenture governing our senior subordinated notes.

Upon the closing of the offering no shares of our Class C common stock will be
outstanding and we do not anticipate that we will issue shares of Class C common
stock or declare dividends thereon in the near future.

If we have any remaining cash after the payment of dividends as contemplated
above, our board of directors will, in its sole discretion, decide to use that
cash to fund capital expenditures or acquisitions, repay indebtedness, pay
additional dividends in equal amounts per share to holders of the shares of
Class A and Class B common stock or for general corporate purposes.

If we do not have enough available cash in any quarter to pay the amount of
dividends to the holders of the shares of Class A and Class B common stock as
contemplated above, we will first pay any unpaid dividends that have been
accruing on the shares of Class B common stock and then pay any additional
amounts in equal amounts per share to holders of the shares of Class A and Class
B common stock.

The indenture governing our senior subordinated notes restricts our ability to
declare and pay dividends on our common stock as follows:

   --  we may not pay dividends if such payment will exceed the quarterly base
       dividend level in any fiscal quarter; provided that if such payment is
       less than the quarterly base dividend level in any fiscal quarter,   % of
       the difference between the aggregate amount of dividends actually paid
       and the quarterly base dividend level for such quarter will be available
       for the payment of dividends at a later date. The quarterly base dividend
       level for any given fiscal quarter shall equal   % of our excess cash (as
       defined below) for the 12 month period ending on the last day of our then
       most recently ended fiscal quarter for which internal financial
       statements are available at the time such dividend is declared and paid
       divided by four (4). "Excess cash" shall mean with respect to any period,
       Adjusted EBITDA, as defined in the indenture, minus the sum of (i) cash
       interest expense, (ii) capital expenditures and (iii) cash income tax
       expense, in each case, for such period;

   --  we may not pay any dividends if not permitted under any of our senior
       indebtedness;

   --  we may not pay any dividends while interest on the senior subordinated
       notes is being deferred or, after the end of any interest deferral, so
       long as any deferred interest has not been paid in full; and

                                        36
<PAGE>

   --  we may not pay any dividends if a default or event of default under the
       indenture has occurred and is continuing.

The new credit facility restricts our ability to declare and pay dividends on
our common stock if and for so long as we do not meet the interest coverage
ratio and senior leverage ratio tests specified in the new credit facility. If
we fail to achieve any of these ratios for any quarter but resume compliance in
a subsequent quarter and satisfy the other conditions specified in the new
credit facility (including timely delivery of applicable financial statements),
we may resume the payment of dividends. The new credit facility permits us to
use up to 100% of the distributable cash, as defined in the new credit facility
to fund dividends on our shares of common stock.

Our board of directors may, in its discretion, amend or repeal this dividend
policy. Our board of directors may decrease the level of dividends provided for
in this dividend policy or discontinue entirely the payment of dividends. We
have not paid dividends in the past.

Future dividends with respect to shares of our capital stock, if any, will
depend on, among other things, our results of operations, cash requirements,
financial condition, contractual restrictions, provisions of applicable law and
other factors that our board of directors may deem relevant. Under Delaware law,
our board of directors may declare dividends only to the extent of our "surplus"
(which is defined as total assets at fair market value minus total liabilities,
minus statutory capital), or if there is no surplus, out of our net profits for
the then current and/or immediately preceding fiscal years.

                                        37
<PAGE>

                                 CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization
as of December 31, 2003:

   --  on an actual basis; and

   --  on a pro forma as adjusted basis as if this offering, including the use
       of proceeds from this offering, the repayment of all outstanding
       borrowings under our existing credit facilities and our reorganization
       had occurred on that date and that we had entered into the new credit
       facility on that date.

<Table>
<Caption>
                                                                   AS OF DECEMBER 31, 2003
                                                            --------------------------------------
                                                                                        PRO FORMA
                                                              ACTUAL     ADJUSTMENTS   AS ADJUSTED
                                                            ----------   -----------   -----------
                                                                        (In thousands)
   <S>                                                      <C>          <C>           <C>
   Cash and cash equivalents..............................  $    1,414
                                                            ==========
   Long-term debt, including current portion
     Current maturities of long-term debt(1)..............      37,318
     Existing credit facilities (long-term portion)(1)....   1,108,065
     Existing senior subordinated notes...................     314,257
     Capital leases.......................................       4,333
     New credit facility..................................           -
        % senior subordinated notes.......................           -
                                                            ----------
        Total long-term debt..............................   1,463,973
                                                            ----------
   Redeemable preferred interests(2)......................     370,231
   Class B common stock, $0.01 par value per share(3).....          --
                                                            ----------
   Stockholders' equity
     Class A common interests, no par or stated value.....      64,633
     Class B common interests, no par or stated value.....           -
     Class C interests, no par or stated value............      46,000
     Class A common stock, $0.01 par value per share......           -
     Class B common stock, $0.01 par value per share......           -
     Class C common stock, $0.01 par value per share......           -
     Additional paid-in capital...........................           -
     Accumulated deficit(4)...............................     (53,366)
     Accumulated other comprehensive loss.................      (7,371)
     Treasury stock.......................................         (34)
                                                            ----------
        Total common owners' equity.......................      49,862
                                                            ----------
          Total capitalization............................  $1,885,480
                                                            ==========
</Table>

---------------------------
(1) In connection with the repayment of existing indebtedness, we will be
    required to write-off approximately $      in deferred financing costs.

(2) As a result of our existing equity holders' contribution of their redeemable
    preferred interests in VTC, VTS and VTS II to Valor, we will record an
    expense of approximately $      resulting from the excess of the fair value
    of the IDSs, Class B common stock and cash received over the carrying amount
    of the redeemable preferred interests.

(3) Each share of Class B common stock is convertible into one IDS (as may be
    adjusted for stock splits, dividends, combinations or reclassifications)
    following the second anniversary of the consummation of this offering, at
    the option of the holder of such shares. Accordingly, the portion of the
    Class B common stock convertible into senior subordinated debt has been
    classified as mezzanine equity.

(4) In connection with the reorganization, management will receive         IDSs
    in exchange for their outstanding stock options and phantom stock units
    resulting in compensation expense to us of approximately $        .

                                        38
<PAGE>

                                    DILUTION

Dilution is the amount by which the portion of the offering price paid by the
purchasers of the IDSs to be sold in the offering that is allocated to our
shares of Class A common stock represented by the IDSs exceeds the net tangible
book value or deficiency per share of our Class A common stock after the
offering. Net tangible book value or deficiency per share of our Class A common
stock is determined at any date by subtracting our total liabilities from our
total assets less our intangible assets and dividing the difference by the
number of shares of Class A common stock deemed to be outstanding at that date.

Our net tangible book value as of December 31, 2003 was approximately $
million, or $     per share of Class A common stock. After giving effect to our
receipt and intended use of approximately $     million of estimated net
proceeds (after deducting estimated underwriting discounts and commissions and
offering expenses) from our sale of IDSs and separate senior subordinated notes
in this offering based on an assumed initial public offering price of $     per
IDS (the midpoint of the range set forth on the cover page of this prospectus)
and      % of the stated principal amount of the senior subordinated notes being
sold separately, our pro forma as adjusted net tangible book value as of
December 31, 2003 would have been approximately $     million, or $     per
share of Class A common stock. This represents an immediate increase in net
tangible book value of $     per share of our Class A common stock to existing
stockholders and an immediate dilution of $     per share of our Class A common
stock to new investors purchasing IDSs in this offering.

The following table illustrates this substantial and immediate dilution to new
investors:

<Table>
<Caption>
                                                                 PER SHARE OF
                                                                 COMMON STOCK
                                                                 ------------
   <S>                                                           <C>
   Portion of the assumed initial public price of $     per IDS
     allocated to one share of Class A common stock............    $
   Net tangible book value per share as of December 31, 2003...
   Increase per share attributable to cash payments made by
     investors in this offering................................
                                                                   --------
   Pro forma as adjusted net tangible book value after this
     offering..................................................    $
                                                                   --------
   Dilution in net tangible book value per share to new
     investors.................................................    $
                                                                   ========
</Table>

The following table sets forth on a pro forma basis as of December 31, 2003,
assuming no exercise of the over-allotment option:

   --  the total number of shares of our Class A common stock to be owned by the
       existing equity holders and to be owned by the new investors, as
       represented by the IDSs to be sold in this offering;

   --  the total consideration to be paid by the existing equity holders and to
       be paid by the new investors purchasing IDSs in this offering; and

   --  the average price per share of Class A common stock to be paid by
       existing equity holders (cash and stock) and to be paid by new investors
       purchasing IDSs in this offering:

<Table>
<Caption>
                                                                                           AVERAGE
                                              SHARES OF CLASS A                           PRICE PER
                                                 COMMON STOCK                             SHARE OF
                                                  PURCHASED        TOTAL CONSIDERATION     CLASS A
                                              ------------------   --------------------    COMMON
                                               NUMBER    PERCENT    AMOUNT     PERCENT      STOCK
                                              --------   -------   ---------   --------   ---------
   <S>                                        <C>        <C>       <C>         <C>        <C>
   Existing equity holders..................                   %   $                 %    $
   New investors............................                   %                     %
                                              --------    -----    --------     -----
     Total..................................              100.0%   $            100.0%
                                              ========    =====    ========     =====
</Table>

                                        39
<PAGE>

                   SELECTED HISTORICAL FINANCIAL INFORMATION

Valor is a holding company and has no direct operations. Valor was formed for
the sole purpose of reorganizing our corporate structure and consummating this
offering. Valor's principle assets are the direct and indirect equity interests
of its subsidiaries. As a result, we have not provided separate historical
financial results for Valor and present only the historical consolidated
financial results of Valor Telecommunications, LLC. The selected historical
consolidated financial information set forth below as of and for the period
ended December 31, 2000, as well as the selected historical consolidated
financial information as of and for the year ended December 31, 2001, 2002 and
2003, have been derived from our audited consolidated financial statements. In
addition, as described in more detail in "Business," we acquired, at the time of
our formation, select telephone assets from GTE Southwest Corporation. We refer
to these properties as the "Acquired Businesses" and we believe the Acquired
Businesses to be the predecessor of our company, prior to formation in 2000.
This is because the Acquired Businesses, with the exception of our Kerrville
business that was acquired by us in 2002, effectively include nearly all the
businesses currently operated by us, and do not include any businesses that have
been discontinued or sold. Accordingly, the selected historical financial
information below includes the combined accounts of the Acquired Businesses as
of and for the year ended December 31, 1999, as well as the combined accounts as
of and for the period ended August 31, 2000. The combined accounts do not
include any purchase accounting adjustments that occurred as a result of our
acquisition of the Acquired Businesses in 2000.

The information in the following table should be read together with our audited
consolidated financial statements for the years ended December 31, 2001, 2002
and 2003 and the related notes and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," all as included elsewhere in
this prospectus.

<Table>
<Caption>
                                        PREDECESSOR COMPANY(1)
                                      ---------------------------
                                                        PERIOD         PERIOD
                                       YEAR ENDED       ENDED          ENDED             YEAR ENDED DECEMBER 31,
                                      DECEMBER 31,    AUGUST 31,    DECEMBER 31,   ------------------------------------
                                          1999           2000         2000(2)         2001       2002(3)        2003
                                      ------------   ------------   ------------   ----------   ----------   ----------
                                        (DOLLARS IN THOUSANDS,
                                      EXCEPT PER OWNER UNIT DATA)   (DOLLARS IN THOUSANDS, EXCEPT PER OWNER UNIT DATA)
   <S>                                <C>            <C>            <C>            <C>          <C>          <C>
   STATEMENT OF OPERATIONS DATA:
   Operating revenues...............    $367,724       $260,933     $   148,784    $  424,916   $  479,883   $  497,334
   Operating expenses...............     282,719        178,948         164,172       321,618      320,632      315,061
   Operating income (loss)..........      85,005         81,985         (15,388)      103,298      159,251      182,273
   EARNINGS PER OWNERS' UNIT:
   Basic and diluted (loss) income
     from continuing operations:(4)
     Class A and B common
       interests....................         n/a            n/a     $     (1.05)   $    (0.58)  $     0.22   $     0.73
     Class C interests..............         n/a            n/a     $        --    $       --   $     0.09   $     0.15
   Basic and diluted net (loss)
     income:
     Class A and B common
       interests....................         n/a            n/a     $     (1.05)   $    (0.77)  $     0.17   $     0.73
     Class C interests..............         n/a            n/a     $        --    $       --   $     0.09   $     0.15
   CASH FLOW DATA:
   Net cash provided by operating
     activities.....................    $154,279       $119,557     $    16,197    $  100,301   $  150,383   $  166,065
   Net cash used in investing
     activities.....................    $(85,109)      $(56,018)    $(1,821,699)   $ (106,614)  $ (216,773)  $  (66,299)
   Net cash provided by (used in)
     financing activities...........    $(69,170)      $(63,539)    $ 1,811,613    $    8,117   $   71,015   $  (99,465)
</Table>

                                        40
<PAGE>

<Table>
<Caption>
                                  PREDECESSOR COMPANY(1)
                                ---------------------------
                                                  PERIOD         PERIOD
                                 YEAR ENDED       ENDED          ENDED             YEAR ENDED DECEMBER 31,
                                DECEMBER 31,    AUGUST 31,    DECEMBER 31,   ------------------------------------
                                    1999           2000         2000(2)         2001       2002(3)        2003
                                ------------   ------------   ------------   ----------   ----------   ----------
                                  (DOLLARS IN THOUSANDS)                    (DOLLARS IN THOUSANDS)
   <S>                          <C>            <C>            <C>            <C>          <C>          <C>
   OTHER DATA:
   Capital expenditures.......    $ 85,109       $ 56,018     $    36,918    $  107,869   $   89,527   $   69,850
   Acquisition of Kerrville
     Communications
     Corporation(5)...........           -              -               -             -   $  128,135            -
   Depreciation and
     amortization(6)..........    $ 97,111       $ 64,103     $    40,327    $  110,843   $   73,273   $   81,638
   BALANCE SHEET DATA:
   Total assets...............    $573,681       $567,073     $ 1,935,695    $1,913,057   $2,062,404   $2,039,043
   Long-term debt (including
     current maturities)......    $      -       $      -     $ 1,440,643    $1,469,420   $1,544,285   $1,463,973
   Redeemable preferred
     interests................    $      -       $      -     $   370,231    $  370,231   $  370,231   $  370,231
</Table>

---------------------------

(1) The selected historical financial information presented for the Predecessor
    Company above was derived from unaudited financial statements prepared on a
    carve-out basis by GTE Southwest Corporation (the "Carve-Out Financial
    Statements"). This information reflects the results of operations and
    financial position of the Acquired Businesses for the year ended December
    31, 1999 and for the period beginning January 1, 2000 through our
    acquisition date of these businesses. We acquired GTE's business in Oklahoma
    on July 1, 2000 and GTE's businesses in Texas, New Mexico and Arkansas on
    September 1, 2000.

(2) Our consolidated financial statements for the period ended December 31, 2000
    include the results of operations for the businesses we acquired from GTE in
    Texas, Oklahoma, New Mexico and Arkansas beginning on the date of
    acquisition, as well as certain start-up costs that we incurred prior to
    commencing operations.

(3) We acquired all the outstanding common stock, preferred stock and common
    stock equivalents of Kerrville Communications Corporation ("KCC") on January
    31, 2002 and have included the assets, liabilities and results of operations
    of KCC from that date.

(4) Per unit data is not applicable with respect to periods covered by our
    Predecessor's Carve-Out Financial Statements.

(5) Reflects the purchase price for our acquisition of KCC, net of cash
    acquired. Excludes $1,724,119 we paid to purchase predecessor businesses in
    2000.

(6) In accordance with Statement of Financial Accounting Standards ("SFAS") No.
    142, "Goodwill and Other Intangible Assets", effective January 1, 2002, we
    discontinued the amortization of goodwill. Amortization expense associated
    with goodwill was $20,529 for the period ended December 31, 2000 and $53,900
    for the year ended December 31, 2001.

                                        41
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and accompanying notes which appear elsewhere in this prospectus. It
contains forward-looking statements that involve risks and uncertainties. Please
see "Cautionary Statement Regarding Forward-Looking Statements" for more
information. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of various factors, including
those discussed below and elsewhere in this prospectus, particularly under the
headings "Risk Factors" and "Cautionary Statement Regarding Forward-Looking
Statements."

OVERVIEW

We are one of the largest providers of telecommunications services in rural
communities in the southwestern United States and the seventh largest
independent telephone company in the country. We operate approximately 550,000
telephone access lines in primarily rural areas of Texas, Oklahoma, New Mexico
and Arkansas. We believe that in many of our markets we are the only service
provider that offers customers an integrated package of local and long distance
voice, high-speed data and Internet access as well as a variety of enhanced
services such as voicemail and caller identification. For the year ended
December 31, 2003, we generated revenues of $497.3 million.

We formed our company in connection with the acquisition in 2000 of select
telephone assets from GTE Southwest Corporation, which is now part of Verizon.
Our formation was orchestrated by our equity sponsors Welsh, Carson, Anderson &
Stowe, or WCAS, Vestar Capital Partners and Citicorp Venture Capital, Anne K.
Bingaman and our management. Ms. Bingaman, along with Bob Mathew and Michael
Page, formed a predecessor to our company and later joined with our equity
sponsors, led by WCAS, to negotiate and finance the acquisition of the telephone
assets from GTE. Ms. Bingaman, Mr. Mathew, Mr. Page and WCAS were assisted in
these efforts by twelve prominent business persons from the Southwestern United
States who have local, statewide and national public service experience and
decades of successful private business experience. They are Toney Anaya, Ernesto
M. Chavarria, John C. Corella, William E. Garcia, Edward J. Lujan, Manuel Lujan,
Jr., Ronald E. Montoya, M. Ann Padilla, Andrew Ramirez, Henry M. Rivera, Edward
L. Romero and J. Ben Trujillo. Ms. Bingaman served as our Chairman since 1999
and was our first Chief Executive Officer. Once the negotiation of the terms of
the acquisition from GTE was completed, Ms. Bingaman and WCAS recruited our
management team, including Kenneth R. Cole, our first chief operating officer.
Together, these groups and individuals were instrumental in helping us complete
the transactions with GTE and successfully launch our initial operations.

The rural telephone businesses that we own have been operating in the markets we
serve for over 75 years. Since our inception, we have acquired the local
telephone company serving Kerrville, Texas and we have invested substantial
resources to improve and expand our network infrastructure to provide high
quality telecommunications services and superior customer care. We believe that
we are well positioned for future revenue and cash flow growth through both
expanded service offerings and acquisitions.

Access lines are an important element of our business. Historically, rural local
telephone companies, or RLECs, experienced consistent growth in access lines
because of positive demographic trends, insulated rural local economies and
little competition. Recently, however, many RLECs have experienced a loss of
access lines due to challenging economic conditions, increased competition from
wireless providers, competitive local exchange carriers, or CLECs, and in some
cases, cable television operators. We have not been immune to these conditions.
We have experienced modest net losses in access lines due primarily to poor
economic conditions and increased competition. Access line losses may also
increase if cable television operators begin to offer telephony service in our
markets.

Despite our net losses of access lines, we have generated growth in our revenues
each year since our inception in 2000. We have accomplished this by providing
our customers with services not previously available in most of our markets such
as enhanced voice services and data services, including digital subscriber
lines, or DSL, and through acquisitions. We are continuing to add access lines
through plant

                                        42
<PAGE>

improvements, bundling services, win-back programs, increased community
involvement and a variety of other programs.

We are subject to regulation primarily by federal and state government agencies.
At the federal level, the Federal Communications Commission, or FCC, has
jurisdiction over interstate and international telecommunications services.
State telecommunications regulators exercise jurisdiction over intrastate
telecommunications services. We operate under price cap regulation at the
federal level and at the state level in Texas and New Mexico. We are regulated
on a rate of return basis in Oklahoma and Arkansas. For a more extensive
discussion of regulatory matters, see "Risk Factors--Regulatory Matters" and
"Regulation."

REORGANIZATION

Immediately prior to and in connection with the consummation of this offering,
we will reorganize our corporate structure. Our existing equity holders
currently own equity interests in Valor Telecommunications, LLC, or VTC, Valor
Telecommunications Southwest, LLC, or VTS, and Valor Telecommunications
Southwest II, LLC, or VTS II. As part of this reorganization, our existing
equity holders will contribute their equity interests in VTC, VTS and VTS II to
us in exchange for           IDSs,           shares of Class B common stock and
$     in cash from the proceeds of this offering. As a result of this
reorganization, each of VTC, VTS and VTS II will be either a direct or indirect
wholly-owned subsidiary of Valor Communications Group, Inc. See "Detailed
Transaction Steps" on page 86.

REGULATORY MATTERS

We operate in a regulated industry, and the majority of our revenues comes from
the provision of regulated telecommunications services, including state and
federal support for the provision of telephone services in high-cost rural
areas. To further the public policy of providing universal and comparable
telecommunications services throughout the United States, state and federal
regulatory bodies have historically given support to RLECs to offset the high
costs of providing telecommunications services in rural areas. Operating in this
regulated industry means that we are also generally subject to certification,
service quality, rate regulation, tariff filing and other ongoing regulatory
requirements by state and federal regulators.

State Regulation. We operate in Texas, Oklahoma, New Mexico and Arkansas and
each state has its own regulatory framework for intrastate services.

In Texas, most of our operations are subject to price caps on our basic
telecommunications services, while we maintain pricing flexibility on some
non-basic services. While the Texas regulatory structure under which we operate
will become subject to review and renewal in late 2005, we do not expect a
material change in the benefits we have under current regulation. In addition,
we currently have a petition pending in Texas that requests the implementation
of a surcharge for expanded local calling that would compensate us for our costs
and lost revenues associated with replacing long distance routes between
selected towns with flat rated local service. If granted, the petition would
generate additional revenues and increased earnings.

In New Mexico, we operate under an Alternative Form of Regulation Plan that is
specific to our company. The Plan was adopted in 2000 and will expire on March
31, 2006. During its term, the Plan provides for a freeze on the prices of our
intrastate telecommunications services, requires us to invest $83 million in
capital in New Mexico, provides for a streamlined tariff approval process and
prescribes quality of service standards, including penalties for failure to meet
certain service levels. Under the Plan, we will be able to increase our prices
for optional services by 10% if we meet the quality service standards in 2005.

Recently enacted legislation mandates that the New Mexico Public Regulation
Commission adopt rules tailored to the size and market demographics of local
exchange carriers like our company that have between 50,000 and 375,000 access
lines and flexible rules that allow pricing freedoms on retail services. It also
mandates the streamlining of rules governing the introduction and withdrawal of
tariffs and the packaging and bundling of services. Therefore, we will not have
to renegotiate and renew our current Plan.

                                        43
<PAGE>

In Oklahoma, we operate under rate of return regulation in the provision of
intrastate telecommunications services. Pending legislation in Oklahoma would
allow us significant pricing freedom for our basic services and reduce our costs
of regulation. The governor of Oklahoma, however, vetoed similar legislation
last year. Also pending is legislation that would eliminate most of Oklahoma's
retail pricing regulation. We would also significantly benefit from the
enactment of this legislation.

We also operate under rate of return regulation in the provision of intrastate
telecommunications services in Arkansas. We operate approximately 17,000 access
lines in Texarkana, Arkansas, which is our only market in Arkansas. Pursuant to
an agreement with the Arkansas Public Service Commission, our Arkansas tariffs
mirror the prices charged in our Texas tariffs.

Federal Regulation. Most of our interstate access revenues are regulated
pursuant to the FCC's price cap rules. Generally, these rules establish an upper
limit for access prices, but allow annual formula-based adjustments and limited
pricing flexibility. In 2000, the FCC adopted the Coalition for Affordable Local
and Long Distance Service, or CALLS plan, an integrated interstate access reform
and universal service framework for price cap local exchange carriers. The CALLS
plan allowed subscriber line charges billed to end users to rise, but forced
substantial decreases in access charges billed to long distance carriers. The
CALLS plan will expire in mid-2005, unless extended by the FCC. The FCC is
currently considering whether to make substantial changes in the manner in which
local exchange carriers can charge for access to their networks. It has proposed
that current intercarrier compensation for all types of telecommunications
traffic be collected only from the end user customers of the carriers. We do not
know whether the FCC will adopt this proposal or what impact its adoption would
have on our business.

UNIVERSAL SERVICE FUND

In furtherance of public policy, we receive Universal Service Fund, or USF,
revenues from the State of Texas and the federal government to support the high
cost of providing telecommunications services in rural markets.

Texas Universal Service Fund. The Texas Universal Service Fund, or Texas USF,
supports eligible telecommunications providers that serve high cost markets. We
received $103.1 million from the Texas USF in 2003, representing 20.7% of total
revenues for that year. Texas USF is promulgated under a statute that will
become subject to review and renewal in late 2005. We expect that the Texas
Legislature will renew the statute or replace it with a similar regulation that
will not materially change the benefits we receive under the current regulatory
structure.

Federal Universal Service Fund. The federal USF revenue we receive helps to
offset interstate access charges, defrays the high fixed switching costs in
areas with fewer than 50,000 access lines and provides support where our average
cost per line exceeds 115% of the national average cost per line. In 2003, we
received $16.7 million, or 3.4% of our total revenues, in federal USF support.
Currently, significant policy debate is occurring at the FCC and in Congress
over whether universal service support should be available as a means to foster
competitive entry in rural telecommunications markets, rather than its historic
purpose to offset the high cost to serve the country's rural areas. Several
parties have raised objections to the size of the universal service fund and the
types of services eligible for support and the sources of contribution to the
USF. The outcome of any of these proceedings or other legislative or regulatory
changes could affect the amount of federal universal service support that we
receive, and could have an adverse effect on our business, revenue or
profitability.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

Our financial statements are prepared in accordance with accounting principles
that are generally accepted in the United States. The preparation of these
financial statements requires management to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses.
Management continually evaluates its estimates and judgments including those
related to revenue recognition, allowance for doubtful accounts, pension and
postretirement benefits, accounting for goodwill and intangible assets, and
estimated useful lives of property, plant and equipment. Actual results may
differ from these estimates. We believe that of our significant accounting
policies, the following may

                                        44
<PAGE>

involve a higher degree of judgment and complexity (See Note 2 to the
consolidated financial statements for a complete discussion of our significant
accounting policies.):

Revenue Recognition. Revenue is recognized when evidence of an arrangement
between our customer and us exists, the earnings process is complete and
collectibility is reasonably assured. The prices for most services are filed in
tariffs with the appropriate regulatory bodies that exercise jurisdiction over
the various services.

Basic local services, enhanced calling features such as caller identification,
special access circuits, long distance flat rate calling plans, and most data
services are billed one month in advance. Revenue for these services is
recognized in the month services are rendered. The portion of advance-billed
revenue associated with services that will be delivered in a subsequent period
is deferred and recorded as a current liability under "Advance billings and
customer deposits" in the Consolidated Balance Sheets.

Amounts billed to customers for activating service are deferred and recognized
over the average life of the customer. The costs associated with activating such
services are deferred and are recognized as an operating expense over the same
period. Costs in excess of revenues are recognized as an operating expense in
the period of activation.

Revenues for providing usage based services, such as per-minute long distance
service and access charges billed to long distance companies for originating and
terminating long distance calls on our network, are billed in arrears. Revenues
for these services are recognized in the month services are rendered.

Universal Service revenues are government-sponsored support received in
association with providing service in mostly rural, high-cost areas. These
revenues are typically based on information provided by us and are calculated by
the government agency responsible for administering the support program and are
recognized in the month the service is performed.

Allowance for doubtful accounts. In evaluating the collectibility of accounts
receivable, we assess a number of factors, including a specific customer's or
carrier's ability to meet its financial obligations, the length of time the
receivable has been past due and historical collection experience. Based on
these assessments, we record both specific and general reserves for
uncollectible accounts receivable to the amount we ultimately expect to collect
from customers and carriers. If circumstances change or economic conditions
worsen such that our past collection experience is no longer relevant, our
estimate of the recoverability of accounts receivable could be further reduced
from the levels reflected in the accompanying consolidated balance sheet.

Pension and postretirement benefits. The amounts recognized in the financial
statements related to pension and postretirement benefits are determined on an
actuarial basis utilizing several critical assumptions.

A significant assumption used in determining our pension and postretirement
benefit expense is the expected long-term rate of return on plan assets. In
2003, we used an expected long-term rate of return of 8.5%. We continue to
believe that 8.5% is an appropriate rate of return for our plan assets given our
investment strategy and will continue to use this assumption for 2004. The
projected portfolio mix of the plan assets is developed in consideration of the
expected duration of related plan obligations and as such is more heavily
weighted toward equity investments, including public and private equity
positions. Our investment policy is to invest 55-75% of the pension assets in
equity funds with the remainder being invested in fixed income funds and cash
equivalents. The expected return on plan assets is determined by applying the
expected long-term rate of return to the market-related value of plan assets.
The actual return on our equity portfolio has been significantly below expected
return levels due to overall equity market conditions in 2001 and 2002.

Another significant estimate is the discount rate used in the annual actuarial
valuation of pension and postretirement benefit plan obligations. In determining
the appropriate discount rate at year-end, we considered the current yields on
high quality corporate fixed-income investments with maturities corresponding to
the expected duration of the benefit obligations. As of December 31, 2003, we
reduced the discount rate by 45 basis points to 6.05%.

                                        45
<PAGE>

We expect to contribute $4.7 million to our pension plan and $0.6 million to our
other postretirement benefits plan in 2004.

Goodwill and Intangible Assets. During 2001, the Financial Accounting Standards
Board, or FASB, issued Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets," or SFAS 142, which requires that
effective January 1, 2002, goodwill recorded in business combinations cease
amortizing. SFAS 142 requires that goodwill be reviewed for impairment using
fair value measurement techniques. Specifically, goodwill impairment is
determined using a two-step process. The first step of the goodwill impairment
test is used to identify potential impairment by comparing the fair value of the
reporting unit to its carrying value, including goodwill. If the fair value of a
reporting unit exceeds its carrying amount, goodwill of the reporting unit is
considered not impaired and the second step of the impairment test is
unnecessary. If the fair value of the reporting unit is less than the carrying
value, the second step of the goodwill impairment test calculation is performed
to measure the amount of the impairment charge. The second step of the goodwill
impairment test compares the implied fair value of the reporting unit's goodwill
with its carrying value. The implied fair value of goodwill is determined in the
same manner as the amount of goodwill recognized in a business combination. That
is, the fair value of the reporting unit is allocated to all of the assets and
liabilities of that unit (including any unrecognized intangible assets) as if
the reporting unit had been acquired in a business combination and the fair
value of the reporting unit was the purchase price paid to acquire the reporting
unit. If the implied fair value of goodwill is less than its carrying value,
goodwill must be written down to its implied fair value.

Determining the fair value of a reporting unit under the first step of the
goodwill impairment test and determining the fair value of individual assets and
liabilities of a reporting unit (including unrecognized intangible assets) under
the second step of the goodwill impairment test is judgmental in nature and
often involves the use of significant estimates and assumptions. These estimates
and assumptions could have a significant impact on whether or not an impairment
charge is recognized and also the magnitude of any such charge. We perform
internal valuation analyses and consider other market information that is
publicly available. Estimates of fair value are primarily determined using
discounted cash flows. This approach uses significant estimates and assumptions
including projected future cash flows (including timing) and the selection of a
discount rate that reflects the risk inherent in future cash flows.

Upon completion of our initial assessment in May 2002, and our annual
assessments in the third quarters of 2002 and 2003, we determined that no
write-down in the carrying value of goodwill was required.

Useful Life of Property, Plant and Equipment. We estimate the useful lives of
property, plant and equipment in order to determine the amount of depreciation
expense to be recorded during any reporting period. The majority of our
telecommunications plant, property and equipment is depreciated using the group
method, which develops a depreciation rate based on the average useful life of a
specific group of assets, rather than the individual asset as would be utilized
under the unit method. The estimated life of the group is based on historical
experience with similar assets as well as taking into account anticipated
technological or other changes. If technological changes were to occur more
rapidly than anticipated or in a different form than anticipated, the useful
lives assigned to these assets may need to be shortened, resulting in the
recognition of increased depreciation expense in future periods. Likewise, if
the anticipated technological or other changes occur more slowly than
anticipated, the life of the group could be extended based on the life assigned
to new assets added to the group. This could result in a reduction of
depreciation expense in future periods. We review these types of assets for
impairment when events or circumstances indicate that the carrying amount may
not be recoverable over the remaining lives of the assets. In assessing
impairment, we follow the provisions of Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," or SFAS 144, utilizing cash flows which take into account management's
estimates of future operations.

Redeemable Preferred Interests and Phantom Stock Units.  We are required to make
an estimate of the fair value of our Redeemable Preferred Interests in order to
determine the carrying value of the liability at the balance sheet date. In
addition, we are required to make an estimate of the fair value of our Phantom
Stock Units in order to determine the appropriate related compensation expense.
We estimate the fair value of these items by initially determining an overall
enterprise value and allocating the enterprise value

                                        46
<PAGE>

to the various preferred and common equity components that impact the
determination of the fair value of the Redeemable Preferred Interests and the
Phantom Stock Units. The enterprise value is estimated through a combination of
a discounted cash flow analysis and an enterprise comparability analysis to
publicly traded companies in the same industry classification. We expect that
after the reorganization of our corporate structure, we will not be required to
make an estimate of fair value of these items because both the Redeemable
Preferred Interests and the Phantom Stock Units will be exchanged for IDSs and
Class B common stock.

Income Taxes.  We intend to account for our issuance of the IDS units in this
offering as representing shares of Class A common stock and senior subordinated
notes by allocating the proceeds for each IDS unit to the underlying Class A
common stock or senior subordinated note based upon the relative fair values of
each. Accordingly, we will account for the portion of the aggregate IDSs
outstanding that represent senior subordinated notes as long-term debt bearing a
stated interest rate of      % maturing on 2014. We have concluded that it is
appropriate and we intend to annually deduct interest expense of approximately
$          on the senior subordinated notes from taxable income for U.S. federal
and state income tax purposes. There can be no assurance that the Internal
Revenue Service or the courts will not seek to challenge the treatment of these
senior subordinated notes as debt or the amount of interest expense deducted,
although to date we have not been notified that the senior subordinated notes
should be treated as equity rather than debt for U.S. federal and state income
tax purposes. If the senior subordinated notes were required to be treated as
equity for income tax purposes, the cumulative interest expense associated with
the senior subordinated notes would not be deductible from taxable income and we
would be required to recognize additional tax expense and establish a related
income tax liability. In addition, to the extent any portion of the interest
expense is determined not to be deductible, we would be required to recognize
additional tax expense and establish a related income tax liability. The
additional tax due to the federal and state authorities would be based on our
taxable income or loss for each of the years that we take the interest expense
deduction and would materially reduce our after tax cash flow and materially
affect our ability to make interest or dividend payments on the IDS units. We do
not currently intend to record a liability for a potential disallowance of this
interest expense deduction. In addition, non U.S. holders could be subject to
withholding taxes on the payment of interest which could subject the Company to
additional liability for the withholding taxes that we do not intend to collect
on payments of such interest.

The determination of whether the IDSs constitute investment units where the
senior subordinated notes are instruments separate and distinct from the common
stock portion of the IDS Units and appropriately classified as debt or equity
for U.S. federal income tax purposes is based on the Company's facts and
circumstances. There is no statutory definition of indebtedness for U.S. federal
and state income tax purposes and its characterization is governed by principles
developed in case law, which analyzes numerous factors that are intended to
identify the economic substance of the investor's interest in the Company. While
the IRS has not published an exhaustive list of relevant items, principal
factors often cited include the intent of the parties, whether the instrument in
question is an unconditional obligation to pay a sum certain at a maturity date
that is not unduly far in the future and whether the instrument has significant
equity-like characteristics (e.g., convertibility into the stock of the
corporation, participation rights, voting power, subordination to other
creditors).

Additionally, the IRS may challenge the determination that the fixed interest
rate on the senior subordinated notes represents an arm's length rate and, if
successful, any excess amount over the arm's length rate could be characterized
as a non-deductible payment (dividend) instead of an interest payment for U.S.
federal and state income tax purposes, which could materially increase our
taxable income and, thus our income tax liability. The Company intends to
determine, upon consummation of this offering, the appropriate arm's length
interest rate on the senior subordinated notes through the utilization of a
third party valuation firm and through the sale of the separate senior
subordinated notes with the same terms that are part of this offering.

Nevertheless, weighing all of the factors and based in part on the foregoing
determination from independent financial advisors and advice they have received
from outside legal counsel, our U.S. tax counsel believe that the senior
subordinated notes, one of the securities comprising an IDS Unit, should be
characterized as debt and the interest paid on the senior subordinated notes
should be deductible for U.S.

                                        47
<PAGE>

federal income tax purposes. We intend to take such position. However, there can
be no assurance that this position would be sustained if challenged by the IRS.

IDSs and Class B common stock.  Our IDS units include common stock, senior
subordinated debt and three embedded derivate features that may require
bifurcation under FASB 133. The embedded derivative features include a call
option, a change-of-control put option, and a term-extending option on the
senior subordinated debt. Upon completion of this offering, proceeds from the
issuance of the IDSs will be allocated, based upon relative fair value, to Class
A common stock and the senior subordinated notes. If it is determined at the
time of issuance that any of the embedded derivatives are required to be
bifurcated and separately accounted for, a portion of the proceeds from the
original issuance will also be allocated to these derivatives equal to the
combined fair value of the embedded derivatives that require bifurcation. If a
portion of the initial proceeds is allocated to any of the derivatives, the
senior subordinated notes will initially be recorded at a discount and accreted
to their redemption value as a component of interest expense using the effective
interest method. Any such allocation will not effect the tax treatment of the
IDSs.

The Class A common stock portion of the IDS unit will be included in
stockholders' equity, net of related transaction costs, and dividends paid on
the Class A common stock will be recorded as a reduction to retained earnings
when declared by us. The senior subordinated debt portion of the IDS unit will
be included in long-term debt, and the related transaction costs will be
capitalized as deferred financing costs and amortized to interest expense using
the effective interest method. Interest on the senior subordinated notes will be
charged to expense as accrued by us. The bifurcated derivatives will be recorded
as a liability and will be marked to market with changes in fair value being
recorded in earnings. We intend to determine the fair value of the Class A
common stock, the senior subordinated debt and embedded derivatives through the
utilization of a third party valuation firm and the sale of the separate senior
subordinated notes with the same terms that are part of this offering.

In connection with the reorganization, we will issue shares of Class B common
stock to certain current equity holders, which may, subject to certain
conditions, be exchanged for IDSs. The Class B common stock contains dividend
features which are intended to replicate the yield on the IDS units. Any time a
dividend is paid to the holders of Class A common stock, holders of the Class B
common stock will be paid a dividend equal to the same amount per share as paid
to the holders of the Class A common stock. In addition to any such dividend,
holders of the Class B common stock will accrue dividends at a rate that will
replicate the interest payable on the senior subordinated note component of the
of IDS unit.

Following the second anniversary of the consummation of this offering, at the
option of the holder of the shares, a share of Class B common stock may be
exchanged for one IDS (as may be adjusted for stock splits, dividends,
combinations or reclassifications), in connection with the sale of shares of
Class B common stock. Accordingly, at the date of issuance, based on relative
fair values, a pro rata portion of the Class B common stock exchangeable for
senior subordinated debt will be classified as mezzanine equity and pro rata
portion exchangeable for Class A common stock will be classified as permanent
equity. If it is determined at the time of issuance the embedded exchange option
is required to be bifurcated and separately accounted for, a portion of the
proceeds from the original issuance of the Class B common stock will also be
allocated to this derivative. If a portion of the initial proceeds is allocated
to the derivative, the amount recorded in mezzanine equity will initially be
recorded at a discount and accreted to the redemption value using the effective
interest method. The bifurcated derivatives will be recorded as liabilities and
will be marked to market with changes in fair value being recorded as a
component of interest expense.

The dividends paid on the Class B common stock will be deducted from net income
in the determination of net income available to Class A common stockholders for
determination of earnings per share. At the time the holder exercises its
exchange right, the portion of the Class B common stock included in mezzanine
equity will be reclassified to debt and the associated interest payments will be
included in interest expense.

                                        48
<PAGE>

In connection with the reorganization, management will receive IDSs in exchange
for their outstanding stock options and phantom stock units. The resulting
compensation expense will be based upon fair value of the IDSs received by
management at the date of exchange.

CONSOLIDATED RESULTS OF OPERATIONS

  Operating Revenues

The following table sets forth our total average revenue per access line:

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
   <S>                                                       <C>         <C>         <C>
   Total revenue (in thousands)............................  $424,916    $479,883    $497,334
   Average access lines....................................   552,316     574,922     564,027
   Average revenue per access line per month...............  $  64.11    $  69.56    $  73.48
</Table>

Local Service--Revenues are derived from providing local exchange telephone
services to both residential and business customers, including monthly recurring
charges from basic service such as local dial-tone and enhanced services such as
caller identification, voicemail and call waiting and non-recurring charges for
service activation and reconnection of service.

Data Services--Revenues are derived from monthly recurring charges for DSL,
private lines, Internet and other data related services.

Long Distance Services--Revenues are derived from usage charges assessed on long
distance and local toll calls and from revenue on flat rate calling plans.

Access Services--Network access revenues include switched access, special
access, and end user charges. Switched access represents use sensitive charges
to long distance companies for access to our network in connection with the
completion of interstate and intrastate long-distance calls. Special access
represents dedicated circuits, which are typically purchased by long distance
companies. End user charges are monthly flat-rate charges assessed on access
lines.

Universal Service Fund, or USF--We receive monthly payments from state and
federal government-sponsored support associated with providing basic telephone
services generally in rural, high cost areas.

Other Services--Other revenues primarily represent sales of customer premise
equipment, or CPE, directory advertising, unbundled network elements, or UNE,
and billing and collection fees.

The following table sets forth our revenues for the periods shown:

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
   <S>                                                       <C>         <C>         <C>
   Local service...........................................  $132,514    $147,130    $156,369
   Data services...........................................    17,927      20,741      20,990
   Long distance services..................................    14,652      22,961      30,816
   Access services.........................................   119,421     133,037     132,047
   Universal service fund..................................   116,305     121,607     119,727
   Other services..........................................    24,097      34,407      37,385
                                                             --------    --------    --------
                                                             $424,916    $479,883    $497,334
                                                             ========    ========    ========
</Table>

The following table sets forth several key metrics:

<Table>
<Caption>
                                                                    AS OF DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
   <S>                                                       <C>         <C>         <C>
   Total access lines......................................   551,599     571,308     556,745
   Long distance subscribers...............................    62,234     130,622     188,526
     Penetration rate of total access lines................        11%         23%         34%
   DSL subscribers.........................................       511       3,510       8,779
     Penetration rate of total access lines................         0%          1%          2%
</Table>

                                        49
<PAGE>

  Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Local Service Revenues. Local service revenue increased $9.3 million, or 6%, to
$156.4 million in 2003 from $147.1 million in 2002, despite declining access
lines during the period. Revenue from the provision of basic service decreased
$2.3 million primarily as a result of access line loss. This access line related
loss was more than offset by an increase of $9.0 million in enhanced services,
primarily resulting from our bundle strategy. The remainder of the increase was
from activation and reconnection charges.

Data Services Revenues. Data services revenues improved 1% in 2003 to $21.0
million from $20.7 million in 2002. DSL revenues increased $1.8 million and
other data revenue increased $1.7 million. The number of DSL subscribers grew by
5,269 during the year. The increase in the number of DSL subscribers represents
a 150% increase from 2002. We have been able to grow our data services revenue
despite the loss of substantially all the revenue from one of our large Internet
service provider customers. The loss of this customer represented a $3.2 million
decrease in revenue during 2003.

Long Distance Services Revenues. Long distance services revenue increased $7.8
million, or 34%, to $30.8 million in 2003 from $23.0 million in 2002. Our flat
rate plans and direct-dialed long-distance products increased $10.1 million.
This increase was partially offset by a reduction in local toll revenue of $2.3
million, or 37%, compared to the previous year. This results primarily from
customers switching to one of our new plans offering toll-free local calling or
switching to alternate lower cost service providers.

Access Services Revenues. Access services revenues declined $1.0 million to
$132.0 million in 2003 from $133.0 million in 2002. Switched access revenue
decreased approximately $4.8 million, which was primarily attributable to lower
access rates. Lower switched access revenue was partially offset by higher
special access and end user revenues. Special access revenues increased by $1.6
million as the demand for special circuits ordered by interexchange carriers to
transport their customers' voice and data traffic continue to improve. End user
revenues increased by $2.2 million, of which $3.8 million was due to an increase
in rates, offset by a $1.6 million reduction resulting from a loss in access
lines.

USF Revenues. USF revenues declined $1.9 million, or 2%, to $119.7 million in
2003 from $121.6 million in 2002. Texas State USF declined $1.1 million in 2003
compared to 2002 as a result of a loss in access lines.

Other Services Revenues. Other services revenue increased $3.0 million, or 9%,
to $37.4 million. $2.4 million of this increase was related to CLECs leasing
additional facilities to service their customers in our markets. The remaining
$0.6 million increase was due primarily to higher directory advertising and
other miscellaneous items.

  Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Local Service Revenues. Local service revenue increased $14.6 million, or 11%,
to $147.1 million in 2002 from $132.5 million in 2001. Comparing access lines at
December 31, 2002 to December 31, 2001, access lines increased 19,709. $4.9
million of the revenue increase and 27,537 of the access line increase was
related to our acquisition of Kerrville Communications Corporation, or KCC, in
2002.

Excluding the effects of the KCC acquisition, access lines declined 7,828, or
1.4%, most of which occurred near the end of the year. As a result, this decline
had a minimal effect on our 2002 revenues. Revenues excluding the acquisition of
KCC increased $9.7 million, or 7.3%. $4.2 million of this increase was related
to sales of enhanced services, primarily as a result of our bundled products
which we began marketing during 2002. Other increases to local service revenues
include $3.4 million in activation and reconnection charges and $2.1 million of
other miscellaneous increases.

Data Services Revenues. Data services revenues increased $2.8 million, or 16%,
to $20.7 million in 2002 from $17.9 million in 2001. $2.5 million of the
increase was related to our acquisition of KCC in 2002. The remaining increase
was due substantially to our efforts to increase the number of DSL subscribers
in our markets and sales of other data products.

Long Distance Services Revenues. Long distance services revenue increased $8.3
million, or 57%, to $23.0 million in 2002 from $14.7 million in 2001. $1.7
million of the revenue increase and approximately 8,400 of the long distance
subscriber increase was related to our acquisition of KCC in 2002.

                                        50
<PAGE>

Excluding the effects of the KCC acquisition, revenue from our flat rate plans
and direct-dialed long-distance products increased $8.7 million as a result of
the number of long distance subscribers increasing by 96% to 122,257 from 62,234
at the end of 2001. This increase was partially offset by a reduction in local
toll revenue of $2.1 million. This reduction in local toll results primarily
from customers switching to one of our new plans offering toll-free local
calling or switching to alternate lower cost service providers.

Access Services Revenues. Access services revenues increased $13.6 million, or
11%, to $133.0 million from $119.4 million for 2002 and 2001, respectively. $8.3
million of the revenue increase was attributable to the acquisition of KCC.

Excluding the effects of the KCC acquisition, access services revenues increased
$5.3 million in 2002 as compared to 2001. Higher special access revenues
contributed $7.9 million of the increase as inter-exchange carriers purchased
special circuits to transport their customers' voice and data traffic and from
fulfilling pent-up demand for circuits in our exchanges. Adding to the increases
in access services revenue in 2002 were higher subscriber line charges of $3.6
million. These increases were offset by lower switched access revenue. Switched
access revenue declined by $6.2 million, or 10%, compared to the previous year.

USF Revenues. USF revenues increased $5.3 million, or 5%, to $121.6 million in
2002 from $116.3 million in 2001. $4.1 million of the increase was related to
our acquisition of KCC in 2002. The remaining $1.2 million increase was due
primarily to higher net federal USF support, partially offset by lower Texas
state USF as a result of our declining access lines in Texas.

Other Services Revenues. Other services revenue increased $10.3 million, or 43%,
to $34.4 million in 2002 from $24.1 million in 2001. $4.0 million of the
increase was related to our acquisition of KCC in 2002. Equipment sales
increased $4.0 million from a mix of sales of large systems to business
customers, sales of individual phone sets, and other small items. Other
miscellaneous items contributed the remaining increase of $2.3 million.

  Operating Expenses

Cost of Service. Cost of service includes operational costs of owning and
operating our facilities, cost of leasing other facilities to interconnect our
network, access charges paid to third parties to transport and terminate toll
calls, and the cost of sales of customer premise equipment.

Selling, General and Administrative. Selling, general and administrative
expenses represent the cost of billing our customers, operating our call
centers, performing sales and marketing activities in support of our efforts to
grow revenues, and other general corporate support activities.

Depreciation and Amortization. Depreciation and amortization includes
depreciation of our communications network and equipment and amortization of
goodwill through December 31, 2001. The following table sets forth operating
expenses for the periods shown:

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
   <S>                                                       <C>         <C>         <C>
   Cost of service.........................................  $105,357    $113,891    $106,527
   Selling, general and administrative.....................   105,418     133,468     126,896
   Depreciation and amortization...........................   110,843      73,273      81,638
                                                             --------    --------    --------
                                                             $321,618    $320,632    $315,061
                                                             ========    ========    ========
</Table>

  Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Cost of Service. Cost of service decreased $7.4 million, or 6%, to $106.5
million from $113.9 million. Costs for external circuits and network capacity
declined $5.4 million as a result of efficiencies gained from upgrades we made
to our network. Costs to maintain and operate our network declined $6.6 million
as a result of the investment we made in our telecommunications infrastructure.
Additionally, cost of goods sold for customer premise equipment decreased $2.1
million as sales for this equipment slowed during 2003. These decreases were
partially offset by higher access charges of $7.4 million paid to third parties
related

                                        51
<PAGE>

to the increase in usage from our increasing long distance subscriber base.
Other miscellaneous items contributed the remaining decrease of $0.7 million.

Selling, General and Administrative. Selling, general and administrative
expenses decreased $6.6 million, or 5%, to $126.9 million in 2003 from $133.5
million in 2002. We recorded a $5 million charge during 2002 as a result of one
of our largest customers, MCI, declaring bankruptcy. In 2003, we sold the
receivables related to the charge and negotiated setoff of amounts owed by us to
MCI against amounts owed by MCI to us, recovering approximately $3.4 million.
The effect of these transactions decreased our expense in 2003 as compared to
2002 by $8.4 million. Offsetting this reduction in expense was an increase of
$1.8 million of various other miscellaneous expenses.

Depreciation and Amortization. Depreciation and amortization expense increased
by $8.4 million, or 11%, to $81.6 million during 2003 as compared to 2002.
Higher depreciation expense resulted from our spending on capital projects to
improve our network infrastructure.

  Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Cost of Service. Cost of service increased $8.5 million, or 8%, to $113.9
million in 2002 from $105.4 million in 2001. $5.8 million of the increase was
related to our acquisition of KCC in 2002. Of the remaining $2.7 million
increase, higher access charges of $4.3 million were paid to third parties
related to the increased usage from our increasing long distance subscriber
base, and higher cost of goods sold for $2.0 million primarily resulted from
large equipment system sales in late 2002. These increases were offset by a
reduction of $3.6 million, primarily from lower costs for external circuits and
network capacity as a result of efficiencies gained from upgrades we made to our
network.

Selling, General and Administrative. Selling, general and administrative
expenses increased $28.1 million, or 27%, to $133.5 million in 2002 from $105.4
million in 2001. $7.1 million of the increase was from our 2002 acquisition of
KCC. Of the remaining $21.0 million, $5.3 million was due principally to
headcount increases in our call centers. This was done to eventually shift
reliance away from third parties to generate sales and to increase the overall
effectiveness of our customer service function. Sales and marketing expense
increased $6.4 million as a result of efforts to generate sales of bundle
products and long distance. We wrote off approximately $5.0 million of
receivables when one of our largest customers, MCI, declared bankruptcy in 2002.
Of the remaining $4.3 million increase, $1.4 million was due to a restructuring
charge taken in the fourth quarter of 2002 for elimination of 81 positions and
$2.9 million was from various other miscellaneous increases.

Depreciation and Amortization. Depreciation and amortization expense decreased
$37.5 million to $73.3 million in 2002 from $110.8 million in 2001. $53.9
million of this decrease resulted from our adoption of SFAS 142, which required
that goodwill no longer be amortized. Excluding the effects of SFAS 142,
depreciation and amortization expense increased $16.4 million. $4.1 million of
the increase was related to our acquisition of KCC in 2002. The remaining $12.3
million increase in depreciation expense results from our spending on capital
projects to improve our network infrastructure.

INTEREST EXPENSE

The following table sets forth interest expense:

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
   <S>                                                       <C>         <C>         <C>
   Interest expense........................................  $133,156    $127,365    $119,185
</Table>

Interest expense decreased $8.2 million to $119.2 million in 2003 from $127.4
million in 2002, due to lower average principal outstanding on our senior debt.

Excluding the effects of the borrowings for the KCC acquisition, our interest
expense decreased $10.9 million to $122.3 million in 2002 from $133.2 million in
2001, as a result of our paying down debt. This decrease was partially offset by
an increase of deferred interest on our subordinated notes and lower capitalized
interest as spending for projects declined in 2002 compared to 2001.

                                        52
<PAGE>

LOSS ON INTEREST RATE HEDGING ARRANGEMENTS

The following table sets forth our loss on interest rate hedging arrangements:

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
   <S>                                                       <C>         <C>         <C>
   Loss on interest rate hedging arrangements..............  $(14,292)   $(12,348)    $(2,113)
</Table>

The adjustment to mark our hedging arrangements to market value resulted in
non-cash income of $8.5 million during 2003 and non-cash expense of $2.7 million
in 2002 and $9.9 million in 2001. The remaining loss relates to cash settlements
during the periods. These hedging arrangements will be terminated and replaced
in connection with our reorganization.

EARNINGS FROM UNCONSOLIDATED CELLULAR PARTNERSHIPS AND OTHER INCOME AND EXPENSE

The following table sets forth other income and expense for the periods shown:

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
   <S>                                                       <C>         <C>         <C>
   Earnings from unconsolidated cellular partnerships......      $  -      $2,757      $3,258
   Other income and (expense)..............................      $358      $ (268)      $ (62)
</Table>

Earnings from unconsolidated cellular partnerships are our share of the earnings
in the equity interest of the two cellular partnerships acquired in 2002 as part
of the KCC acquisition. In 2002 and 2003, we recorded $2.8 million and $3.3
million, respectively, for these equity earnings. Other income and (expense)
represents various other miscellaneous income and expense items, including
interest income on our cash balances held at financial institutions.

INCOME TAXES

The following table sets forth income taxes for the periods shown:

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
   <S>                                                       <C>         <C>         <C>
   Income taxes............................................        $0      $1,649      $2,478
</Table>

The income taxes represent those of Valor Telecommunications Southwest II, LLC,
which has elected to be taxed as a corporation for federal income tax purposes.
(See Note 2, "Summary of Significant Accounting Policies" and Note 10, "Income
Taxes" of our consolidated financial statements for an expanded discussion of
income taxes.)

MINORITY INTEREST

The following table sets forth the minority interest for the periods shown:

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
   <S>                                                       <C>         <C>         <C>
   Minority interest.......................................    $3,595       $(615)    $(3,568)
</Table>

Minority interest reflects the share of income and loss of minority shareholders
in Valor Telecommunications Southwest, LLC and Valor Telecommunications
Southwest II, LLC.

DISCONTINUED OPERATIONS

The following table sets forth discontinued operations for the periods shown:

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
   <S>                                                       <C>         <C>         <C>
   Discontinued operations.................................   $(8,443)    $(3,461)       $108
</Table>

                                        53
<PAGE>

We sold our competitive local exchange carrier, or CLEC, in Texas during April
2002 to NTS Communications for $0.2 million. In accordance with the provisions
of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," which was effective for us on January 1, 2002, the revenue, costs and
expenses and cash flows of our competitive local exchange business have been
excluded from the respective captions in our Consolidated Statements of
Operations and Consolidated Statements of Cash Flows, and have been reported
through their respective dates of separation as "Net income (loss) from
discontinued operations" and as "Net cash used in discontinued operations."

In connection with the sale, we recorded a liability of approximately $2.0
million related to certain employee termination benefits and other exit costs
such as non-cancelable leases. As of December 31, 2003 and 2002, approximately
$0.1 million and $0.4 million of the $2.0 million had not been paid. These
amounts have been classified as current liabilities in the Consolidated Balance
Sheets. Income from discontinued operations of $0.1 million in 2003 represents a
revision to the estimates we made in 2002 for recording certain employee
termination benefits and other exit costs.

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," or
SFAS 133, as amended by SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133,"
and by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain
Hedging Activities," which became effective for our company on January 1, 2001,
established accounting and reporting standards that required every derivative
instrument be recorded in the balance sheet as either an asset or liability
measured at fair value, with changes in fair value reflected in the statement of
operations.

We entered into interest rate hedge contracts to adjust the interest rate
profile of our debt obligations (see "Interest Rate Risk" below). In addition,
our credit arrangements include provisions that require interest rate protection
(hedge agreements) for a portion of our variable debt. We entered into interest
rate hedging agreements with certain financial institutions to reduce the
financial impact of changes in interest rates on our debt. Our interest rate
swap and collar agreements do not qualify for hedge accounting under SFAS 133
and therefore are carried at fair market value and included in "Deferred credits
and other liabilities" in the Consolidated Balance Sheets. The transitional
unrealized loss on the interest rate hedging arrangements at January 1, 2001 is
reflected as the "Cumulative effect of change in accounting principle" on the
Consolidated Statements of Operations. Changes in the fair market value and
settlements are recorded as "Loss on hedging arrangements" each quarter.

FINANCIAL CONDITION AND LIQUIDITY

Current Financial Condition. At December 31, 2003, we had net debt of $1,469.2
million, defined as total debt less cash and equivalents, and $49.9 million of
common owners' equity, compared to net debt of $1,544.2 million and $5.6 million
of common owners' deficit at December 31, 2002.

As discussed in more detail below, our management believes that our operating
cash flows, cash and cash equivalents, and borrowing capacity under our new
credit facility will be sufficient to fund our capital and liquidity needs for
the foreseeable future.

  Cash Flows

<Table>
<Caption>
                                                             FOR THE YEARS ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             ---------   ---------   --------
                                                                  (Dollars in thousands)
   <S>                                                       <C>         <C>         <C>
   Net cash provided by operating activities...............  $ 100,301   $ 150,383   $166,065
   Net cash used in investing activities...................   (106,614)   (216,773)   (66,299)
   Net cash provided by (used in) financing activities.....      8,117      71,015    (99,465)
   Net cash used in discontinued operations................     (8,373)     (3,662)      (176)
                                                             ---------   ---------   --------
   Net (decrease) increase in cash and cash equivalents....  $  (6,569)  $     963   $    125
                                                             =========   =========   ========
</Table>

                                        54
<PAGE>

Net cash provided by continuing operations of $166.1 million in 2003, was
generated primarily by $58.1 million of income from continuing operations,
adjusted to exclude non-cash items of $102.7 million. The most significant
non-cash items were depreciation and amortization expense of $81.6 million and
non-cash interest expense related items of $17.4 million, which includes
amortization of debt issuance costs, unrealized gain on hedging arrangements,
and non-cash interest expense on our senior subordinated debt. We began making
cash payments related to our 10% senior subordinated notes in 2003, which is
discussed in "Outstanding Senior Subordinated Notes" below.

Net cash provided by continuing operations of $150.4 million in 2002, was
generated primarily by $19.8 million of income from continuing operations,
adjusted to exclude non-cash items of $124.8 million. The most significant
non-cash items were depreciation and amortization expense of $73.3 million,
non-cash interest expense related items of $42.2 million, and $11.4 million of
bad debt expense. Cash flows from continuing operations were also favorably
impacted by working capital improvements of $3.3 million. The growth in cash
flows from continuing operations from 2001 to 2002 relates primarily to the
acquisition of KCC in 2002, as well as the unfavorable working capital
requirements in 2001.

Net cash provided by continuing operations of $100.3 million in 2001, resulted
from a $44.9 million of net loss from continuing operations, adjusted to exclude
non-cash items of $168.0 million and working capital requirements of $29.9
million. The most significant non-cash items were depreciation and amortization
expense of $110.8 million, non-cash interest expense related items of $49.4
million, and $11.4 million of bad debt expense.

Cash used in investing activities was $66.3 million in 2003, compared to $216.8
million in 2002, and $106.6 million in 2001. The investing activities during
2002 include the cash paid of $128.1 million to acquire all the outstanding
common stock, preferred stock and common stock equivalents of KCC. Our investing
activities consisted primarily of capital expenditures for property, plant and
equipment. We fund capital expenditures to deploy new network services,
modernize our property, plant and equipment, position our network infrastructure
for future growth, and to meet regulatory obligations.

Capital expenditures for the years ended 2001, 2002 and 2003 were $107.9
million, $89.5 million and $69.9 million, respectively. The decreases in capital
spending from 2002 to 2003 and from 2001 to 2002 reflect the completion of
certain switch upgrades in 2002, as well as continued improvement in the overall
plant condition. For the period from January 1, 2004 to December 31, 2004, we
expect capital expenditures to be approximately $68.8 million, and we anticipate
that future capital expenditures will be at, or slightly below, current levels.
Cash used for capital expenditures was partially offset by distributions of $3.5
million in 2003, and $1.9 million in 2002, received from our equity investment
in two wireless partnerships. Future cash distributions from these equity
investments are uncertain.

Cash used by financing activities was $99.5 million in 2003, compared to cash
provided by financing activities of $71.0 million in 2002, and $8.1 million in
2001. These changes are principally due to the net incremental repayments of
long-term debt of $100.0 million in 2003, and net incremental borrowings of
$39.2 million in 2002, and net incremental repayments of $2.2 million in 2001,
respectively. Cash provided by financing activities in 2002 includes the
proceeds from partner capital contribution of $46.1 million, which together with
the additional borrowings of $82.0 million, was used primarily to acquire all
the outstanding common stock, preferred stock and common stock equivalents of
KCC.

Historically, we have managed our cash on hand through the use of revolving
credit facilities to maximize the amount of debt repayment. Of the total net
debt repayments of $100.0 million in 2003, $58.9 million were required principal
payments and $41.1 million were optional principal payments.

                                        55
<PAGE>

OUTSTANDING DEBT AND EXISTING FINANCING ARRANGEMENTS

At December 31, 2003 we had various financing arrangements outstanding with a
total borrowing capacity of $1,621.6 million. Of this total borrowing capacity,
$150.9 million was available to fund future contractual obligations and $1,470.7
million was outstanding as debt (refer to Note 8 to the consolidated financial
statements for more details on outstanding debt):

<Table>
<Caption>
                                                        TOTAL BORROWING     UNUSED      OUTSTANDING
                                                           CAPACITY       CAPACITY(1)      DEBT
                                                        ---------------   -----------   -----------
                                                                  (Dollars in thousands)
   <S>                                                  <C>               <C>           <C>
   Senior credit facilities
     Revolver.........................................    $  264,900       $150,900     $  114,000
     Bank term loans..................................       444,822              -        444,822
     Rural Telephone Finance Cooperative, or RTFC,
        term loans....................................       591,561              -        591,561
   10.0% Senior Subordinated Notes....................       314,257              -        314,257
   Capitalized leases and other.......................         6,020              -          6,020
                                                          ----------       --------     ----------
                                                          $1,621,560       $150,900     $1,470,660
                                                          ==========       ========     ==========
</Table>

---------------

(1) Unused capacity is reduced by an outstanding letter of credit in the amount
    of $0.1 million.

The agreements for the senior credit facilities limit, among other things,
additional borrowings, transactions with affiliates, capital expenditures and
the payment of dividends and require us to maintain certain financial ratios
including debt to cash flow ratios, interest coverage and fixed charge coverage.
We expect to replace these facilities with a new senior credit facility that
contains substantially similar covenants.

OUTSTANDING SENIOR SUBORDINATED NOTES

As of December 31, 2003, Valor Telecommunications Southwest, LLC had $314.3
million aggregate principal amount of 10% Senior Subordinated Notes due 2010
outstanding. Until our pro forma fixed charge coverage equals or exceeds one to
one, our 10% Senior Subordinated Notes do not pay cash interest, but accrue
interest at 12.0% and is converted into additional note principal. During the
years ended December 31, 2002 and 2003, we converted $32.6 million and $17.8
million, respectively, of interest into additional note principal. During 2003,
we began making cash interest payments on our 10% Senior Subordinated Notes.

All our outstanding senior subordinated notes are held by our equity sponsors,
and we will repay all our outstanding senior subordinated notes as part of our
reorganization. We will repay the equity sponsors for our outstanding senior
subordinated notes in cash with the proceeds of this offering and borrowings
under our new credit facility.

NEW CREDIT FACILITY

We intend to enter into a $     new senior secured credit facility with a
syndicate of financial institutions. We expect that the new credit facility will
be comprised of a senior secured revolving credit facility of up to $
million, which we refer to as the "new revolver," and a senior secured term loan
facility in an aggregate principal amount of $     million, which we refer to as
the "new term loan." We expect that the new revolver and the new term loan will
each have an approximately five-year maturity with no amortization of principal
prior to maturity. We expect that the new credit facility will have several
provisions similar to credit facilities of this nature, including but not
limited to: interest rate and fees, mandatory prepayments, voluntary
prepayments, affirmative and negative covenants, restrictions on collateral and
events of default. See "Description of Certain Indebtedness--New Credit
Facility".

                                        56
<PAGE>

CONTRACTUAL AND OTHER OBLIGATIONS

In addition to the above financing arrangements, we have commitments under
certain contractual arrangements to make future payments for goods and services.
These commitments secure the future rights to various assets and services to be
used in the normal course of operations. For example, we are contractually
committed to make certain minimum lease payments for the use of property under
operating lease agreements. In accordance with current accounting rules, the
future rights and obligations pertaining to such firm commitments are not
reflected as assets or liabilities on the consolidated balance sheet. The
following table summarizes our contractual and other obligations at December 31,
2003, and the effect such obligations are expected to have on liquidity and cash
flow in future periods:

                           PAYMENTS DUE BY PERIOD(1)

<Table>
<Caption>
                                          2004     2005-2006   2007-2008   THEREAFTER     TOTAL
                                        --------   ---------   ---------   ----------   ----------
                                                          (Dollars in thousands)
   <S>                                  <C>        <C>         <C>         <C>          <C>
   Contractual obligations(2).........  $ 50,786   $ 72,204    $    713     $      -    $  123,703
   Long-term debt obligations(3)......  $154,074   $306,511    $686,909     $867,307    $2,014,801
   Capital lease obligations(4).......  $  1,777   $  2,551    $    397     $      -    $    4,725
   Operating lease obligations(5).....  $  2,257   $  4,400    $  3,644     $  2,873    $   13,174
                                        --------   --------    --------     --------    ----------
   Total contractual cash
     obligations......................  $208,894   $385,666    $691,663     $870,180    $2,156,403
                                        --------   --------    --------     --------    ----------
</Table>

---------------------------
(1)  The table above does not include an estimate for income taxes, obligations
     to preferred equity holders, cash contributions to our pension plan and
     cash contributions to our post-retirement medical plan which we are
     required to make but not required to include above.
(2)  Our contractual obligations represent our required capital investment in
     New Mexico, officers' salaries under employment agreements, capital
     expenditure commitments and payments to third party service providers.
(3)  The long-term debt obligations represent our cash debt service obligations,
     including both principal and interest.
(4)  The capital lease obligations represent our future rental payments for
     vehicles leased under five year terms.
(5)  Operating lease obligations represent the future minimum rental payments
     required under the operating leases that have initial or remaining
     non-cancelable lease terms in excess of one year as of December 31, 2003.

OFF-BALANCE SHEET ARRANGEMENTS

Except as noted in the table above under Contractual obligations and Operating
lease obligations, we have no material off-balance sheet obligations.

RISK MANAGEMENT

Interest Rate Risk. We are exposed to market risk from changes in interest rates
on our long-term debt obligations. To manage our interest rate risk exposure and
fulfill a requirement of our credit facility, we entered into two agreements
with investment grade financial institutions in 2000, an interest rate swap and
an interest rate collar. Each of these agreements covered a notional amount of
$100 million. As a further hedge against interest rate exposure, we elected a
fixed rate option for some of our senior debt during the year ended December 31,
2003.

The fair value of our fixed-rate long-term debt is sensitive to changes in
interest rates. Interest rate changes would result in gains or losses in the
market value of the debt due to differences between the market interest rates
and rates at the incurrence of the obligation.

Inflation. Historically, we have mitigated the effects of increased costs by
recovering certain costs applicable to our regulated telephone operations
through the ratemaking process over time. Possible future regulatory changes may
alter our ability to recover increased costs in our regulated operations. As
inflation raises the operating expenses in our non-regulated lines of business,
we will attempt to recover rising costs by raising prices for our services.

Derivatives. Except for the interest rate swap and interest rate collar
agreements described above, we generally do not use derivative financial
instruments.

                                        57
<PAGE>

Following our reorganization and the consummation of this offering, we
anticipate that we will employ similar methods to reduce our exposure to
interest rate fluctuations and inflation.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities". This statement addresses financial accounting
and reporting for costs associated with exit or disposal activities and
nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." The provisions of this
Statement are effective for exit or disposal activities that are initiated after
December 31, 2002. We adopted this statement on January 1, 2003. The adoption of
this standard did not have a material impact on our financial position or the
results of operations.

Financial Accounting Standards Board Interpretation (FIN) No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others--an Interpretation of FASB Statements No.
5, 57, and 107 and Rescission of FIN No. 34" was issued in November 2002 and
became effective for disclosures made in December 31, 2002 financial statements.
The interpretation requires expanded disclosures of guarantees. In addition, the
interpretation requires recording the fair value of guarantees upon issuance or
modification after January 1, 2003. While we have various guarantees included in
contracts in the normal course of business, these guarantees do not represent
significant commitments or contingent liabilities related to the indebtedness of
others.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities, an Interpretation of Accounting Research Bulletin No. 51 (ARB 51)",
which clarifies the consolidation accounting guidance in ARB 51, "Consolidated
Financial Statements," as it applies to certain entities in which equity
investors who do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entities to finance
their activities without additional subordinated financial support from other
parties. Such entities are known as variable interest entities (VIEs). FIN No.
46 requires that the primary beneficiary of a VIE consolidates the VIE. FIN No.
46 also requires new disclosures for significant relationships with VIEs,
whether or not consolidation accounting is used or anticipated. In December
2003, the FASB revised and re-released FIN No. 46 as "FIN No. 46(R)." The
provisions of FIN No. 46(R) are effective for periods ending after March 15,
2004. However, we have elected to adopt FIN No. 46(R) as of December 31, 2003.
The adoption of FIN No. 46(R) did not have a material impact on our financial
position or the results of operations.

In May 2003, the FASB issued SFAS No. 150 "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." This Statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability because that financial instrument embodies an obligation of the
issuer. This Statement is effective for periods beginning after June 15, 2003.
We have included the redeemable preferred interests as part of total liabilities
as of December 31, 2002 and 2003.

In January 2004, FASB Staff Position (FSP) No. 106-1, "Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003" was issued. FSP No. 106-1 permits the deferral of
recognizing the effects of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the Act) in the accounting for post-retirement health
care plan under SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions," and in providing disclosures related to the plan required
by SFAS No. 132 (revised 2003), "Employers' Disclosures about Pensions and Other
Postretirement Benefits." The deferral of the accounting for the Act continues
to apply until authoritative guidance is issued on the accounting for the
federal subsidy provided by the Act or until certain other events requiring plan
remeasurement. We have elected the deferral provided by this FSP and are
evaluating the magnitude of the potential favorable impact of this FSP on our
results of operations and financial position. See Note 11 to our financial
statements included elsewhere in this prospectus for further discussion of
postretirement benefits.

                                        58
<PAGE>

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from changes in interest rates on our long-term
debt obligations. We estimate our market risk using sensitivity analysis. Market
risk is defined as the potential change in the fair value of a fixed-rate debt
obligation due to a hypothetical adverse change in interest rates and the
potential change in interest expense on variable rate long-term debt obligations
due to changes in market interest rates. Fair value on long-term debt
obligations is determined based on a discounted cash flow analysis, using the
rates and maturities of these obligations compared to terms and rates currently
available in the long-term markets. The potential change in interest expense is
determined by calculating the effect of the hypothetical rate increase on our
variable rate debt for the year and does not assume changes in our financial
structure.

The results of the sensitivity analysis used to estimate market risk are
presented below, although the actual results may differ from these estimates.

At December 31, 2003, the fair value of our fixed rate long-term debt was
estimated to be $700.1 million based on the overall weighted average rate of our
fixed rate long-term debt of 7.7% and an overall weighted maturity of 5.8 years,
compared to terms and rates currently available in long-term financing markets.
Market risk is estimated as the potential loss in fair value of our long-term
debt resulting from a hypothetical increase of 10% in interest rates. Such an
increase in interest rates would result in approximately $18.3 million decrease
in the fair value of our long-term debt. At December 31, 2003, we had
approximately $564.8 million of variable rate debt. If market interest rates
increase 100 basis points in 2004 over the rates in effect at December 31, 2003,
interest expense would increase $4.9 million.

To manage our interest rate risk exposure and fulfill a requirement of our
credit facility, we entered into two agreements with investment grade financial
institutions in 2000, an interest rate swap and an interest rate collar. Each of
these agreements covers a notional amount of $100 million and effectively
converts this portion of our variable rate debt to fixed rate debt. Our interest
rate swap and collar agreements do not qualify for hedge accounting under SFAS
No. 133; therefore, they are carried at fair market value and are included in
"Deferred credits and other liabilities" on the Consolidated Balance Sheets. We
do not hold or issue derivative financial instruments for trading or speculative
purposes.

With respect to these hedges, market risk is estimated as the potential loss in
the fair value of the hedge resulting from a hypothetical 10% change in the
forward rates used to determine the fair value. A hypothetical 10% decrease in
the forward rates would result in a $0.1 million decrease in the fair value of
our swap agreement. A hypothetical 10% decrease in the forward rates would
result in a $0.1 million decrease in the fair value of our collar agreement.

                                        59
<PAGE>

                                    BUSINESS

OVERVIEW

We are one of the largest providers of telecommunications services in rural
communities in the southwestern United States and the seventh largest
independent local telephone company in the country. We operate approximately
550,000 telephone access lines in primarily rural areas of Texas, Oklahoma, New
Mexico and Arkansas. The geographic concentration of our assets has enabled us
to create operational efficiencies. We believe that in many of our markets we
are the only service provider that offers customers an integrated package of
local and long distance voice, high-speed data and Internet access, and enhanced
services such as voicemail, call waiting, caller identification and call
forwarding. For the year ended December 31, 2003, we generated revenues of
$497.3 million.

We formed our company in 2000 in connection with the acquisition of select
telephone assets from GTE Southwest Corporation, which is now part of Verizon.
In January 2002, we acquired the local telephone company serving Kerrville,
Texas from BA Capital Company and individual shareholders. The rural telephone
businesses that we own have been operating in the markets we serve for over 75
years.

Since our inception, we have invested substantial resources to improve and
expand our network infrastructure to provide high quality telecommunications
services and superior customer care. This capital investment, in combination
with a focused selling effort, has contributed to an increase in our revenue of
$72.4 million, or 17% from 2001 through 2003. We believe that we are well
positioned for future revenue and cash flow growth through both expanded service
offerings and acquisitions.

We operate our business through telephone company subsidiaries that qualify as
rural local exchange carriers, or RLECs, under the Telecommunications Act of
1996. Like many RLECs, our business is characterized by stable operating
results, revenue and cash flow and a relatively favorable regulatory
environment. In addition, we are entitled to exemptions from certain
interconnection regulatory requirements. We have historically experienced less
competition than regional Bell operating companies because of the low customer
density and high residential component of our customer base. In Texas, where our
largest customer base is located, we serve an average of 9.23 access lines per
square mile, which is approximately half the national average of access lines
per square mile served by other RLECs. Since a majority of our customer base is
located in areas that are less densely populated than areas served by other
RLECs, we believe that we are more insulated from competitive pressures than
many other local telecommunications providers.

Our company culture values and promotes diversity among our employees and in our
supplier base. We have made a strong commitment to ensuring inclusion of
minority, women-owned, veteran-owned and disabled-owned enterprises in our
contracts as an intelligent business strategy in view of the markets we serve.
We believe that this commitment to diversity has created value for our company
by increasing customer loyalty, enhancing recruitment and promotion of highly
qualified employees, and helping to grow our revenue base.

OUR STRENGTHS

We believe that our key strengths will enable us to continue to experience
stable and growing streams of revenue and cash flows. Our principal strengths
include:

Ability to Generate Consistent Cash Flows. We have increased our operating cash
flow in each year since our inception. We have accomplished this by growing
revenues through providing additional services to our customers, reducing
expenses by improving operating efficiencies and negotiating favorable terms
with our suppliers and contractors and optimizing our capital expenditures.
Historically, we have been able to increase our cash flow by using excess cash
to repay outstanding indebtedness and reduce our interest expense. Furthermore,
RLECs in general have been able to attain predictable and stable cash flow from

                                        60
<PAGE>

operations due to a steady demand for telecommunications services in rural areas
and public policies that support universal, affordable local telephone service.

Leading Market Position. In the markets we serve, we are the leading provider of
telecommunications services. We generally face less competition from wireless
providers, cable television operators and other local exchange carriers than
other industry participants because competitive entry into our markets is less
attractive due to the generally lower population density and primarily
residential customer base. In addition, access line loss has generally been less
for RLECs than other industry participants due to several reasons, including
fewer competitive alternatives and incomplete wireless coverage. With a lower
rate of line loss, we are not required to expend as much to replace customers as
some other industry participants. Furthermore, our customer base is located in
areas that are generally less densely populated than areas served by other
RLECs, which helps insulate us from competitive pressures. These factors allow
us to focus on offering additional services and provide opportunities to
increase revenue per customer. We reinforce our market position by providing
reliable customer service, offering a full range of voice and data services and
maintaining a strong local presence in the communities we serve.

Scalable, State-of-the-Art Network Infrastructure. We invested more than $300
million since our inception in 2000 to improve and expand our network
infrastructure. These initiatives have enabled us to provide additional services
to our customers and improve the overall quality of our network, as demonstrated
by reductions in trouble reports and service outages and our surpassing all
applicable statewide regulatory service quality measures in 2003. In all our
markets we have implemented a technologically advanced switching network that
has the capacity to accommodate future technologies. While our competitors do
offer some voice and data services in some of our markets, many providers of
potentially competing platforms in our markets operate on older analog equipment
and are less able to provide a reliable, high grade of voice and data services
to our customers. The rural nature of our markets creates substantial costs to
transport voice and Internet connectivity to central network connection points.
By implementing our state-of-the-art networks, we have been able to minimize
these costs and service our markets in a cost effective manner. We believe that
our prior capital investment in our network, combined with our focus on the
quality of our service, leaves us well positioned for future cash flow growth.

Wide Array of Integrated Services. We believe that we are the only
telecommunications service provider in many of the markets we serve that has the
ability to provide an integrated package of local, long distance, high-speed
data and Internet access as well as a variety of enhanced services such as
voicemail and caller identification. By offering a bundled package of services
we have improved our long distance and enhanced services penetration, resulting
in increased revenue and higher margins.

Experienced and proven management team. We have a highly experienced senior
management team that has an average of over 20 years of experience in the local
telecommunications industry. Our senior executives have a solid track record of
managing the expansion of public telecommunications companies through both
internal growth and integration of acquisitions. Our operating results
demonstrate that our management team can successfully generate revenue and
decrease costs while integrating and consolidating an expanding business in an
evolving, regulated and increasingly competitive industry. Our management team
has instilled a corporate culture that focuses on revenue opportunities,
reducing costs and providing quality service. We reinforce this culture and
these objectives through specifically targeted incentive bonus and employee
recognition programs that motivate our employees to seek opportunities to expand
our customer base, augment subscriptions for services and reduce costs. In
addition, we measure performance at all levels for the purposes of these
incentive programs by employing a wide range of performance tracking metrics.
Upon completion of this offering, our management team will hold a significant
investment in IDSs.

BUSINESS STRATEGY

Our business strategy is to be the leading provider of telecommunications
services to the rural communities that we serve. We strive to grow our revenues,
control our expenses and deploy our capital in a manner

                                        61
<PAGE>

that maximizes our earnings and free cash flow. In order to achieve this goal,
we have formulated the following strategy:

Increase Penetration of Higher Margin Services. We intend to capitalize on our
ability to offer higher margin enhanced calling and data services as a bundled
package. We have been aggressively marketing enhanced services to our customers,
and we have witnessed an increasing demand for data services. The wide array of
enhanced services such as voicemail and caller identification, generally produce
higher margins than basic telephone service. We also offer dial-up Internet
access and DSL broadband services, as well as satellite television services
through a resale arrangement with a satellite operator. We believe there is
significant opportunity to continue to increase our revenue per customer by
cross-selling data services and enhanced services as a bundled package.

Provide Superior Service and Customer Care. We seek to build long-term customer
relationships by offering a wide range of telecommunications services and
consistent customer support. We believe that our service-driven customer
relationship strategy leads to high levels of customer satisfaction and will
lead to an increase in demand for enhanced and ancillary services. We currently
provide personalized customer care through three call centers that support our
business and residential customers. These call centers are located in the rural
areas we serve and are staffed with customer representatives with knowledge of
our local markets. We recently installed an interactive voice response system
that has automated many of our customer service functions and expanded our
customers' ability to interact with our company 24 hours a day, 365 days a year.
Customers can now receive answers to many frequently asked questions without
having to speak with a customer care representative. In addition, in 2003 we
surpassed all applicable statewide service quality standards imposed by the
regulators in all of the states in which we operate. In each year since 2001, we
have experienced a substantial year-over-year improvement in our service
quality.

Improve Operating Efficiency and Profitability. We strive for greater
efficiencies and improved profit margins by consolidating corporate functions,
negotiating favorable terms with our suppliers and contractors and focusing
capital expenditures on projects that exceed our internal rate of return
thresholds. Our investment in customer service and focus on implementing a high
level of customer support has substantially reduced the number of customer
service calls that we receive since 2001, with a resulting reduction in related
cash operating costs. These initiatives have led to increases in our
profitability. In addition, our capital investments have provided us with a
state-of-the-art scalable network that has resulted in a significantly decreased
number of service outages and significantly reduced the number of overtime calls
that our service technicians had to make since 2001.

Pursue Selective Strategic Acquisitions. We believe that a key to the long-term
growth of our business will be the successful acquisition of telecommunications
assets to increase the size of our business and capitalize on the
state-of-the-art network that we have built. We believe that our network
infrastructure and labor force can support significant growth through strategic
acquisitions. Selective acquisitions can drive growth by increasing revenue and
improving profit margins through cost synergies and by expanding service
offerings. Our management team has a solid track record of evaluating,
purchasing and successfully integrating RLEC assets. We seek to acquire
companies that could generate significant internal rates of return on investment
and will be accretive to cash flows, as well as increase penetration, broaden
our target areas and add to our offering of services.

INDUSTRY OVERVIEW

The U.S. local telephone industry is composed of a few large, well-known
companies, including the regional Bell operating companies, or RBOCs, and
numerous small and mid-sized independent telephone companies. RLECs are
independent telephone companies that typically operate in sparsely populated
rural areas where competition has been limited due to the generally unfavorable
economics of constructing and operating such competitive systems. To ensure that
affordable universal telephone service is available in these remote areas, RLECs
typically benefit from various support mechanisms provided by both state and
federal government regulation.

                                        62
<PAGE>

Federal and state regulations promoting the widespread availability of telephone
service have allowed rural telephone companies to invest in their networks while
keeping prices affordable for customers. This policy commitment was reaffirmed
and expanded by the universal service provisions of the federal
Telecommunications Act of 1996. In light of the high cost per access line of
installing lines and switches and providing telephone service in sparsely
populated areas, a system of cost recovery mechanisms has been established to,
among other things, keep customer telephone charges at a reasonable level and
yet allow owners of such telephone companies to earn a fair return on their
investment. These cost recovery mechanisms, which are less available to larger
telephone companies, have resulted in robust telecommunications networks in many
rural areas.

The passage of the Telecommunications Act of 1996 substantially changed the
regulatory structure applicable to the telecommunications industry, with a
stated goal of stimulating competition for telecommunications services,
including local telephone service, long distance service and enhanced services.
In recent years, the telecommunications industry has undergone significant
structural change. Many of the largest service providers have achieved growth
through acquisitions and mergers while an increasing number of competitive
providers have restructured or entered bankruptcy to obtain protection from
their creditors. Since 2001, capital in the form of public financing was
generally difficult to obtain for new entrants and competitive providers.
Capital constraints have caused a number of competitive providers to change
their business plans, resulting in consolidation. Despite these changes, the
demand for all types of telecommunications services, particularly data services,
has not diminished, and companies increasingly bundle services and provide
integrated offerings for end-user customers.

Families or small groups of individuals own many RLECs. We believe that the
owners of many of these RLECs may be interested in selling such companies as the
growing technical, administrative and regulatory complexities of the local
telephone business challenge the capabilities of the existing management. In
addition, a number of large telephone companies are selling many of their rural
telephone assets to focus their attention on their major metropolitan operations
that generate the bulk of their revenue. As a result, we believe that we may
have opportunities to acquire additional rural telephone assets.

OUR SERVICES

We offer a wide range of high quality telecommunications and related services to
residential, business and government customers and transport services to end
users and other data and voice carriers. We locally manage our service offerings
to serve the needs of each community effectively and efficiently. We are
committed to a high standard of service and have dedicated sales and customer
service representatives with local market knowledge positioned in each of the
states in which we operate. Based on our understanding of our local customers'
needs, we offer bundled services that are designed to simplify the customer's
selection and use of our services. Offering bundled services allows us to
capitalize on our network infrastructure by offering a full suite of integrated
communications services in voice, high-speed data, fiber transport, Internet
access and long distance services, as well as enhanced services, such as
voicemail and caller identification, all on one bill.

We also generate revenue through the provision of network access to
interexchange carriers for origination and termination of interstate and
intrastate long distance phone calls, the receipt of government-sponsored
universal service fund support, and from the sale of other services, such as
customer premise equipment and directory advertising.

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The following chart summarizes each component of our revenue sources for the
year ended December 31, 2003:

<Table>
<Caption>
                             PERCENT OF
   REVENUE SOURCE             REVENUE                          DESCRIPTION
   --------------            ----------                        -----------
   <S>                       <C>          <C>
   Local Services..........    31.4%      We derive revenue from providing local exchange
                                          telephone services to both residential and business
                                          customers, including monthly recurring charges from
                                          basic services such as local dial tone and enhanced
                                          services such as caller identification, voicemail and
                                          call waiting.
   Data Services...........     4.2%      We receive revenues from monthly recurring charges for
                                          services, including DSL, special access, private
                                          lines, Internet and other data related services.
   Long Distance                6.2%      We receive revenues for intrastate and interstate long
     Services..............               distance services provided to our retail users by
                                          reselling the services of wholesale long distance
                                          carriers.
   Access Services.........    26.6%      We receive network access charges from inter-exchange
                                          carriers in connection with the completion of
                                          interstate and intrastate long-distance calls and for
                                          special access services, including dedicated circuits
                                          purchased by long distance telephone companies.
   Universal Service                      We receive Universal Service Fund, or USF, payments
     Fund:.................               from
     Texas.................    20.7%      the State of Texas and from the federal government to
                                          support
     Federal...............     3.4%      the high cost of providing local telephone service in
                                          rural locations. The funds are allocated and
                                          distributed to us from pools of funds generated by
                                          surcharges on telecommunications services.
   Other Services..........     7.5%      We generate revenues from selling telecommunications
                                          equipment, selling advertisements in directories and
                                          for billing and collecting long distance fees for
                                          other carriers, and other miscellaneous services.
</Table>

You should refer to the section "Management's Discussion and Analysis of
Financial Condition and Results of Operations" for more information.

Local Calling Services. Local calling services include basic local lines,
private lines and switched data services as well as enhanced services such as
voicemail and caller identification. We provide local calling services to
residential, business and government customers, generally for a fixed monthly
charge. In the markets we serve, the amount that we can charge a customer for
local service is determined by the appropriate state regulatory authorities
pursuant to the laws and regulations of the particular state. We also generate
revenue from non-recurring services, such as service activation and reconnection
of service.

Data Services. We provide Internet access services to approximately 13,600
dial-up Internet subscribers. Our dial-up Internet service provides customers,
primarily residential customers, with a local dial-up number they can use to
establish a connection to the Internet over their existing phone lines for a
flat, monthly fee. We also provide high speed Internet access with our DSL
products to approximately 8,779 customers for a monthly fee. Currently, our
network is capable of providing DSL service to 35% of our customers at
downstream speeds of up to 1.5 MB per second. Our Internet access services also
enable customers to establish an email account and to send and receive email.

Long Distance Services. We generate revenue from the provision of long distance
calling services either based on usage or pursuant to flat-rate calling plans.
These services include traditional switched and dedicated long distance, toll
free calling, international, calling card and operator services.

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<PAGE>

Access Services. Long distance carriers pay us network access charges when our
local customers make or receive long distance telephone calls. Since toll calls
are generally billed to the customer originating the call, a mechanism is
required to compensate each RLEC, RBOC or long distance carrier providing
services relating to the call. Services include switched access, charges that
depend on call volume, and special access, involving dedicated circuits for
which long distance telephone companies pay a flat fee. We bill access charges
to long distance companies and other customers for the use of our facilities to
access the customer, as described below. In addition, end users are charged a
monthly flat-rate fee assessed on access lines.

     Intrastate Access. We generate intrastate access revenue when an intrastate
long distance call involving a long distance carrier is originated by or
terminated with a customer in our exchange to or from a customer in another
exchange in the same state. The long distance carrier pays us an intrastate
access payment for either terminating or originating the call. We record the
details of the call through our carrier access billing system and receive the
access payment from the long distance carrier. When one of our customers
originates the call, we typically provide billing and collection for the long
distance carrier through a billing and collection agreement. The access charge
for our intrastate service is regulated and approved by the state regulatory
authority.

     Interstate Access. We generate interstate access revenue when an interstate
long distance call is originated by or terminated with a customer in our
exchange to or from a customer in another state. We bill interstate access
charges in the same manner as we bill intrastate access charges, however, the
interstate access charge is regulated and approved by the FCC instead of the
state regulatory authority.

  Universal Service Fund

     Texas USF. The Texas Universal Service Fund commenced payments in January
2000, pursuant to rules enacted by the Public Utility Commission of Texas, or
TPUC, in 1998. It was designed to offer competitively neutral assistance so that
telecommunications companies could provide basic local telecommunications
services at affordable rates to customers in high cost-rural areas and to
qualifying low-income and disabled customers. By order of the TPUC, the Texas
USF pays eligible carriers servicing areas identified as high cost, on a
per-line basis. Customers of telecommunications services in Texas fund the Texas
USF through monthly surcharges on their bills.

We receive disbursements from the Texas USF in the amounts specified in the
order establishing the fund payments to our predecessor, GTE Southwest, Inc. In
2003, we received $103.1 million from the Texas USF, representing 20.7% of total
revenues for that year. The receipt of funds is dependent on the number of
eligible access lines served by the company, and therefore is impacted by
economic and competitive factors. If a line is removed from service, state
universal service funding for that line is discontinued.

The TPUC's rules provide for a review of the Texas USF every three years. The
TPUC recently completed this review, the first since the fund was established.
The TPUC received comments from interested parties regarding changes to the
fund, and upon review, the TPUC staff has recommended no changes to the fund at
this time. The TPUC will undertake its next review in late 2005. The regulation
under which the Texas USF is promulgated will become subject to review and
renewal in late 2005. We expect that the Texas Legislature will renew the
regulation or replace it with a regulation that does not materially change the
benefits we receive under the current regulatory structure.

     Federal USF Revenue. The federal USF supplements the amount of local
service revenue that we receive to ensure that basic local service rates for
customers in high cost rural areas are comparable to rates charged in lower cost
urban and suburban areas. The federal USF, which is funded by monthly fees paid
by long distance carriers and LECs, distributes funds to us on a monthly basis
based upon our embedded costs for providing local service. Federal USF payments
represented approximately 3.4% of our revenues for the year ended December 31,
2003. This mostly reflects the changes in the universal service support as a
result of the CALLS plan that moved the implicit support from access charges and
made it explicit. See "Regulation--Promotion of Universal Service."
                                        65
<PAGE>

Other Services. Our other services consist primarily of the sale of customer
premises equipment, directory advertising, unbundled network elements, billing
and collection fees, and other ancillary services.

SALES AND MARKETING

Our marketing approach emphasizes customer-oriented sales, marketing and service
with a local presence. We market our products primarily through our customer
service representatives, direct sales representatives, local retail stores and
outsourced telemarketing supported by direct mail, bill inserts, newspaper
advertising, website promotions, public relations activities and sponsorship of
community events. We have established relationships with local government
officials and business leaders, and we offer to deploy DSL service if a
community can guarantee that a minimum number of customers will use our services
for one year. In our largest operating areas, we maintain retail business
offices that allow our customers the opportunity to pay their bills directly or
meet personally with our customer service and sales representatives to purchase
additional services or, in some locations, customer premise equipment. Our
customer service and sales representatives are well trained and earn incentive
compensation to promote sales of services that meet the unique needs of our
customers.

We, or our predecessors, have been serving our established markets for over 75
years. Our sales force makes direct calls to prospective and existing business
customers and conducts analyses of business customers' usage histories and
service needs, and demonstrates how our service package will improve a
customer's communications capabilities and costs. Our network engineers work
closely with our various sales groups to design service products and
applications, such as high-speed data and wholesale transport services, for our
customers. Our technicians survey customer premises to assess building entry,
power and space requirements and coordinate delivery, installation and testing
of equipment.

To foster long-term relationships with our subscribers, we have undertaken many
initiatives to provide superior customer service to our subscribers. We operate
three call centers located in the rural areas that we serve with customer
service representatives who are knowledgeable about the local market. In
addition, we have automated many of our customer service functions so our
customers can receive answers to many frequently asked questions regarding their
telecommunications services 24 hours a day without speaking to a customer
service representative.

NETWORK ARCHITECTURE AND TECHNOLOGY

Our network consists of central office hosts and remote sites with advanced
digital switches, primarily manufactured by Nortel, Lucent and Siemens,
generally operating with the most current software. The outside plant consists
of transport and distribution delivery networks connecting our host central
office with remote central offices and ultimately with our customers. As of
December 31, 2003, we maintained over 46,000 route miles of copper plant. Our
network also includes approximately 3,700 route miles of local and long-haul
fiber optic cable predominantly based in the four state area we serve. We own
fiber optic cable, which has been deployed throughout our current network and is
the primary transport technology between our host and remote central offices and
interconnection points with other incumbent carriers. We also lease fiber optic
capacity from other major carriers.

In our markets, DSL-enabled integrated access technology is being deployed to
provide significant broadband capacity to our customers. We continue to remove
any network impediments to ensure we can offer DSL service to as many customers
as possible, however, we only equip central offices with DSL enabling equipment
to the extent a demonstrated customer demand exists. As of December 31, 2003, we
had invested approximately $4.5 million to deploy DSL technology, reaching over
196,000 potential broadband customers.

Rapid and significant changes in technology are expected in the communications
industry. Our future success will depend, in part, on our ability to anticipate
and adapt to technological changes. We believe that our network architecture
enables us to respond efficiently to these technological changes.

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<PAGE>

We offer facilities-based services in each of our markets. Our fully integrated
telecommunications network is comprised primarily of asynchronous transport
mode, or ATM, core switches, capable of handling both voice and data, and time
division modulation, or TDM, digital central office switches in our four regions
of operation. We currently own or lease all of our network facilities and have
not booked any revenues from swaps of indefeasible rights to use, or IRUs.

Our network operations center located in Texarkana, Texas monitors all our
networks, transport and ATM elements, digital switching systems and Internet
services infrastructure devices 24 hours a day, seven days a week.

INFORMATION TECHNOLOGY AND SUPPORT SYSTEMS

We have a full suite of proven operational support systems, or OSS, and customer
care/billing systems that allow us to meet or exceed our customers'
expectations. Our OSS and billing systems include automated provisioning and
service activation systems, mechanized line record and trouble reporting
systems, inter-company provisioning and trading partner electronic data exchange
systems. The bulk of these OSS and billing services are provided through the use
of systems contracted or leased from ALLTEL. We employ an Internet service
provider provisioning system and helpdesk database software to assist new data
customers and to communicate with them when necessary. Our approach to OSS and
billing systems focuses on implementing best-of-class applications that allow
consistent communication and coordination throughout our entire organization.
Our objective is to improve profitability by reducing individual company costs
through the sharing of best practices, centralization or standardization of
functions and processes, and deployment of technologies and systems that provide
for greater efficiencies and profitability.

COMPETITION

While the telecommunications industry as a whole is extremely competitive,
competition has been comparatively limited for RLECs because RLECs have
historically operated in markets with:

   --  low population densities;

   --  significant distance to competitive urban areas;

   --  relatively low business customer base;

   --  limited competitive commercially viable substitution alternatives; and

   --  reduced interconnection, resell or unbundled network element platform
       requirements.

These factors render uneconomic most business plans for developing a
facilities-based network to compete against an RLEC. Nonetheless, we have
experienced moderate competition from rural telephone cooperatives, edging out
from the territories where they are incumbent carriers, as well as from wireless
providers and other intermodal competitors, including cable television
operators. In Broken Arrow, Oklahoma, where we operate approximately 64,000
access lines, Cox Communications, or Cox, a cable television operator, has
requested interconnection with our network. Cox has requested to adopt an
existing Valor interconnection agreement which may indicate that Cox, which
currently provides broadband services in Broken Arrow, may intend to enter into
this market and offer voice telecommunications services. In addition, future
technological changes could negatively impact our competitive position. For
example, as Voice over Internet Protocol, or VoIP, develops, some wholesale
customers may be able to bypass network access charges.

PROPERTIES

Our corporate headquarters are located in Irving, Texas. We lease over 67,000
square feet of office space for our headquarters in Irving pursuant to a lease
that will expire in August 2010. In addition, we lease an aggregate of over
100,000 square feet with respect to three call centers in New Mexico and Texas
pursuant
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<PAGE>

to leases that expire at various times between June 2005 and April 2010. We own
all of the other properties that are material to our business. Our other
properties include maintenance facilities, rolling stock, central office and
remote switching platforms and transport and distribution network facilities in
the states in which we operate our business. Our administrative and maintenance
facilities are generally located in or near the rural communities we serve and
our central offices are often within the administrative building and outlying
customer service centers. Auxiliary battery or other non-utility power sources
are at each central office to provide uninterrupted service in the event of an
electrical power failure. Mobile generators are located near our central offices
in the event of a major power outage that continues for a long period of time.
Transport and distribution network facilities include fiber optic backbone and
copper wire distribution facilities, which connect customers to remote switch
locations or to the central office and to points of presence or interconnection
with the incumbent long distance carrier. These facilities are located on land
pursuant to permits, easements, rights of way or other agreements.

EMPLOYEES

As of December 31, 2003, our work force consisted of 1,559 full time employees.
Approximately 1,050 of our employees are subject to collective bargaining
agreements with the Communications Workers of America, or CWA. Most of our union
employees work in our call centers and in technical positions related to the
operation of our network and provision of service to our customers. Our labor
agreement with the CWA, which covers our non-Kerrville employees, was
renegotiated during 2002 for a three-year period that ends in February 2005. Our
labor agreement with the CWA relating to employees of our Kerrville operations
was renegotiated in 2003 and will expire in 2006. We believe that our relations
with our employees are good.

LEGAL PROCEEDINGS

We are involved in various claims, legal actions and regulatory proceedings
arising in the ordinary course of our business. In the opinion of our
management, the resolution of these matters will not have a material adverse
effect on our financial condition, results of operations or cash flows.

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<PAGE>

                                   REGULATION

The following summary of the regulatory environment in which our business
operates does not describe all present and proposed federal, state and local
legislation and regulations affecting the telecommunications industry. Some
legislation and regulations are currently the subject of judicial proceedings,
legislative hearings and administrative proposals that could change the manner
in which this industry operates. We cannot predict the outcome of any of these
matters or their potential impact on our business. Regulation in the
telecommunications industry is subject to rapid change, and any such change may
have an adverse effect on us in the future. See "Risk Factors--"Regulatory
Risks" and "Risks Relating to Our Business."

OVERVIEW

The telecommunications services we provide and from which we derive a large
majority of our revenue are subject to federal, state and local regulation. At
the federal level, the FCC generally exercises jurisdiction over our facilities
and services used to provide, originate, or terminate interstate or
international communications. State regulators in Texas, Oklahoma, New Mexico
and Arkansas exercise jurisdiction over our facilities and services used to
provide, originate or terminate intrastate communications. Local governments
often regulate the public rights-of-way necessary to install and operate our
networks and, in some of our states, local governments may require us to enter
into franchise agreements that compensate the local government for use of their
rights-of-way. State and federal regulators share responsibility for
implementing and enforcing the policies of the Telecommunications Act of 1996
intended to foster competition in local telecommunications services. We believe
that the competition we have experienced to date in our markets has not been
substantial as compared to that experienced by other local exchange carriers.
Competition in our markets may increase in the future as a result of the
Telecommunications Act and subsequent decisions by regulators implementing the
Telecommunications Act.

PROMOTION OF UNIVERSAL SERVICE

The universal service fund, or USF, payments we receive from the Texas and
federal USF Funds are intended to support the high cost of our operations in
rural markets. Texas USF support payments represented approximately 20.7% of our
revenues for the year ended December 31, 2003. In 2003, we received $16.7
million, or 3.4% of our total revenues, in federal USF support. We also collect
charges from our customers to support these funds.

The purpose of the TUSF is to implement a competitively neutral mechanism to
assist telecommunications providers in providing basic local telecommunications
services at reasonable prices to customers in high cost rural areas and to
qualifying low-income and disabled customers. By order of the TPUC, the Texas
USF pays eligible carriers serving areas identified as high cost, on a per-line
basis. Texas USF support payments are based on actual lines in service and
therefore are subject to reduction if customers discontinue service or migrate
from our lines to a competitive carrier.

All customers of telecommunications services in Texas fund the Texas USF through
the payment of a monthly surcharge on their bills. AT&T has challenged the TPUC
rule that makes all telecommunications services offered in Texas subject to
surcharge to support the Texas USF. AT&T contends that only intrastate services
should be subject to surcharge to support the Texas USF. This matter is pending
decision in the appellate courts. We do not believe that the outcome of this
appeal will impact the amount of Texas USF we receive.

The rules governing the Texas USF provide for a review of the Texas USF every
three years starting in 1999. In September 2002, the TPUC undertook its first
review. Interested parties provided the TPUC with comments on whether there
should be changes made to the Texas USF. In September 2003, the TPUC staff
recommended no changes be made to the Texas USF at this time. The TPUC will
undertake its next review of the rules in September 2005. We do not expect any
material change in the Texas USF

                                        69
<PAGE>

methodology or the manner in which the amount of support we receive is
calculated under our current Texas regulations.

The Texas regulatory structure under which we operate, including the enabling
statute for the Texas USF, will become subject to legislative review and renewal
in late 2005. The current Texas USF rules will not expire with their enabling
statute in 2005, but if the enabling statute changes as part of the 2005 review,
the TPUC would have to amend the Texas USF rules to comply with the statute. We
believe that there is strong support of the Texas USF in its current form from a
variety of constituents, and we do not believe it is likely that there will be
any material change in the current USF enabling statute during the Legislative
review period. However, such changes are possible and may be adverse to our
revenues.

The federal USF revenue we receive helps to offset interstate access charges,
defrays the high fixed switching costs in areas with fewer than 50,000 access
lines and provides support where our average cost per line exceeds 115% of the
national average cost per line. Funding for the federal USF comes from
surcharges on interstate and international telecommunications services.
Providers pass these charges through to their customers on the customers'
monthly bills. In May 2001, the FCC adopted a proposal to reform universal
service support for rural areas. The FCC has indicated that, for the period
after July 1, 2006, it will develop a comprehensive plan for high-cost support
mechanisms for rural and non-rural carriers that may rely on a different cost
methodology than currently is applied. We are unable to predict whether and to
what extent we would be eligible to receive any federal high-cost support under
such a plan. However, the federal high cost support we receive today is less
than one percent of our total revenues.

Federal USF payments are only available to carriers that are designated as
eligible telecommunications carriers, or ETCs, by a state regulatory body.
Competitive providers that have been granted ETC status are eligible to receive
the same amount of universal service support per customer as the local exchange
carrier serving the same area. Under current federal rules, the payment of
federal universal service funds to a competitor qualifying as an ETC in an area
served by an local exchange carrier is not intended to reduce significantly any
federal universal support payable to the local exchange carrier. The FCC,
however, could promulgate rules that reduce universal service support for local
exchange carriers under such conditions. Currently, five competitive carriers
have received ETC designation in our markets in Texas and New Mexico and draw
support.

The FCC has requested comment on the standards for ETC designations, as well as
whether and how it might limit USF support payments in markets where competitive
ETCs have been designated. A federal-state joint board recently made
recommendations to the FCC on these issues, including creating tighter standards
for ETC designation and limiting federal USF support to only one primary line
per location. The FCC will have one year to act on these recommendations. We
cannot predict the outcome of these proceedings. In addition, Congress may
address universal service issues in legislation, but we cannot predict the
occurrence, timing or effects of such legislation.

STATE REGULATION

We operate in Texas, Oklahoma, New Mexico and Arkansas, and we are certified in
those states to provide local telecommunications services.

Intrastate Rate Regulation. State regulators in our states regulate the prices
we charge for intrastate services, including our prices for local, intrastate
long distance and intrastate access services paid by providers of intrastate
long distance services. In Texas, most of our intrastate operations are subject
to price caps, while regulations in Oklahoma and Arkansas employ rate-of-return
regulation to set our prices. Our subsidiaries in New Mexico operate under an
alternative regulation plan whereby prices are fixed through the term of the
plan, which expires in 2006. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Regulatory Matters--State
Regulation."

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<PAGE>

New Mexico Investment. In New Mexico, we operate under an Alternative Form of
Regulation Plan, or Plan. Adopted in 2000, the Plan provides for a freeze on the
prices of our intrastate telecommunications services during the term of the
Plan, requires us to invest $83 million in capital in New Mexico during the term
of the plan, provides for streamlined tariff approval process and prescribes
quality of service standards, including penalties for failure to meet certain
service levels. This Plan expires on March 31, 2006. As of December 31, 2003, we
have invested approximately $47.4 million of the $83 million capital investment
commitment. At this time, we believe that we can substantially complete our
investment commitment by the end of the Plan within our current projected
capital expenditures.

Service Quality. State regulators impose service quality reporting obligations
on us and require us to adhere to prescribed service quality standards. These
standards measure the performance of various parts of our business. If we fail
to meet these standards, regulators may impose fines or we may have to issue
credits to our customers, or both.

Competition. State regulators have a number of duties in implementing the
Telecommunications Act of 1996, including mediating or arbitrating disputed
issues in interconnection agreements, setting the prices of unbundled network
elements, and designating ETCs.

Acquisitions. Our state regulators may review sales, acquisitions or transfers
of control directly involving local exchange carriers certified to provide
intrastate telecommunications services within our states. Therefore, if we seek
to acquire companies that provide intrastate telecommunications services, or
engage in other activities by which a change in control occurs, we may have to
report or seek approval of state regulators in connection with such activities.
State regulators may deny, delay or impose conditions on such transactions.

Compliance. Our state regulators also have the authority to condition, modify,
cancel, terminate or revoke operating authority for failure to comply with
applicable laws or rules, regulations, and policies of the state regulatory
agency. Fines or other penalties may be imposed for such violations.

FEDERAL REGULATION

We must comply with the Communications Act of 1934, as amended, and FCC rules
which require, among other things, that we offer interstate services at just and
reasonable prices and on non-discriminatory terms and conditions. The
Telecommunications Act of 1996 significantly changed and is expected to continue
to change the telecommunications industry.

Rural Telephone Company. The Telecommunications Act of 1996 prescribes different
regulatory requirements for local exchange carriers that meet the definition of
a rural telephone company. We have certified as a rural telephone company, RLEC,
in each of the states in which we operate. A wireless carrier has challenged our
certification at the FCC on two occasions, and these challenges have been
pending since 2000 and 2003. We do not believe that the challenges have merit,
and we do not expect the FCC to conclude we fail to meet the RLEC definition.

Interconnection. A central aim of the Telecommunications Act of 1996 was to open
local telecommunications marketplaces to competition while enhancing universal
service. Pursuant to the Telecommunications Act, most local exchange carriers
have obligations to open their networks to competitors, including:

   --  negotiate in good faith with any carrier requesting interconnection;

   --  provide interconnection for the transmission and routing of
       telecommunications at any technically feasible point in its network on
       just, reasonable and nondiscriminatory rates, terms and conditions;

   --  provide access to unbundled network elements, or UNEs, such as local
       loops, switches and trunks, or combinations of UNEs at nondiscriminatory,
       cost-based rates;

   --  offer retail local telephone services to resellers at discounted
       wholesale rates; and

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<PAGE>

   --  provide physical collocation, which allows a competitor to install and
       maintain its network termination equipment in an local exchange carrier's
       central office, or to obtain functionally equivalent forms of
       interconnection.

Competitors are required to compensate local exchange carriers for the cost of
providing these services.

Because we qualify as a RLEC under the Telecommunications Act, we may rely on a
statutory exemption from these additional interconnection requirements until we
receive a bona fide request for interconnection and the applicable state
regulator lifts the exemption. To lift the exemption, the state regulator must
find that competitive entry would not impose an undue economic burden on us, is
technically feasible and will not harm universal service. We have agreed not to
exercise the rural exemption in Oklahoma, where we were classified as a
non-rural carrier prior to July 1, 2003. In Texas and New Mexico, we agreed to
continue providing interconnection to those competitive carriers that had
interconnections agreements with GTE at the time we acquired the GTE properties
and we continue to provide interconnection to these carriers today.
Notwithstanding these agreements, we may request suspension or modification of
certain interconnection requirements in all states, including Oklahoma, by
petition to the state regulator and upon the demonstration of certain statutory
factors.

Since the passage of the Telecommunications Act, we have experienced a modest
amount of competition from small RLECs serving adjacent markets, other
competitive local carriers, resellers and wireless service providers. Many of
these competitors were already providing competitive services in our markets
when we acquired the business in 2000. As of December 31, 2003, we had 33
interconnection agreements with 19 competitors and 40 resale agreements with 28
resellers. Many of these competitors have agreements in more than one of our
states, and not all of these competitors currently offer competitive local
services in our markets.

In Broken Arrow, Oklahoma, Cox Communications, the cable television provider,
has requested interconnection with our network. Cox has requested to adopt an
existing Valor interconnection agreement which may indicate that Cox, which
currently provides broadband services in Broken Arrow, may intend to offer voice
telecommunications services there as well.

In its Triennial Review order released in August 2003, the FCC eliminated some
of the obligations imposed on local exchange carriers under prior rules, and
redefined some of the standards used to determine what parts of its network an
local exchange carrier must make available to competitors. The United States
Court of Appeals for the District of Columbia Circuit recently overturned
significant aspects of the Triennial Review Order. Further appellate and FCC
proceedings are expected.

In addition, the FCC is reexamining its pricing standard for unbundled network
elements and may reconsider other aspects of its new rules. Congress may
consider legislation that may modify some aspects of the Telecommunications Act
or these rules. We cannot predict the outcome of any of these proceedings or of
any action taken by our state regulatory commissions pursuant to the new rules.

The FCC recently ruled that we and other local exchange carriers must port our
telephone numbers to requesting wireless carriers, so-called
wireline-to-wireless local number portability, or LNP. Local exchange carriers
operating in the country's largest urban areas were required to make LNP
capability available to wireless carriers by November 24, 2003. We have LNP
available to wireless carriers in our Broken Arrow exchange, which is part of
the Tulsa metropolitan area. Since deploying LNP, we have had only a few
requests to port one of our numbers to a wireless carrier. RLECs serving rural
areas have to make LNP available to wireless carriers on May 24, 2004 or six
months after a bona fide request from a wireless carrier. The FCC still has
under consideration a number of technical and cost recovery issues associated
with deployment of LNP.

We have received bona fide requests for LNP in some of our exchanges. We
estimate that upgrading our switches to provide LNP will cost approximately $3.2
million in capital expenditures. We have filed petitions before the New Mexico
Public Regulation Commission, the Oklahoma Corporation Commission,

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<PAGE>

and the Texas Public Utility Commission, requesting that these regulators
suspend our obligation to deploy LNP until at least March 31, 2005 in order to
provide time for the FCC to issue orders on the open technical and cost recovery
issues.

End-User and Access Charges. The FCC regulates the prices that we charge for the
use of our local telephone facilities in originating or terminating interstate
telecommunications services. The FCC has structured these prices as a
combination of flat monthly charges paid by the end-users and usage sensitive
charges or flat rated facilities charges paid by long distance carriers, also
referred to as access charges. The FCC regulates the levels of interstate access
charges we charge by imposing price caps on those charges. In 2000, the FCC
adopted an integrated interstate access reform and universal service framework
for price cap LECs called the CALLS Plan, which allowed end user rates to rise,
but forced substantial decreases in access charges billed to long distance
carriers. The CALLS Plan will expire in mid-2005 unless extended by the FCC.

The CALLS Plan provides for a "low-end adjustment" to increase prices to achieve
a 10.25% annual return, if needed, to address a situation where a LEC's earnings
drops below 10.25%. In essence, this is a protection against unreasonably low
earnings. We requested and were granted low-end adjustment relief pursuant to
FCC rules for our Texas study area in 2001, 2002 and 2003, and we expect to
request and obtain such relief in our 2004 annual tariff filing. We also
obtained a waiver in 2002 that delayed a price decrease in access charges until
July 2004. We currently have pending a request to make the 2002 waiver
permanent.

The FCC has made, and is continuing to consider, various changes to the existing
access charge price structure. The FCC has sought comment on how it should
change inter-carrier compensation, including interstate access charges,
reciprocal compensation for local calling between competitors, and intrastate
access charges. Specifically, the FCC proposed to adopt for all inter-carrier
compensation a "bill and keep" mechanism in which carriers would exchange
traffic at no charge to each other, and recover their costs from their own end
users. Carrier charges would be limited to compensation for transporting traffic
to another carrier's network. If implementation of such a proposal raises the
prices paid by end users to the point where the prices are unaffordable, the FCC
proposed that a universal service mechanism would be used to compensate a
carrier for costs in excess of what could be recovered through affordable rates.
The FCC stated that the proposed mechanism would not be adopted until after
expiration of the CALLS plan. This matter has been pending at the FCC for three
years. It is not known what kind of changes, if any, the FCC will adopt pursuant
to this rulemaking, but the FCC could significantly alter inter-carrier
compensation as early as 2005.

Interstate Long Distance Services. The FCC does not actively regulate the
prices, terms or facilities of our interstate long distance services. However,
we must comply with the general requirement that our prices and terms be just,
reasonable and nondiscriminatory. Also, we must comply with FCC rules regarding
unauthorized switching of a customer's long distance service provider, or
slamming; the FCC has recently levied substantial fines on some carriers for
slamming. In addition, our long distance carrier must post the prices, terms and
conditions of its interstate service on its Internet web site and engage in
other public disclosure activities.

Acquisitions. The FCC generally must approve in advance most transfers of
control and assignments of operating authorizations by FCC-regulated entities.
Therefore, if we seek to acquire companies that hold FCC authorizations, in most
instances we will be required to seek approval from the FCC prior to completing
those acquisitions. The FCC may deny, delay or impose conditions on such
transactions.

Compliance and Penalties. The FCC has the authority to condition, modify,
cancel, terminate or revoke operating authority for failure to comply with
applicable federal laws or rules, regulations and policies of the FCC. Fines or
other penalties also may be imposed for such violations.

Communications Assistance for Law Enforcement Act. Under the Communications
Assistance for Law Enforcement Act, or CALEA, and related federal statutes, we
are required to provide law enforcement

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<PAGE>

officials with call content and call identifying information under a valid
electronic surveillance warrant and to reserve a sufficient number of circuits
for use by law enforcement officials in executing court-authorized electronic
surveillance. We believe we are in compliance with those laws and regulations.

LOCAL GOVERNMENT AUTHORIZATIONS

We may be required to obtain permits from municipal authorities for street
opening and construction or operating franchises to install and expand fiber
optic facilities in certain rural communities. Some of these franchises may
require the payment of franchise fees. We have obtained such municipal
franchises in some parts of Texas, Oklahoma, New Mexico and Arkansas.

POTENTIAL INTERNET REGULATORY OBLIGATIONS

In connection with our Internet access offerings, we could become subject to
laws and regulations as they are adopted or applied to the Internet. To date,
the FCC has treated Internet service providers, or ISPs, as enhanced service
providers, rather than common carriers, and therefore ISPs are exempt from most
federal and state regulation, including the requirement to pay access charges or
contribute to the federal USF. As Internet services expand, federal, state and
local governments may adopt rules and regulations, or apply existing laws and
regulations to the Internet. The FCC is currently reviewing the appropriate
regulatory framework governing broadband access to the Internet through
telephone and cable television operators' communications networks. At this time,
we cannot estimate what regulatory changes may occur as a result of the FCC's
review, or what impact any such changes would have on our operations or
revenues.

In February 2004, the FCC determined that a particular entirely Internet-based
Voice over Internet Protocol, or VoIP, service is an information service and
exempt from such regulatory obligations. Also in February 2004, the FCC launched
a comprehensive rulemaking to determine the appropriate types of regulation,
including such matters as intercarrier compensation and contributions to USF, to
which ISPs offering or enabling different types of services, including VoIP,
should be subject. We cannot predict the outcome of these proceedings or the
effect of FCC decisions in this area on our business.

ENVIRONMENTAL REGULATIONS

Our operations are subject to federal, state and local laws and regulations
governing the use, storage, disposal of, and exposure to hazardous materials,
the release of pollutants into the environment and the remediation of
contamination. As an owner or operator of property, we could be subject to
environmental laws that impose liability for the entire cost of cleanup at
contaminated sites, regardless of fault or the lawfulness of the activity that
resulted in contamination. We believe, however, that our operations are in
substantial compliance with applicable environmental laws and regulations.

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<PAGE>

                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth information with respect to our executive
officers and directors and other key employees of Valor as of April 7, 2004.

<Table>
<Caption>
NAME                          AGE                          POSITION
----                          ---                          --------
<S>                           <C>   <C>
Anthony J. de Nicola........  39    Chairman, Director
Kenneth R. Cole.............  56    Vice Chairman
John J. Mueller.............  47    Chief Executive Officer and President
John A. Butler..............  42    Executive Vice President--Chief Financial Officer
William M. Ojile, Jr. ......  43    Senior Vice President--Chief Legal Officer and
                                    Secretary
W. Grant Raney..............  43    Senior Vice President--Operations, Engineering and
                                    Customer Service
Cynthia B. Nash.............  39    Senior Vice President and Chief Information Officer
Keith D. Terreri............  39    Vice President--Treasury and Corporate Development
Julie Burnett...............  49    Vice President--Marketing
Cynthia T. Cruz.............  44    Vice President--Corporate Communications
Randal S. Dumas.............  34    Vice President--Accounting and Controller
Ben Muro....................  57    Vice President--Human Resources
Sanjay Swani................  37    Director
Todd Khoury.................  38    Director
</Table>

ANTHONY J. DE NICOLA has served as a director of our company since February 2004
and as Chairman since April 2004. Mr. de Nicola is currently a general partner
of Welsh, Carson, Anderson & Stowe, which is one of our existing equity holders.
He joined Welsh, Carson, Anderson & Stowe in 1994 and focuses on investments in
the information business services and communications industries. Before joining
Welsh, Carson, Anderson & Stowe, he worked for four years in the private equity
group at William Blair & Company. Previously, Mr. de Nicola worked at Goldman
Sachs & Co. in the Mergers and Acquisitions Department.

KENNETH R. COLE has served as our Vice Chairman since April 2004. Prior to then,
Mr. Cole served as our Chief Executive Officer from January 2002 to April 2004.
Mr. Cole joined our company at its inception in January 2000 as President and
Chief Operating Officer. Prior to joining our company, Mr. Cole had a 26-year
career at CenturyTel, Inc., culminating in his service as Chief Operating
Officer from May 1999 to January 2000.

JOHN J. MUELLER has served as our Chief Executive Officer and President since
April 2004 and was previously our President and Chief Operating Officer since
November 2002. Mr. Mueller joined us in April 2002 as Executive Vice President
and Chief Operating Officer. Prior to joining our company, Mr. Mueller spent 23
years at Cincinnati Bell Inc. including serving as General Manager--Consumer
Markets from February 1999 to May 1999, President--Business Units from May 1999
to November 1999 and President of the Cincinnati Bell Telephone Company from
November 1999 to October 2001.

JOHN A. BUTLER has served as our Executive Vice President and Chief Financial
Officer since joining us in March 2000. Before joining our company, Mr. Butler
served as Executive Vice President and Chief Financial Officer of Commonwealth
Telephone Enterprises, Inc. starting in 1998. Prior to 1998, he was a director
at First Union Capital Markets (Wachovia) in the Media and Communications Group.
Mr. Butler has over 18 years of experience in the finance and telecommunications
industries. Mr. Butler began his career at Arthur Andersen & Co. and is a
licensed, certified public accountant.

WILLIAM M. OJILE, JR. has served as our Senior Vice President, Chief Legal
Officer and Secretary since November 2000. Before joining our company, Mr. Ojile
worked at U.S. WEST, Inc. for approximately

                                        75
<PAGE>

12 years, serving as Regional Executive Director--Public Policy from January
1998 to July 2000, and, after the merger between U.S. WEST and Qwest
Communications International in July 2000, as Corporate Counsel for Qwest
Communications International from July 2000 to November 2000.

W. GRANT RANEY has served as our Senior Vice President--Operations and
Engineering since January 2001. In February 2000, Mr. Raney joined our company
as Vice President--Operations. Prior to joining our company, from March 1999 to
February 2000, Mr. Raney was Division Vice President at Spectra Communications
Group, a partnership of CenturyTel, Inc. Starting March 1979 at CenturyTel, Mr.
Raney has gained 25 years of experience in the telecommunications industry in a
variety of roles of increasing responsibility.

CYNTHIA B. NASH has served as our Senior Vice President and Chief Information
Officer since January 2004. In April 2002, Ms. Nash joined our company as our
Vice President and Chief Technology Officer. Before joining our company, Ms.
Nash held various positions of increasing responsibility with CenturyTel, Inc.,
including Vice President of Information Technology from January 2001 to April
2002, Director of the Program Management Office and Customer Care from September
2000 to January 2001, Director of Applications Development from December 1999 to
September 2000 and Director of Telco Applications from September 1997 to
December 1999. Ms. Nash has over 17 years of experience in the
telecommunications industry.

KEITH D. TERRERI has served as our Vice President--Treasury and Corporate
Department since July 2001. Prior to joining our company, Mr. Terreri was Vice
President and Treasurer of RCN Corporation from December 1999 to June 2001 and
Director of Finance from January 1998 to December 1999. Mr. Terreri has over 6
years experience in the telecommunications industry. Mr. Terreri began his
career at Deloitte & Touche LLP and is a certified public accountant.

JULIE BURNETT has served as our Vice President--Marketing since May 2002. Prior
to that, she served as our Vice President--Long Distance and Emerging Markets
starting in April 2000. Prior to joining our company, Ms. Burnett worked at
CenturyTel, Inc. starting in 1979, where, from November 1999 until joining our
company, she was Vice President--Long Distance Operations.

CYNTHIA T. CRUZ has served as our Vice President--Corporate Communications since
June 2000. Prior to joining our company, Ms. Cruz was Senior Manager, Public
Affairs, for Levi Strauss & Company from 1998 to 2000.

RANDAL S. DUMAS has served as our Vice President--Controller since July 2003. He
joined our company in January 2001 as Director--Accounting, and he added the
responsibility of Controller in June 2002. Prior to joining our company, Mr.
Dumas worked for Citizens Communications starting in 1994, where he was Revenue
Accounting Manager from January 1997 to January 2000, Director of General
Accounting from January to June 2000 and Director of Financial Operations from
June 2000 until January 2001. Mr. Dumas is a certified public accountant.

BEN MURO has served as our Vice President--Human Resources since February 2000.
Prior to joining our company, Mr. Muro was Senior Vice President of Human
Resources for Parkland Health and Hospital System in Dallas from March 1991 to
February 2000.

SANJAY SWANI has served as a director of our company since February 2004. Mr.
Swani is currently a general partner of Welsh, Carson, Anderson & Stowe, which
is one of our existing equity holders. He joined Welsh, Carson, Anderson & Stowe
in 1999 and focuses on investments in the information business services and
communications industries. Previously, he was a director of Fox Paine & Company,
a San Francisco-based private equity firm. Mr. Swani also spent four years in
the Mergers, Acquisitions & Restructuring Department and two years in the Debt
Capital Markets Department of Morgan Stanley Dean Witter & Co.

                                        76
<PAGE>

TODD KHOURY has served as a director of our company since February 2004. Mr.
Khoury is currently a managing director of Vestar Capital Partners, which is one
of our existing equity holders. Prior to joining Vestar in 1993, Mr. Khoury was
a member of the Corporate Finance Group of Salomon Brothers Inc.

Our board of directors will consist of at least      members. Within one year of
the consummation of this offering, a majority of our board of directors will be
independent. The term of office for each director will be until his successor is
elected or appointed, with elections for each directorship being held annually.

BOARD COMMITTEES

Prior to the consummation of this offering, we intend to establish an audit
committee, a nominating committee, a compensation committee and a pension
committee. Each committee will consist of three persons, at least one of whom is
not an employee of, and has no business relationships with, Valor. Within one
year of the consummation of this offering, all the members of our audit
committee, nominating committee and compensation committee will be "independent"
as defined by the           rules.

The audit committee will be responsible for reviewing our internal accounting
procedures and consulting with and reviewing the services provided by our
independent accountants. The nominating committee will evaluate the
qualifications of potential nominees to our board of directors and make
recommendations to the board as to which candidates should be nominated for
election to our board of directors. The compensation committee will be
responsible for reviewing and recommending to the board of directors the
compensation and benefits of all our officers and directors, including stock
compensation and loans and establishing and reviewing general policies relating
to the compensation and benefits of our employees. The pension committee will be
responsible for reviewing the quality of services provided by our pension and
savings plan advisors and administrators.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The current compensation of our executive officers was determined by the
compensation committee of Valor Telecommunications Southwest, LLC, which is
comprised of Anthony J. de Nicola, William E. Garcia, Edward J. Lujan and Anne
K. Bingaman, with Mr. de Nicola serving as committee chairman. Prior to the
consummation of this offering, we plan to form a compensation committee of our
board of directors to oversee executive compensation issues. We anticipate that
no member of our compensation committee will serve as a member of the board of
directors or compensation committee of an entity that has one or more executive
officers serving as a member of our board of directors or compensation
committee.

DIRECTOR COMPENSATION

Non-employee members of our board of directors will receive compensation for
their services as directors of $          per meeting of the board of directors
that they attend. Directors will also be reimbursed for out-of-pocket expenses
for attending board and committee meetings.

LIMITATIONS ON DIRECTORS' LIABILITY AND INDEMNIFICATION

Our amended and restated certificate of incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a corporation will not be personally liable for monetary
damages for breach of their fiduciary duties as directors, except liability for:

   --  any breach of their duty of loyalty to the corporation or its
       stockholders;

   --  acts or omissions not in good faith or which involve intentional
       misconduct or a knowing violation of law;

   --  unlawful payments of dividends or unlawful stock repurchases or
       redemptions; or

                                        77
<PAGE>

   --  any transaction from which the director derived an improper personal
       benefit.

The limitation of liability does not apply to liabilities arising under the
federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.

Our amended and restated certificate of incorporation provide that we will
indemnify our directors and officers and may indemnify our employees and other
agents to the fullest extent permitted by law. We believe that indemnification
under our amended and restated certificate of incorporation covers at least
negligence and gross negligence on the part of indemnified parties. Our amended
and restated certificate of incorporation also permit us to secure insurance on
behalf of any officer, director, employee or other agent for any liability
arising out of his or her actions in his or her capacity as an officer,
director, employee or other agent.

The limited liability and indemnification provisions in our amended and restated
certificate of incorporation may discourage stockholders from bringing a lawsuit
against our directors for breach of their fiduciary duty and may reduce the
likelihood of derivative litigation against our directors and officers, even
though a derivative action, if successful, might otherwise benefit us and our
stockholders. A stockholder's investment in us may be adversely affected to the
extent we pay the costs of settlement or damage awards against our directors and
officers under these indemnification provisions.

At present, there is no pending litigation or proceeding involving any of our
directors, officers or employees in which indemnification is sought, nor are we
aware of any threatened litigation that may result in claims for
indemnification.

Insofar as indemnification for liabilities arising under the Securities Act may
be permitted for directors, officers and controlling persons of us pursuant to
the foregoing provisions or otherwise, we have been advised that in the opinion
of the Securities and Exchange Commission, or SEC, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.

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<PAGE>

EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth the compensation
earned, awarded or paid for services rendered to us in all capacities for the
fiscal year ended December 31, 2003, by our Chief Executive Officer and our four
next most highly compensated executive officers who earned more than $100,000 in
salary and bonus during the fiscal year ended December 31, 2003, to whom we
refer in this prospectus collectively as the named executive officers:

                           SUMMARY COMPENSATION TABLE

<Table>
<Caption>
                                                                         LONG-TERM
                                                ANNUAL COMPENSATION     COMPENSATION
                                                --------------------    ------------
                                                                         SECURITIES
                                                                         UNDERLYING      ALL OTHER
                                 FISCAL YEAR     SALARY      BONUS       OPTIONS(2)     COMPENSATION
                                 -----------    --------    --------    ------------    ------------
   <S>                           <C>            <C>         <C>         <C>             <C>
   Kenneth R. Cole.............     2003        $525,000    $800,000            --        $30,761(3)
     Vice Chairman(1)
   John J. Mueller.............     2003        $325,000    $550,000            --        $28,238(4)
     Chief Executive Officer
        and President
   John A. Butler..............     2003        $284,625    $482,000       200,000        $22,004(5)
     Executive Vice President
        and Chief Financial
        Officer
   W. Grant Raney..............     2003        $232,875    $279,279       150,000        $18,580(6)
     Senior Vice President of
        Operations, Engineering
        and Customer Service
   William M. Ojile, Jr. ......     2003        $207,000    $225,138            --        $22,169(7)
     Senior Vice President,
        Chief Legal Officer and
        Secretary
</Table>

---------------------------
(1)  Mr. Cole served as our Chief Executive Officer from January 2002 through
     April 2004.
(2)  Represents options to purchase equity interests of Valor Telecommunications
     Southwest LLC, or VTS, under VTS's 2000 Equity Incentive Non-Qualifying
     Option Plan. These options will be exchanged for IDSs as part of our
     reorganization.
(3)  Consists of $20,003 of insurance premiums ($7,365 for medical insurance;
     $7,623 for life insurance; and $5,015 for Long-Term Disability), $1,758 for
     related medical exams, and a $9,000 company contribution to our 401(k)
     plan.
(4)  Consists of $16,905 of insurance premiums ($8,046 for medical insurance;
     $1,649 for life insurance; and $7,210 for Long-Term Disability), $2,333 for
     related medical exams, and a $9,000 company contribution to our 401(k)
     plan.
(5)  Consists of $10,839 of insurance premiums ($7,364 for medical insurance;
     $1,260 for life insurance; and $2,215 for Long-Term Disability), $2,165 for
     related medical exams, and a $9,000 company contribution to our 401(k)
     plan.
(6)  Consists of $7,141 of insurance premiums ($5,064 for medical insurance;
     $1,033 for life insurance; and $1,044 for Long-Term Disability), $2,439 for
     related medical exams, and a $9,000 company contribution to our 401(k)
     plan.
(7)  Consists of $10,710 of insurance premiums ($8,043 for medical insurance;
     $808 for life insurance; and $1,859 for Long-Term Disability), $2,459 for
     related medical exams, and a $9,000 company contribution to our 401(k)
     plan.

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<PAGE>

EMPLOYMENT AND SEVERANCE AGREEMENTS

We have entered into employment, confidentiality and non-competition agreements
with Messrs. Cole, Mueller, Butler, Ojile and Raney, the material terms of which
are discussed below. We also have agreements with other key employees at the
director level and above that provide for an agreement not to compete with us
for a maximum period of up to twelve months, in return for the payment of
severance benefits for involuntary termination without cause.

Agreement with Kenneth R. Cole. We entered into an employment agreement with
Kenneth C. Cole in 2000 that, as amended, will remain in effect until February
7, 2006. Mr. Cole currently receives an annual base salary of $575,000, an
annual incentive bonus and medical and other benefits. Mr. Cole's annual bonus
is targeted to be one times his base salary for the appropriate year. For the
year ended December 31, 2003, Mr. Cole received a bonus of $800,000. Mr. Cole
may work part-time under mutually agreeable wages, terms and conditions agreed
for the period from February 7, 2004 until the expiration of his employment
agreement.

If we terminate Mr. Cole's employment without cause or if he resigns for "Good
Reason," as such term is defined in his employment agreement, he will be
entitled to receive severance benefits consisting of his annual base salary and
continued medical and other benefits for one year following the date of his
termination, plus the pro rata portion of the annual bonus he would have
received had he been employed by our company for the full fiscal year. Mr.
Cole's employment agreement provides that he will be restricted from engaging in
competitive activities for one year after the termination of his employment. Mr.
Cole may not solicit employees for eighteen months following termination of his
employment with our company.

Agreement with John J. Mueller. We entered into an employment agreement with
John J. Mueller in 2002 that will remain in effect until April 7, 2007 and can
be renewed for successive one year periods thereafter. Mr. Mueller currently
receives an annual base salary of $400,000, an annual incentive bonus and
medical and other benefits. Mr. Mueller's annual bonus is targeted to be one
times his base salary for the appropriate year. For the year ended December 31,
2003, Mr. Mueller received a bonus of $550,000.

If we terminate Mr. Mueller's employment without cause or if he resigns for
"Good Reason," as such term is defined in his employment agreement, he will be
entitled to receive severance benefits consisting of his annual base salary and
continued medical and other benefits for one year following the date of his
termination, plus the pro rata portion of the annual bonus he would have
received had he been employed by our company for the full fiscal year. Mr.
Mueller's employment agreement provides that he will be restricted from engaging
in competitive activities for one year after the termination of his employment.
Mr. Mueller may not solicit employees for eighteen months following termination
of his employment with our company.

Agreement with John A. Butler. We entered into an employment agreement with John
A. Butler in 2000. The agreement provides for automatic one-year extensions of
the employment term unless either party provides written notice of its intention
not to review the agreement within 90 days of the expiration of the then current
term. Mr. Butler currently receives an annual base salary of $315,000, an annual
incentive bonus and medical and other benefits. Mr. Butler's annual bonus is
targeted to be one-half his base salary for the appropriate year. For the year
ended December 31, 2003, Mr. Butler received a bonus of $482,000.

If we terminate Mr. Butler's employment without cause or if he resigns for "Good
Reason," as such term is defined in his employment agreement, he will be
entitled to receive severance benefits consisting of his annual base salary and
continued medical and other benefits for one year following the date of his
termination, plus the pro rata portion of the annual bonus he would have
received had he been employed by our company for the full fiscal year. Mr.
Butler's employment agreement provides that he will be restricted from engaging
in competitive activities for one year after the termination of his employment.
Mr. Butler may not solicit employees for one year following termination of his
employment with our company.

                                        80
<PAGE>

Agreement with William M. Ojile, Jr. We entered into an employment agreement
with William M. Ojile in 2000. The agreement provides for automatic one-year
extensions of the employment term unless either party provides written notice of
its intention not to review the agreement within 90 days of the expiration of
the then current term. Mr. Ojile currently receives an annual base salary of
$250,000, an annual incentive bonus and medical and other benefits. Mr. Ojile's
annual bonus is targeted to be one-half his base salary for the appropriate
year. For the year ended December 31, 2003, Mr. Ojile received a bonus of
$225,138.

If we terminate Mr. Ojile's employment without cause or if he resigns for "Good
Reason," as such term is defined in his employment agreement, he will be
entitled to receive severance benefits consisting of his annual base salary and
continued medical and other benefits for one year following the date of his
termination, plus the pro rata portion of the annual bonus he would have
received had he been employed by our company for the full fiscal year. Mr.
Ojile's employment agreement provides that he will be restricted from engaging
in competitive activities for one year after the termination of his employment.
Mr. Ojile may not solicit employees for one year following termination of his
employment with our company.

Agreement with W. Grant Raney. We entered into an employment agreement with W.
Grant Raney in 2000. The agreement provides for automatic one-year extensions of
the employment term unless either party provides written notice of its intention
not to review the agreement within 90 days of the expiration of the then current
term. Mr. Raney currently receives an annual base salary of $257,000, an annual
incentive bonus and medical and other benefits. Mr. Raney's annual bonus is
targeted to be one-half his base salary for the appropriate year. For the year
ended December 31, 2003, Mr. Raney received a bonus of $279,279.

Under certain circumstances, the termination of Mr. Raney's employment with our
company will entitle him to receive severance benefits consisting of his annual
base salary and continued medical and other benefits for one year following the
date of his termination, plus the pro rata portion of the annual bonus he would
have received had he been employed by our company for the full fiscal year. Mr.
Raney's employment agreement provides that he will be restricted from engaging
in competitive activities for one year after the termination of his employment.
Mr. Raney may not solicit employees for one year following termination of his
employment with our company.

TRANSACTION BONUS

Upon the consummation of this offering, we will award           to members of
our senior management team in recognition of their efforts in connection with
our reorganization and this offering. The awards will be as follows: Kenneth R.
Cole,        ; John J. Mueller,        ; John A. Butler,        ; William M.
Ojile,        ; W. Grant Raney,        ; and an aggregate of      to other
members of our management team.                One-third of each person's award
will vest on each of the first three anniversaries of the date we consummate
this offering. In the event that the employment of any person who has received
an award terminates prior to the time their award fully vests, any unvested
       will be forfeited. We anticipate the impact of the transaction bonus on
compensation expense to be approximately $     for each of years ending December
31, 2004, 2005 and 2006.

BONUS AND INCENTIVE PLANS

Long-Term Incentive Plan. Our officers, other senior executives and other key
employees to be identified by the compensation committee of our board of
directors will be eligible to participate in the Long-Term Incentive Plan, or
the LTIP. The purpose of the LTIP will be to attract, retain, motivate and
reward executives and key employees by making a significant portion of their
incentive compensation directly dependent upon achieving key strategic,
financial and operational objectives that are critical to our ongoing growth and
profitability. The LTIP will be administered by our compensation committee,
which shall also have the power to amend or terminate the LTIP at any time.
                                        81
<PAGE>

The LTIP will provide for cash payments out of an incentive pool that may be
earned by and paid to selected participants based on the achievement, over
multiple-year performance periods, of objective performance goals established by
our compensation committee and based on certain minimum and maximum target
amounts that a participant may earn through the allocation of the incentive
pool, as well as require that the participants remain employed with us for some
period of time in order to vest in such amounts. The performance goals will have
the effect of aligning the interests of management with those of the holders of
IDSs.

We intend for the LTIP to be a performance-based compensation arrangement within
the meaning of Section 162(m) of the Internal Revenue Code, in order to ensure
the full deductibility of all payments made under the LTIP to our executive
officers and other key employees whose compensation could otherwise be subject
to the limitations on deductibility under Section 162(m).

Annual Incentive Compensation Plan. We maintain an incentive compensation plan
whereby certain management and supervisory personnel qualify for incentive
payments if our company and executives both meet or exceed certain financial
performance targets.

Individual awards are paid to participants in lump sum payments within 60 days
following the end of the fiscal year, subject to withholding of applicable
federal, state and local taxes. Individual awards are paid annually but we may
choose to make semi-annual payments if we are meeting or exceeding financial
objectives and the outlook for the remaining half of the year is favorable.
Participants may also qualify for a separate mid-year award at our management's
discretion. Our chief executive officer, in consultation with the board of
directors, may adjust or eliminate any incentive payment that would otherwise be
earned under the incentive compensation plan based on such factors as they may
determine in their sole discretion. Our chief executive officer, in consultation
with the board of directors, may also amend or cancel the bonus plan at any time
for any reason.

In January 2004, our chief executive officer, with the approval of our
compensation committee, authorized bonus amounts for fiscal year 2003 for
members of our management team eligible to participate in the incentive
compensation plan that qualified for payment.

Savings Plan. We sponsor the Valor Telecommunications Southwest, LLC Savings
Plan, a tax qualified plan in which our eligible employees may participate.
Subject to certain limitations, participants in our 401(k) plan may elect to
make pre-tax contributions up to 16% of their annual base salary each year. At
our discretion, we make matching contributions equal to a percentage of a
participant's contributions. Matching contributions fully vest after two years
of employment with our company.

Pension Plan. We also sponsor the Valor Telecommunications Enterprises, LLC
Pension Plan, a defined benefit plan, in which qualified employees may
participate. This plan is offered only to union employees and is not available
for management. Former employees of GTE Southwest Corporation, or GTE, who
participated in the pension plan of GTE and became our employees upon our
acquisition of assets from GTE also participate in our pension plan. We
contribute the full cost of the pension plan to a pension trust fund. The
average annual compensation and accredited service determines the amount of
payments an employee receives under the pension plan.

                                        82
<PAGE>

                             PRINCIPAL STOCKHOLDERS

The following table shows information regarding the beneficial ownership of
shares of our Class A common stock and Class B common stock immediately prior to
completion of this offering and shows the number of and percentage owned by:

   --  each person who is known by us to own beneficially more than 5% of our
       capital stock;

   --  each member of our board of directors;

   --  each of our named executive officers;

   --  each of our nominees to our board of directors; and

   --  all members of our board of directors and our executive officers as a
       group.

Both prior to and after completion of this offering, there will be no shares of
Class C common stock outstanding. Except as indicated in the footnotes to this
table (1) each person has sole voting and investment power with respect to all
shares attributable to such person and (2) each person's address is c/o Valor
Communications Group, Inc., 201 E. John Carpenter Freeway, Suite 200, Irving,
Texas 75062.

<Table>
<Caption>
                                                                      SHARES BENEFICIALLY OWNED
                                                              -----------------------------------------
                                                                    CLASS A               CLASS B
                                                              -------------------   -------------------
                                                               NUMBER    PERCENT     NUMBER    PERCENT
                                                              --------   --------   --------   --------
<S>                                                           <C>        <C>        <C>        <C>
Welsh, Carson, Anderson & Stowe(1)..........................
Vestar Capital Partners(2)..................................
Citicorp Venture Capital(3).................................
Kenneth R. Cole.............................................
John Mueller................................................
John Butler.................................................
William Ojile...............................................
Grant Raney.................................................
Anthony J. de Nicola(4).....................................
Sanjay Swani(5).............................................
Todd Khoury(6)..............................................
All directors and executive officers as a group (9
  persons)..................................................
</Table>

---------------------------
(1)  The address of Welsh, Carson, Anderson & Stowe is 320 Park Avenue, Suite
     2500, New York, NY 10022.
(2)  The address of Vestar Capital Partners is 245 Park Avenue, 41st Floor, New
     York, NY 10167.
(3)  The address of Citicorp Venture Capital is 299 Park Avenue, New York, NY
     10022.
(4)  As a general partner of Welsh, Carson, Anderson & Stowe, Mr. de Nicola may
     be deemed to have an indirect beneficial ownership interest in shares owned
     by Welsh, Carson, Anderson & Stowe.
(5)  As a general partner of Welsh, Carson, Anderson & Stowe, Mr. Swani may be
     deemed to have an indirect beneficial ownership interest in shares owned by
     Welsh, Carson, Anderson & Stowe.
(6)  As a managing director of Vestar Capital Partners, Mr. Khoury may be deemed
     to have an indirect beneficial ownership interest in shares owned by Vestar
     Capital Partners.

                                        83
<PAGE>

                           RELATED PARTY TRANSACTIONS

EQUITY SPONSORS

Repurchase of Existing Subordinated Notes with Proceeds from this Offering. Upon
the consummation of this offering, we will repay an aggregate of $314.3 million
of subordinated notes held by affiliates of Welsh, Carson, Anderson & Stowe, or
WCAS, Vestar Capital Partners, or Vestar, and Citicorp Venture Partners, or CVC.
In connection with the repayment of the subordinated notes, WCAS will receive
$     million, Vestar will receive $     million and CVC will receive $
million of the proceeds from this offering. Anthony J. de Nicola and Sanjay
Swani, two members of our board of directors, may receive or be deemed to have
received a portion of WCAS proceeds by virtue of their affiliation with WCAS. In
addition, Todd N. Khoury, a member of our board of directors, may receive or be
deemed to have received a portion of the Vestar proceeds by virtue of his
affiliation with Vestar.

Management Fees. Pursuant to the limited liability company operating agreement
of our subsidiary, Valor Telecommunications, LLC, or VTC, each of WCAS and
Vestar provides management services to us. In return for these services we paid
management fees of $571,430 to an affiliate of WCAS and $428,570 to an affiliate
of Vestar in each of fiscal 2000, 2001, 2002 and 2003. We will cease paying
these fees upon the closing of the offering. In addition, we will use a portion
of the proceeds of this offering to pay $     million to affiliates of WCAS and
$     million to affiliates of Vestar for a one-time, non-recurring transaction
fee in connection with our reorganization and this offering.

Investor Rights Agreement. We will enter into an investor rights agreement with
the equity sponsors and certain other existing equity investors pursuant to
which upon any sale of shares of Class B common stock following the second
anniversary of the consummation of this offering, at the option of the holder of
such shares, we will exchange each share of Class B common stock with the
purchaser thereof for one IDS (as may be adjusted for stock splits, dividends,
combinations or reclassifications).

As a condition to any sale of shares of Class B common stock involving an
election to require us to issue IDSs in exchange for such shares:

   --  such sale and exchange must comply with applicable laws, including,
       without limitation, securities laws, laws relating to redemption of
       common stock and laws relating to the issuance of debt;

   --  such sale and exchange must occur pursuant to an effective registration
       statement in the United States and a receipted prospectus for all the
       provinces of Canada;

   --  such sale and exchange must not conflict with or cause a default under
       any material financing agreement;

   --  such sale and exchange must not cause a mandatory suspension of dividends
       or deferral of interest under any material financing agreement as of the
       measurement date immediately following the proposed sale and exchange
       date;

   --  no event of default or deferral of interest has occurred and is
       continuing under the Indenture governing the senior subordinated notes;
       and

   --  the selling stockholder must have given us at least 30 but not more than
       60 days advance notice of such transaction.

In the event that the IDSs are automatically separated as a result of the
continuance of a payment default on the senior subordinated notes for 90 days,
or the redemption or maturity of any senior subordinated notes, at such time we
will amend our bylaws to delete the restriction that we may only issue shares of
Class A common stock in offerings registered with the Securities and Exchange
Commission and each share of Class B common stock will automatically be
exchanged for one share of Class A common stock and one senior subordinated
note.

                                        84
<PAGE>

In addition, the investor rights agreement will contain the following
registration rights:

   --  our equity sponsors will collectively have demand registration rights
       relating to the IDSs and the shares of our Class A common stock and
       senior subordinated notes represented by the IDSs that they hold as well
       as the shares of Class B common stock they hold and the IDSs into which
       such shares of Class B common stock may be exchanged, subject to the
       requirement that the securities covered by each demand registration have
       an aggregate public offering price of at least $     million; provided
       that an equity sponsor must beneficially own more than one percent of our
       outstanding shares of Class A common stock, Class B common stock, senior
       subordinated notes, or IDSs, as the case may be, to initiate a demand for
       registration; provided, further, that an equity sponsor may exercise a
       demand right for less than an aggregate public offering price of
       $          million if such proposed offering is for all of the remaining
       shares of Class A common stock, Class B common stock, senior subordinated
       notes or IDSs held by the equity sponsor; and

   --  the equity sponsors and certain other existing equity investors will have
       the right to include in our future public offerings of securities the
       shares of our Class A common stock, senior subordinated notes or IDSs
       held by each of them as well as the shares of Class B common stock they
       hold and the IDSs into which such shares of Class B common stock may be
       exchanged.

The equity sponsors may only exercise their demand registration rights with
respect to their Class A common stock once our Class A common stock is listed on
the             and their demand registration rights with respect to their Class
B common stock, following the second anniversary of the consummation of this
offering. If the equity sponsors exercise their demand registration rights, we
will file a registration statement or prospectus and undertake an offering in
the United States and Canada, as requested by the equity sponsors. The
registration rights are transferable by the equity sponsors and certain other
existing equity investors.

We have agreed to pay all costs and expenses in connection with each such
registration, except underwriting discounts and commissions applicable to the
securities sold, and to indemnify the equity sponsors and certain other existing
equity investors that have included securities in such offering against certain
liabilities, including liabilities under the Securities Act and any Canadian
securities laws.

Furthermore, we have agreed not to repurchase any shares of Class B common stock
prior to the second anniversary of the consummation of this offering.

INDEMNIFICATION AND INSURANCE

For a description of our limitation on liability and indemnification of, and
provision of insurance covering, our directors and executive officers, see
"Management--Limitations on Liability and Indemnification of Officers and
Directors."

                                        85
<PAGE>

                           DETAILED TRANSACTION STEPS

Immediately prior to and in connection with the consummation of this offering,
we will reorganize our corporate structure. All the equity interests in our
subsidiaries Valor Telecommunications, LLC, or VTC, Valor Telecommunications
Southwest, LLC, or VTS, and Valor Telecommunications Southwest II, LLC, or VTS
II, are currently held by the following individuals and entities to whom we
refer to collectively as our "existing equity holders":

   --  affiliates of Welsh, Carson, Anderson and Stowe; affiliates of Vestar
       Capital Partners; and affiliates of Citicorp Venture Capital, to whom we
       refer collectively as our "equity sponsors";

   --  a group of individuals who assisted us in forming our company, to whom we
       refer collectively as our "founders"; and

   --  our management and employees.

Our existing equity holders currently own equity interests in Valor
Telecommunications, LLC, Valor Telecommunications Southwest, LLC and Valor
Telecommunications Southwest II, LLC. The equity interests in Valor
Telecommunications, LLC are held by certain of our founders, our management
through a Delaware limited partnership and our equity sponsors both directly and
indirectly through various entities. The equity interests in Valor
Telecommunications Southwest, LLC are held by Valor Telecommunications, LLC, our
management, our equity sponsors both directly and indirectly through various
entities and by certain of our founders. The equity interests in Valor
Telecommunications Southwest II, LLC are held by Valor Telecommunications, LLC,
and many of the same founders who hold interests in Valor Telecommunications
Southwest, LLC. Valor Communications Group, Inc. is currently a wholly-owned
subsidiary of Valor Telecommunications, LLC.

Immediately prior to the consummation of this offering, the following
transactions will take place:

1.  Our founders, our management and our equity sponsors will contribute
    directly or indirectly their equity interests in Valor Telecommunications,
    LLC to Valor Communications Group, Inc. in exchange for an aggregate of
        IDSs ,          shares of Class B common stock and $          in cash
    from the proceeds of this offering.

2.  Our management, our equity sponsors and our founders who hold equity
    interests in Valor Telecommunications Southwest, LLC will contribute their
    equity interests in Valor Telecommunications Southwest, LLC to Valor
    Communications Group, Inc. in exchange for an aggregate of     IDSs,
              shares of Class B common stock and $     in cash from the proceeds
    of this offering.

3.  The founders who hold equity interests in Valor Telecommunications Southwest
    II, LLC will contribute their equity interests in Valor Telecommunications
    Southwest II, LLC to Valor Communications Group, Inc. in exchange for
              IDSs and $          in cash from the proceeds of this offering.

4.  The stock of Valor Communications Group, Inc. held by Valor
    Telecommunications, LLC will be retired.

As a result of our founders, our management and our equity sponsors'
contribution of their redeemable preferred interests in VTC, VTS and VTS II to
Valor, we will record an expense of approximately $     , resulting from the
excess of the fair value of the IDSs, Class B common stock and cash received
over the carrying amount of the redeemable preferred interests. In addition, as
a result of our management exchanging their outstanding stock options and
phantom stock units for           IDSs, we will record approximately $     in
compensation expense. As a result of this reorganization, each of Valor
Telecommunications, LLC, Valor Telecommunications Southwest, LLC and Valor
Telecommunications Southwest II, LLC will be either a direct or indirect
wholly-owned subsidiary of Valor Communications Group, Inc.

                                        86
<PAGE>

                      DESCRIPTION OF CERTAIN INDEBTEDNESS

NEW CREDIT FACILITY

Our subsidiaries Valor Telecommunications, LLC, or VTC, and Valor
Telecommunications Southwest II, LLC, or VTS II, intend to enter into a $
new senior secured credit facility with a syndicate of financial institutions,
to be arranged by Banc of America Securities LLC and CIBC World Markets Corp as
joint lead arrangers and joint book-managers.

Each of VTC's and VTS II's respective subsidiaries, other than certain of their
subsidiaries which they may acquire or organize after the date hereof, will also
be co-borrowers under the new credit facility. We will guaranty the obligations
of VTC and VTS II and their subsidiaries under the new credit facility.

We expect that the new credit facility will be comprised of a senior secured
revolving credit facility of up to $     million, which we refer to as the "new
revolver," and a senior secured term loan facility in an aggregate principal
amount of $     million, which we refer to as the "new term loan."

We expect that the new revolver and the new term loan will each have an
approximately five-year maturity with no amortization of principal prior to
maturity.

We expect that the new credit facility will have several features similar to
credit facilities of this nature, including but not limited to:

Interest Rate and Fees. We expect that borrowings will bear interest, at our
option, for the new revolver facility and the new term facility at either (a)
the Eurodollar Rate plus an applicable margin or (b) the Base Rate plus an
applicable margin, as such terms will be defined in the new credit facility.

We also expect the new revolver will provide payment to the lenders of a
commitment fee on any unused commitments equal to   % per annum.

Mandatory Prepayments. We expect that the new credit facility will require us to
prepay outstanding loans under the new senior notes with, subject to certain
conditions and exceptions,    % of the cash proceeds received by us from any
loss, damage, destruction or condemnation of or any sale, transfer or other
disposition of any assets,    % of the net cash proceeds from the incurrence of
any indebtedness by us, and    % of any Distributable Cash during any Dividend
Suspension Period, and    % of Available Cash during any Interest Deferral
Period, as such terms are defined in the new credit facility.

Voluntary Prepayments. We expect that the new credit facility will provide for
voluntary commitment reductions and prepayments of the new revolver and new
senior notes, respectively, subject to certain conditions and restrictions.

Covenants. We expect that the new credit facility will require that we meet
certain financial tests, including, without limitation, the following tests: a
maximum total leverage ratio, a maximum senior leverage ratio and a minimum
interest coverage ratio.

We also expect that our new credit facility will contain customary covenants and
restrictions, including, among others, limitations or prohibitions on declaring
and paying dividends and other distributions, redeeming and repurchasing our
other indebtedness, loans and investments, additional indebtedness, liens,
recapitalizations, mergers, acquisitions and asset sales and transactions with
affiliates.

Collateral. We expect to give to the administrative agent on behalf of each
lender a security interest in collateral consisting of, without limitation, a
pledge of our intercompany debt, 100% of the capital stock of our wholly-owned
domestic subsidiaries and a security interest in substantially all our other
personal property. VTC, VTS II and each of their respective subsidiaries which
is a co-borrower under the new credit facility will also give the administrative
agent a security interest in all of such persons' collateral of such types.

Events of Default. We expect that our new credit facility will specify certain
customary events of default.

                                        87
<PAGE>

                              DESCRIPTION OF IDSS

GENERAL

We are selling        IDSs in this offering. Each IDS initially represents:

   --  one share of our Class A common stock; and

   --  a    % senior subordinated note with a $     principal amount.

The ratio of Class A common stock to principal amount of senior subordinated
notes represented by an IDS is subject to change in the event of a stock split,
recombination or reclassification of our common stock. For example, if we elect
to effect a two-for-one stock split, from and after the effective date of the
stock split, each IDS will represent two shares of Class A common stock and the
same principal amount of senior subordinated notes as it previously represented.
Likewise, if we effect a recombination or reclassification of our Class A common
stock, each IDS will thereafter represent the appropriate number of shares of
Class A common stock on a recombined or reclassified basis, as applicable, and
the same principal amount of senior subordinated notes as it previously
represented. Immediately following the occurrence of any such event, we will
file with the SEC a Current Report on Form 8-K or any other applicable form,
disclosing the changes in the ratio of Class A common stock to principal amount
of senior subordinated notes as a result of such event.

Holders of IDSs are at all times the beneficial owners of the Class A common
stock and senior subordinated notes represented by such IDSs and, through their
broker or other financial institution and DTC, will each have exactly the same
rights, privileges and preferences, including voting rights, rights to receive
distributions, rights and preferences in the event of a default under the
indenture governing the senior subordinated notes, ranking upon bankruptcy and
rights to receive communications and notices as a beneficial owner of separately
held Class A common stock and senior subordinated notes, as applicable, would
have through its broker or other financial institution and DTC.

The IDSs will be available in book-entry form only. As discussed below under
"Book-Entry Settlement and Clearance," a nominee of the book-entry clearing
system will be the sole registered holder of the IDSs. That means you will not
be a registered holder of IDSs or be entitled to receive a certificate
evidencing your IDSs. You must rely on the procedures used by your broker or
other financial institution that will maintain your book-entry position to
receive the benefits and exercise the rights of a holder of IDSs that are
described below. You should consult with your broker or financial institution to
find out what those procedures are.

VOLUNTARY SEPARATION AND RECOMBINATION

Holders of IDSs, whether purchased in this offering or in a subsequent offering
of IDSs of the same series may, at any time after the earlier of 45 days from
the date of the closing of this offering or the occurrence of a change of
control, through their broker or other financial institution, separate the IDSs
into the shares of our Class A common stock and senior subordinated notes
represented thereby. Unless the IDSs have been previously automatically
separated as a result of the continuance of a payment default on the senior
subordinated notes for 90 days, or the redemption or maturity of any senior
subordinated notes, any holder of shares of our Class A common stock and senior
subordinated notes may, at any time, through his or her broker or other
financial institution, combine the applicable number of shares of Class A common
stock and senior subordinated notes to form IDSs.

If a sufficient number of shares of our Class A common stock are held separately
to meet the minimum requirements for separate trading on the
                    for at least 30 consecutive trading days, we have agreed
that we will use reasonable efforts to cause the Class A common stock to be
listed on the                     , in addition to the Class A common stock
being listed on the Toronto Stock Exchange, provided that the Class A common
stock would meet the applicable exchange or quotation system listing standards.

                                        88
<PAGE>

AUTOMATIC SEPARATION

Upon the occurrence of any of the following, the IDSs will be automatically
separated into the shares of Class A common stock and senior subordinated notes
represented thereby:

   --  a payment default on the senior subordinated notes continues for 90 days;

   --  exercise by us of our right to redeem all or a portion of the senior
       subordinated notes, which may be represented by IDSs at the time of such
       redemption;

   --  the date on which principal on the senior subordinated notes becomes due
       and payable, whether at the stated maturity date or upon acceleration
       thereof; or

   --  if DTC is unwilling or unable to continue as securities depository with
       respect to the IDSs or ceases to be a registered clearing agency under
       the Securities Exchange Act of 1934 and we are unable to find a successor
       depositary.

Following the automatic separation of the IDSs as a result of the continuance of
a payment default on the senior subordinated notes for 90 days, or the
redemption or maturity of any senior subordinated notes, shares of Class A
common stock and senior subordinated notes may no longer be combined to form
IDSs.

BOOK-ENTRY SETTLEMENT AND CLEARANCE

The Depository Trust Company, known as DTC, will act as securities depository
for the IDSs, and the senior subordinated notes and shares of Class A common
stock represented by the IDSs, or the "securities." The senior subordinated
notes and the shares of our Class A common stock represented by the IDSs will be
represented by one or more global notes and global stock certificates. The
global notes and global stock certificates will be issued in fully-registered
form in the name of DTC's nominee, Cede & Co.

Book-Entry Procedures. If you intend to purchase IDSs in the manner provided by
this prospectus you must do so through the DTC system or through direct and
indirect participants. The participant that you purchase through will receive a
credit for the applicable security on DTC's records. The ownership interest of
each actual purchaser of the applicable security, who we refer to as a
"beneficial owner," is to be recorded on the participant's records. Beneficial
owners will not receive written confirmation from DTC of their purchases, but
beneficial owners are expected to receive written confirmations providing
details of their purchase and sale transactions, as well as periodic statements
of their holdings, from the DTC participant through which the beneficial owner
entered into their purchase and sale transactions.

All interests in the securities will be subject to the operations and procedures
of DTC. We provide the following summary of DTC's operations solely for your
convenience. The operations and procedures of DTC may be changed at any time. We
are not responsible for those procedures and operations.

DTC has advised us as follows: DTC is a limited purpose trust company organized
under the laws of the State of New York, a "banking organization" within the
meaning of the New York State Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "clearing agency" registered under Section 17A of the Securities
Exchange Act of 1934. DTC was created to hold securities for its participants
and to facilitate the clearance and settlement of securities transactions
between its participants through electronic book-entry changes to the accounts
of its participants. DTC's participants include securities brokers and dealers,
including the underwriters, banks and trust companies, clearing corporations and
other organizations. Indirect access to DTC's system is also available to others
such as banks, brokers, dealers and trust companies. These indirect participants
clear through or maintain a custodial relationship with a DTC participant,
either directly or indirectly. The rules that apply to DTC and its participants
are on file with the SEC.

To facilitate subsequent transfers, all securities deposited by direct
participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of securities with DTC and their registration in the name of Cede &
Co. effect no change in beneficial ownership. DTC has no knowledge of the actual

                                        89
<PAGE>

beneficial owners of the securities. DTC's records reflect only the identity of
the direct participants to whose accounts such securities are credited, which
may or may not be the beneficial owners. The participants will remain
responsible for keeping account of their holdings on behalf of their customers.

Transfers of ownership interests in the securities are to be accomplished by
entries made on the books of participants acting on behalf of beneficial owners.
Beneficial owners will not receive certificates representing their ownership
interests in the applicable security except in the event that use of the book-
entry system for the securities is discontinued.

Separation and Combination. Holders of IDSs may, at any time after 45 days from
the date of original issuance, through their broker or other financial
institution, separate their IDSs into the shares of Class A common stock and
senior subordinated notes represented thereby. Similarly, unless the IDSs have
previously been automatically separated as a result of the continuance of a
payment default on the senior subordinated notes for 90 days, or the redemption
or maturity of any senior subordinated notes, any holder of shares of our Class
A common stock and senior subordinated notes may, at any time after 45 days from
the date of original issuance, through their broker or other financial
institution, combine the applicable number of shares of Class A common stock and
senior subordinated notes to form IDSs.

In addition, the IDSs will be automatically separated into the shares of Class A
common stock and senior subordinated notes represented thereby upon the
occurrence of the following:

   --  a payment default on the senior subordinated notes continues for 90 days,

   --  exercise by us of our right to redeem all or a portion of the senior
       subordinated notes, which may be represented by IDSs at the time of such
       redemption,

   --  the date on which principal on the senior subordinated notes becomes due
       and payable, whether at the stated maturity date or upon acceleration
       thereof, or

   --  if DTC is unwilling or unable to continue as securities depository with
       respect to the IDSs or ceases to be a registered clearing agency under
       the Securities Exchange Act of 1934 and we are unable to find a successor
       depositary.

Following the automatic separation of the IDSs as a result of the continuance of
a payment default on the senior subordinated notes for 90 days, or the
redemption or maturity of any senior subordinated notes, shares of Class A
common stock and senior subordinated notes may no longer be combined to form
IDSs.

Any voluntary or automatic separation of IDSs and any subsequent combination of
IDSs from senior subordinated notes and Class A common stock are to be
accomplished by entries made by the DTC participants acting on behalf of
beneficial owners. In any such case, the participant's account through which a
separation or combination is effected will be credited and debited for the
applicable securities on DTC's records. Depending on the arrangements between a
holder and his or her brokerage firm, and the brokerage arrangements with the
DTC participant, the transaction fee for any voluntary separation or
recombination may be passed directly on to the holder.

Conveyance of notices and other communications by DTC to direct participants, by
direct participants to indirect participants, and by participants to beneficial
owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.

Neither DTC nor Cede & Co. will consent or vote with respect to the securities.
Under its usual procedures, DTC would mail an omnibus proxy to participants as
soon as possible after the record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those direct participants to whose accounts the
securities are credited on the record date.

We and the transfer agent and registrar will make any payments on the securities
to DTC. DTC's practice is to credit direct participants' accounts on the payment
date in accordance with their respective holdings

                                        90
<PAGE>

shown on DTC's records unless DTC has reason to believe that it will not receive
payment on the payment date. Payments by participants to beneficial owners will
be governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participant and not of
DTC, us or the transfer agent and registrar, subject to any statutory or
regulatory requirements as may be in effect from time to time.

We or the transfer agent and registrar will be responsible for the payment of
all amounts to DTC. DTC will be responsible for the disbursement of those
payments to its participants, and the participants will be responsible for
disbursements of those payments to beneficial owners.

DTC may discontinue providing its service as securities depository with respect
to the IDSs, the shares of our Class A common stock or our senior subordinated
notes at any time by giving reasonable notice to us or the transfer agent and
registrar. If DTC discontinues providing its service as securities depository
with respect to the IDSs and we are unable to obtain a successor securities
depository, you will automatically take a position in the component securities.
If DTC discontinues providing its service as securities depository with respect
to the shares of our Class A common stock and/or our senior subordinated notes
and we are unable to obtain a successor securities depository, we will print and
deliver to you certificates for the securities that have been discontinued and
you will automatically take a position in any securities still subject to the
depository arrangement.

Also, in case we decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depository) we will print and deliver to
you certificates for the various certificates of Class A common stock and senior
subordinated notes you may own.

The information in this section concerning DTC and DTC's book-entry system has
been obtained from sources that we believe to be reliable, including DTC.

Except for actions taken by DTC in accordance with our instructions, neither we
nor the trustee nor the underwriters will have any responsibility or obligation
to participants, or the persons for whom they act as nominees, with respect to:

   --  the accuracy of the records of DTC, its nominee or any participant or any
       record of beneficial ownership interest in the securities on DTC's books,
       or

   --  any payments, or the providing of notice, to participants or beneficial
       owners.

Procedures Relating to Subsequent Issuances. The indenture governing our senior
subordinated notes will provide that, in the event there is a subsequent
issuance of senior subordinated notes having terms identical to the senior
subordinated notes represented by the IDSs except for the issuance date, if we
determine that such new senior subordinated notes need to have a new CUSIP
number, each holder of senior subordinated notes or IDSs (as the case may be)
agrees that a portion of such holder's senior subordinated notes (whether held
directly in book-entry form or held as part of IDSs) will be exchanged, without
any further action of such holder, for a portion of the senior subordinated
notes acquired by the holders of such subsequently issued senior subordinated
notes. Consequently, following each such subsequent issuance and exchange, each
holder of senior subordinated notes or IDSs (as the case may be) will own an
indivisible unit composed of senior subordinated notes of each separate issuance
in the same proportion as each other holder. Immediately following any exchange
resulting from a subsequent offering, a new CUSIP number will be assigned to
represent an inseparable unit consisting of the senior subordinated notes
outstanding prior to the subsequent issuance and the senior subordinated notes
issued in the subsequent issuance. Accordingly, the senior subordinated notes
issued in the original offering will not be able to be separated from the senior
subordinated notes issued in any subsequent offering. In addition, immediately
following any exchange resulting from a subsequent offering, new IDSs will be
issued in exchange for the existing IDSs which will consist of the inseparable
unit described above representing the proportionate principal amounts of each
issuance of senior subordinated notes (but with the same

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aggregate principal amount as the senior subordinated notes (or inseparable
unit) represented by the IDSs immediately prior to such subsequent issuance and
exchange) and the Class A common stock. All accounts of DTC participants with a
position in the securities will be automatically revised to reflect the new
CUSIP numbers.

Most subsequent issuances of senior subordinated notes, including subsequent
issuances of senior subordinated notes which have OID and all subsequent
issuances six months after the date of this offering, may require trades on the
                    to settle up to 24 hours after the date such trades would
settle absent such subsequent issuance or settle for cash, consistent with such
exchange's practices for the date of such issuance. The                     has
informed us that they will broadcast any such alternate settlement procedures in
advance of any relevant trading day, consistent with their established
procedures. Based upon these discussions, we do not believe that any settlement
delays or cash settlement procedures, if any, associated with subsequent
issuances will have a significant impact on the IDS trading market. Immediately
following any subsequent issuance, we will file with the SEC a Current Report on
Form 8-K or any other applicable form, disclosing the changes, if any, to the
OID attributable to your senior subordinated notes as a result of such
subsequent issuance.

IDS TRANSFER AGENT

          is the IDS transfer agent.

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                          DESCRIPTION OF CAPITAL STOCK

GENERAL

The following is a description of terms of our amended and restated certificate
of incorporation and by-laws, the forms of which have been filed with the
Securities and Exchange Commission, or SEC, as exhibits to the registration
statement of which this prospectus is part and which will become effective prior
to the offering contemplated by this prospectus.

AUTHORIZED CAPITALIZATION

Our authorized capital stock consists of:

   --         shares of Class A common stock, par value $0.01 per share;

   --         shares of Class B common stock, par value $0.01 per share;

   --         shares of Class C common stock, par value $0.01 per share; and

   --         shares of preferred stock, par value $0.01 per share.

After this offering there will be           shares of our Class A common stock,
          shares of our Class B common stock, no shares of our Class C common
stock and no shares of our preferred stock outstanding.

COMMON STOCK

Except as described below, shares of our Class A common stock, Class B common
stock and Class C common stock are identical in all respects. In addition, we
have entered into an agreement with our equity sponsors which, subject to
certain conditions, allows them to exchange their shares of Class B common stock
for IDSs, see "Related Party Transactions -- Investor Rights Agreement." There
are currently no shares of our Class C common stock outstanding, and following
the completion of this offering, no shares of our Class C common stock will be
outstanding. All outstanding shares of common stock are, and all shares of
common stock to be outstanding upon completion of this offering will be, validly
issued, fully paid and nonassessable.

Dividends. Holders of shares of our Class A common stock and Class C common
stock will be entitled to receive such dividends and other distributions in
cash, stock or property of ours as may be declared by our board of directors
from time to time out of our assets or funds legally available for dividends or
other distributions. See "Dividend Policy" for a complete description of the
dividends we expect to declare on our shares of common stock.

Our amended and restated certificate of incorporation contains dividend
provisions with respect to our shares of Class B common stock which are intended
to replicate the yield on our IDS units. Any time a dividend is paid to holders
of Class A common stock, holders of Class B common stock will be paid a dividend
equal to the same amount per share as paid to holders of Class A common stock.
In addition to any such dividend, holders of shares of our Class B common stock
will accrue dividends at a rate of   % per annum on a deemed issuance price per
share which will be equal to the public offering price of the IDSs; provided
that during the continuation of any event of default under the indenture
governing the senior subordinated notes, dividends will accrue at a rate of   %
per annum. Such dividends will accrue, and to the extent not paid, accumulate,
whether or not declared and whether or not we have funds legally available for
the payment of dividends. Such dividends will be paid, if declared by the board,
on the last day of each fiscal quarter or, to the extent not previously paid, at
such time as such shares of Class B common stock are exchanged for IDSs;
provided that such dividends may only be paid to the extent allowable under
applicable law, the terms of our new credit facility and the indenture governing
our senior subordinated notes.

Combination with Senior Subordinated Notes to Form IDSs. Only shares of our
Class A common stock may be combined with senior subordinated notes to form
IDSs. Our bylaws provide that we may only

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issue additional shares of our Class A common stock and IDSs pursuant to a
registration statement that has been declared effective by the Securities and
Exchange Commission.

Rights Upon Liquidation. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, holders of shares of our common stock
will be entitled to share equally in our assets remaining after payment of all
debts and other liabilities, subject to the liquidation preference of any
outstanding preferred stock.

Voting Rights. Shares of our common stock carry one vote per share. Holders of
shares of our common stock have no cumulative voting rights.

Other Rights. Holders of shares of our common stock have no preemptive rights.
The holders of common stock are subject to, and may be adversely affected by,
the rights of the holders of shares of any series of preferred stock that we may
designate and issue in the future.

PREFERRED STOCK

Our board of directors has the authority to issue shares of preferred stock from
time to time on terms that it may determine, to divide shares of preferred stock
into one or more series and to fix the designations, voting powers, preferences
and relative participating, optional or other special rights of each series, and
the qualifications, limitations or restrictions of each series, to the fullest
extent permitted by the General Corporation Law of the State of Delaware, or
DGCL. The issuance of shares of preferred stock could have the effect of
decreasing the market price of the IDSs and our shares of common stock, impeding
or delaying a possible takeover and adversely affecting the voting and other
rights of the holders of shares of our common stock.

DELAWARE ANTI-TAKEOVER LAW AND CHARTER AND BYLAW PROVISIONS

Provisions of Delaware law and our amended and restated certificate of
incorporation and bylaws could make it more difficult to acquire us by means of
a tender offer, a proxy contest or otherwise, or to remove incumbent officers
and directors. These provisions, summarized below, are expected to discourage
types of coercive takeover practices and inadequate takeover bids and to
encourage persons seeking to acquire control of us to first negotiate with us.
We believe that the benefits of increased protection of our potential ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to acquire
or restructure us outweigh the disadvantages of discouraging takeover or
acquisition proposals because, among other things, negotiation of these
proposals could result in an improvement of their terms.

Delaware Anti-Takeover Statute. We are subject to Section 203 of the Delaware
General Corporation Law, or DGCL, an anti-takeover statute. In general, Section
203 prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years
following the date the person became an interested stockholder, unless (with
certain exceptions) the "business combination" or the transaction in which the
person became an interested stockholder is approved in a prescribed manner.
Generally, a "business combination" includes a merger, asset or stock sale, or
other transaction resulting in a financial benefit to the interested
stockholder. Generally, an "interested stockholder" is a person who, together
with affiliates and associates, owns (or within three years prior to the
determination of interested stockholder status, did own) 15% or more of a
corporation's voting stock. The existence of this provision would be expected to
have an anti-takeover effect with respect to transactions not approved in
advance by the board of directors, including discouraging attempts that might
result in a premium over the market price for the shares of common stock held by
stockholders.

No Cumulative Voting. The DGCL provides that stockholders are denied the right
to cumulate votes in the election of directors unless our amended and restated
certificate of incorporation provides otherwise. Our amended and restated
certificate of incorporation does not expressly provide for cumulative voting.

No Stockholder Action by Written Consent; Calling of Special Meeting of
Stockholders. Our organizational documents prohibit stockholder action by
written consent. Our amended and restated certificate of
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incorporation provides that special meetings of our stockholders may be called
only by our board of directors.

Advance Notice Requirements for Stockholder Proposals and Director Nominations.
Our by-laws provide that stockholders seeking to bring business before or to
nominate candidates for election as directors at an annual meeting of
stockholders must provide timely notice of their proposal in writing to the
corporate secretary. To be timely, a stockholder's notice regarding (1) a
stockholder's proposal must be delivered or mailed and received at our principal
executive offices not less than 60 days not more than 90 days prior to the
meeting or (2) a director nomination must be delivered or mailed and received at
our principal executive offices not less than 60 nor more than 90 days in
advance of the anniversary date of the immediately preceding annual meeting of
stockholders; provided that if less than 70 days notice or prior public
announcement of the date of the meeting is given, notice regarding stockholder
nominations for the election of directors or notice of other stockholder
proposals must be received by our corporate secretary by the later of 10 days
following the day on which notice of the date of the special meeting was mailed
or public disclosure of the date of the special meeting was made. Our by-laws
also specify requirements as to the form and content of a stockholder's notice.
These provisions may impede stockholders' ability to bring matters before an
annual meeting of stockholders or make nominations for directors at an annual
meeting of stockholders.

Limitations on Liability and Indemnification of Officers and Directors. The DGCL
authorizes corporations to limit or eliminate the personal liability of
directors to corporations and their stockholders for monetary damages for
breaches of directors' fiduciary duties as directors. Our organizational
documents include provisions that eliminate, to the extent allowable under the
DGCL, the personal liability of directors for monetary damages for actions taken
as a director. Our organizational documents also provide that we must indemnify
and advance reasonable expenses to our directors and officers to the fullest
extent authorized by the DGCL. We will also be expressly authorized to carry
directors' and officers' insurance for our directors, officers and certain
employees for some liabilities.

The limitation of liability and indemnification provisions in our amended and
restated certificate of incorporation and by-laws may discourage stockholders
from bringing a lawsuit against directors for breach of their fiduciary duty.
These provisions may also have the effect of reducing the likelihood of
derivative litigation against directors and officers, even though such an
action, if successful, might otherwise benefit us and our stockholders. In
addition, your investment may be adversely affected to the extent that, in a
class action or direct suit, we pay the costs of settlement and damage awards
against directors and officers pursuant to these indemnification provisions.

There is currently no pending material litigation or proceeding involving any of
our directors, officers or employees for which indemnification is sought.

Removal of Directors. Our organizational documents provide that directors may be
removed only for cause by the affirmative vote of at least a majority in voting
power of the outstanding shares of our capital stock entitled to vote.

Authorized but Unissued Shares. Our authorized but unissued shares of common
stock and preferred stock will be available for future issuance without your
approval. We may use additional shares for a variety of corporate purposes,
including future public offerings to raise additional capital, corporate
acquisitions and employee benefit plans. The existence of authorized but
unissued shares of common stock and preferred stock could render more difficult
or discourage an attempt to obtain control of us by means of a proxy contest,
tender offer, merger or otherwise.

Supermajority Provisions. The DGCL provides generally that the affirmative vote
of a majority in voting power of the outstanding shares entitled to vote is
required to amend a corporation's certificate of incorporation, unless the
certificate of incorporation or by-laws require a greater percentage. Our
organizational documents provide that the following provisions in the
certificate of incorporation or by-laws

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may be amended only by a vote of two-thirds or more in voting power of all the
outstanding shares of our capital stock entitled to vote:

   --  the prohibition on stockholder action by written consent;

   --  the ability to call a special meeting of stockholders being vested solely
       in our board of directors and the chairman of our board of directors;

   --  the provisions relating to advance notice requirements for stockholder
       proposals and directors nominations;

   --  the provisions relating to the removal of directors;

   --  the limitation on the liability of our directors to us and our
       stockholders and the obligation to indemnify and advance reasonable
       expenses to the directors and officers to the fullest extent authorized
       by the DGCL;

   --  the provisions granting authority to our board of directors to amend or
       repeal our by-laws without a stockholder vote, as described in more
       detail in the next succeeding paragraph; and

   --  the supermajority voting requirements listed above.

In addition, our amended and restated certificate of incorporation grants our
board of directors the authority to amend and repeal our by-laws without a
stockholder vote in any manner not inconsistent with the laws of the State of
Delaware or our amended and restated certificate of incorporation. Our amended
and restated certificate of incorporation provides that these provisions in our
amended and restated certificate of incorporation may be amended only by a vote
of two-thirds or more in voting power of all the outstanding shares of our
capital stock entitled to vote.

LISTING

We will apply to list the IDSs on the                under the trading symbol
"          ." We will apply to list the IDSs on the Toronto Stock Exchange under
the trading symbol "          " and our shares of Class A common stock under the
symbol "          ."

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Class A common stock is           .

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                    DESCRIPTION OF SENIOR SUBORDINATED NOTES

The following is a description of the terms of the indenture under which our
senior subordinated notes will be issued, a copy of the form of which has been
filed with the Commission as an exhibit to the registration statement of which
this prospectus is a part. We refer to Valor Communications Group, Inc. as the
"Company" in this "Description of Senior Subordinated Notes" section.

GENERAL

The Notes are to be issued under an indenture, to be dated as of           ,
2004 (the "Indenture"), among us, the subsidiary guarantors and           , as
Trustee (the "Trustee").

The following description is a summary of the material provisions of the
Indenture and the Notes. It does not purport to be complete and we urge you to
read the Indenture, a copy of which will be available upon request from the
Company. This description is subject to, and is qualified in its entirety by
reference to, all the provisions of the Indenture, including the definitions of
certain terms therein and those terms made a part thereof by the Trust Indenture
Act of 1939, as amended. Capitalized terms used in this "Description of Senior
Subordinated Notes" section and not otherwise defined have the meanings set
forth in "--Certain Definitions" hereafter.

The Indenture will provide for the issuance of an unlimited aggregate principal
amount of additional senior subordinated notes having identical terms and
conditions to the Notes offered hereby (other than issuance date) (the
"Additional Notes"), subject to compliance with the covenants contained in the
Indenture. Additional Notes will vote on all matters with the Notes offered
hereby. The Additional Notes will be deemed to have the same accrued current
period interest, deferred interest and defaults as the Notes issued in this
offering and will be deemed to have expended Payment Blockage Periods and
interest deferral periods to the same extent as the Notes issued in this
offering.

The Notes will be issued only in fully-registered form, without coupons,
represented by one or more global notes which will be registered in the name of
Cede & Co., the nominee of DTC. See "Description of IDSs--Book-Entry Settlement
and Clearance."

TERMS OF THE NOTES

  Maturity

The Notes will be unsecured senior subordinated obligations of the Company and
will mature on           , 2014. The Company may extend the maturity of the
Notes for two additional successive five-year terms if the following conditions
are satisfied:

   --  during the twelve month period ending on the last day of the most recent
       fiscal quarter ending at least 45 days before the end of the then-current
       term, our Leverage Ratio is less than      to 1.0;

   --  no Event of Default (including certain events of bankruptcy, insolvency
       or reorganization of the Company or a Significant Subsidiary) has
       occurred and is continuing with respect to the Notes; and

   --  no event of default has occurred and is continuing with respect to any
       other Indebtedness of the Company having a principal amount in excess of
       $     million or could occur as a result of such extension, including
       under any Designated Senior Indebtedness.

If the Company is going to extend the maturity of the Notes, the Company will
cause a notice of such extension, including the new maturity date, to be sent to
holders at least 30 and not more than 60 days prior to the previously scheduled
maturity date.

Within 30 days prior to the maturity or redemption of the Notes, unless the
Company has sent a notice of extension of the maturity date, the Company will
use its reasonable efforts to list or quote the outstanding shares of its Class
A common stock on the securities exchange(s) or automated securities quotation
system(s), if any, on which the IDSs then are listed or quoted, in addition to
any other securities exchange on which the Class A common stock is then listed.

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  Interest

The Notes will bear interest at a rate per year of   % from           , 2004 or
from the most recent date to which interest has been paid or provided for,
payable quarterly on the last day of each March, June, September and December to
Holders of record at the close of business on the 20th day or the immediately
preceding Business Day of such month, commencing           , 2004, provided that
if any such day is not a Business Day, interest shall be paid on the next
Business Day.

  Interest Deferral

Prior to           , 2009, the Company will be permitted, at its election, on
one or more occasions to defer interest payments on the Notes (each, an
"Interest Deferral Period") by delivering to the Trustee a copy of a resolution
of the Company's Board of Directors to the effect that, based upon a good-faith
determination of the Company's Board of Directors, such deferral is reasonably
necessary for bona-fide cash management purposes, or to reduce the likelihood of
or avoid a default under any Designated Senior Indebtedness; provided, however,
that no such deferral may be commenced, and any on-going deferral shall cease,
if a default in payment of principal or premium, if any, on the Notes has
occurred and is continuing, an Event of Default with respect to payment of
interest on the Notes has occurred and is continuing, or another Event of
Default with respect to the Notes has occurred and is continuing and the Notes
have been accelerated as a result of the occurrence of such Event of Default;
and provided, further, that interest payments on the Notes may not be deferred
under this provision for more than eight quarters in the aggregate or beyond
          , 2009.

After           , 2009 and prior to           , 2014 and during the term of each
additional five-year term of the senior subordinated notes, if any, the Company
will be permitted, at its election, on two occasions to defer interest payments
on the Notes (also an "Interest Deferral Period") with respect to two quarters
by delivering to the Trustee a copy of a resolution of the Company's Board of
Directors to the effect that, based upon a good-faith determination of the
Company's Board of Directors, such deferral is reasonably necessary for
bona-fide cash management purposes, or to reduce the likelihood of or avoid a
default under any Designated Senior Indebtedness; provided, however, that no
such deferral may be commenced, and any on-going deferral shall cease, if a
default in payment of principal or premium, if any, on the Notes has occurred
and is continuing, an Event of Default with respect to payment of interest on
the Notes has occurred and is continuing, or another Event of Default with
respect to the Notes has occurred and is continuing and the Notes have been
accelerated as a result of the occurrence of such Event of Default; and
provided, further, that interest payments on the Notes may not be deferred under
this provision for more than two quarters in the aggregate or beyond           ,
2014. At the end of any such Interest Deferral Period, the Company may not defer
interest on the Notes unless and until all deferred interest is paid in full.

Deferred interest on the Notes will bear interest at a rate per annum of      %,
compounded quarterly, until paid in full. At the end of any Interest Deferral
Period, the Company must pay all deferred interest and accrued interest thereon
and thereafter, the Company will be obligated to resume quarterly payments of
interest on the Notes.

During any Interest Deferral Period and so long as any deferred interest or
interest on deferred interest remains outstanding, the Company will not be
permitted to make any payment of dividends on the common stock.

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OPTIONAL REDEMPTION

The Notes will be redeemable at the Company's option as provided in the
Indenture.

In the case of any partial redemption, selection of the Notes for redemption
will be made by the Trustee on a pro rata basis, by lot or by such other method
as the Trustee shall deem fair and appropriate (and in such manner as complies
with the applicable legal and regulatory requirements). If any Note is to be
redeemed in part only, the notice of redemption relating to such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the holder thereof upon cancellation of the original Note. On and after
the date of redemption, interest will cease to accrue on Notes or portions
thereof called for redemption, so long as the Company has deposited with the
depositary funds sufficient to pay the principal of, plus accrued and unpaid
interest (including any deferred interest and accrued interest thereon) on, the
Notes to be redeemed.

A full or partial redemption of the Notes will result in an automatic separation
of the IDSs. See "Description of IDSs--Automatic Separation."

RANKING

The Indebtedness evidenced by the Notes will be unsecured senior subordinated
Indebtedness of the Company, will be subordinated in right of payment, to the
extent and in the manner provided in the Indenture, to the prior payment in full
in cash of all existing and future Senior Indebtedness of the Company, including
the Credit Facilities, will rank pari passu in right of payment with all
existing and future Pari Passu Indebtedness of the Company and will rank senior
in right of payment to all existing and future Subordinated Indebtedness of the
Company. The Notes will also be effectively subordinated to any Secured
Indebtedness of the Company to the extent of the value of the assets securing
such Indebtedness. However, payment from the money or the proceeds of U.S.
Government Obligations held in any defeasance trust described under
"--Defeasance" below is not subordinated to any Senior Indebtedness or subject
to the restrictions described herein.

The indebtedness evidenced by each Guarantee will be unsecured senior
subordinated indebtedness of the applicable Guarantor, will be subordinated in
right of payment, to the extent and in the manner provided in the Indenture, to
the prior payment in full in cash of all existing and future Senior Indebtedness
of such Guarantor, including the Senior Indebtedness of each Guarantor
represented by such Guarantor's guarantee of the Credit Facilities, will rank
pari passu in right of payment with all existing and future Pari Passu
Indebtedness of such Guarantor and will rank senior in right of payment to all
existing and future Subordinated Indebtedness of such Guarantor. The Guarantees
will also be effectively subordinated to any Secured Indebtedness of the
applicable Guarantor to the extent of the value of the assets securing such
Indebtedness.

As of December 31, 2003, on a pro forma basis, (i) the Company would have had
$     Senior Indebtedness outstanding, (ii) the Company would have had no Pari
Passu Indebtedness outstanding other than the Notes, (iii) the Guarantors would
have had $     million in Senior Indebtedness outstanding under the Credit
Facilities, all of which would have been Secured Indebtedness, and (iv) the
Guarantors would have had no Pari Passu Indebtedness outstanding other than the
Guarantees. Although the Indenture will contain limitations on the amount of
additional Indebtedness which the Company, the Guarantors and the Non-Guarantor
Subsidiaries may Incur, under certain circumstances the amount of such
Indebtedness could be substantial and, in any case, such Indebtedness may be
Senior Indebtedness or Secured Indebtedness. See "--Limitations on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred Stock" below.

As a holding company, the Company has no operations and, therefore, is dependent
on the cash flow of its subsidiaries and other entities to meet its own
obligations, including the payment of interest and principal obligations on the
Notes when due. As of December 31, 2003, on a pro forma basis, the total
liabilities of the Company's subsidiaries were approximately $     million,
including trade payables. Although the
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Indenture will limit the Incurrence of Indebtedness by and the issuance of
Preferred Stock of certain of the Company's subsidiaries, such limitation is
subject to a number of significant qualifications.

"Senior Indebtedness" with respect to the Company or any Guarantor means the
Senior Lender Indebtedness and all other Indebtedness of the Company or such
Guarantor, including principal, interest thereon (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization relating
to the Company or any Subsidiary of the Company at the rate specified in the
applicable Senior Indebtedness, whether or not a claim for post-filing interest
is allowed in such proceeding) and other amounts (including make-whole payments,
fees, expenses, reimbursement obligations under letters of credit and
indemnities) owing in respect thereof, whether outstanding on the Issue Date or
thereafter Incurred, unless in the instrument creating or evidencing the same or
pursuant to which the same is outstanding it is provided that such obligations
are not superior, or are subordinated, in right of payment to the Notes or such
Guarantor's Guarantee, as applicable; provided, however, that Senior
Indebtedness shall not include, as applicable, (i) any obligation of the Company
to any Subsidiary of the Company or of such Guarantor to the Company or any
other Subsidiary of the Company, (ii) any liability for federal, state, local or
other taxes owed or owing by the Company or such Guarantor, (iii) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including guarantees thereof or instruments evidencing such
liabilities), (iv) any Indebtedness or obligation of the Company or such
Guarantor which is Pari Passu Indebtedness, (v) any obligations with respect to
any Capital Stock, and (vi) any Indebtedness Incurred in violation of the
Indenture.

Only Senior Indebtedness or Secured Indebtedness of the Company or a Guarantor
will rank senior to the Notes or the relevant Guarantee in accordance with the
provisions of the Indenture. The Notes and each Guarantee will in all respects
rank pari passu with all other Pari Passu Indebtedness of the Company and the
relevant Guarantor, respectively.

The Company may not pay principal of, premium (if any) or interest on, the Notes
or make any deposit pursuant to the provisions described under "Defeasance"
below and may not otherwise purchase, redeem or otherwise retire any Notes
(except that Holders may receive and retain (a) Permitted Junior Securities and
(b) payments made from the trust described under "--Defeasance" below so long
as, on the date or dates the respective amounts were paid into the trust, such
payments were made with respect to the Notes without violating the subordination
provisions described herein or any other material agreement binding on the
Company, including the Credit Facilities) (collectively, "pay the Notes") if (i)
a default in the payment of the principal of, premium, if any, or interest on
any Designated Senior Indebtedness occurs and is continuing or any other amount
owing in respect of any Designated Senior Indebtedness is not paid when due, or
(ii) any other default on any Designated Senior Indebtedness occurs and results
in such Designated Senior Indebtedness becoming due or being declared due and
payable prior to the date on which it would otherwise become due and payable in
accordance with its terms, unless, in either case, the default has been cured or
waived and any such acceleration has been rescinded or such Designated Senior
Indebtedness has been paid in full. However, the Company may pay the Notes
without regard to the foregoing if the Company and the Trustee receive written
notice approving such payment from the Representative of each series of the
Designated Senior Indebtedness with respect to which either of the events set
forth in clause (i) or (ii) of the immediately preceding sentence has occurred
and is continuing. During the continuance of any default (other than a default
described in clause (i) or (ii) of the second preceding sentence) with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or upon the expiration of any applicable
grace periods, the Company may not pay the Notes for a period (a "Payment
Blockage Period") commencing upon the receipt by the Trustee (with a copy to the
Company) of written notice (a "Blockage Notice") of such default from the
Representative of such defaulted Designated Senior Indebtedness specifying an
election to effect a Payment Blockage Period and ending 179 days thereafter (or
earlier if such Payment Blockage Period is terminated (i) by written notice to
the Trustee and the Company from the Person or Persons who gave such Blockage
Notice, (ii) by repayment in full of such defaulted Designated Senior
Indebtedness or (iii) because the default giving rise to such Blockage Notice is
no longer continuing). Notwithstanding the provisions

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described in the immediately preceding sentence (but subject to the provisions
contained in the first sentence of this paragraph and in the succeeding
paragraph), unless the holders of such defaulted Designated Senior Indebtedness
or the Representative of such holders have accelerated the maturity of such
defaulted Designated Senior Indebtedness, the Company may resume payments on the
Notes after the end of such Payment Blockage Period. In no event may the total
number of days during which any Payment Blockage Period or Periods is in effect
exceed 179 days in the aggregate during any 360 consecutive day period. For
purposes of this provision, no default or event of default that existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period shall be, or be made, the basis of the commencement of a subsequent
Payment Blockage Period by the Representative of such Designated Senior
Indebtedness, unless such default or event of default shall have been cured or
waived for a period of not less than 90 consecutive days.

Upon any payment or distribution of the assets of the Company upon a total or
partial liquidation or dissolution or bankruptcy reorganization of, insolvency,
receivership or similar proceeding relating to the Company or its property or an
assignment for the benefit of its creditors or any marshalling of the Company's
assets or liabilities, the holders of Senior Indebtedness will be entitled to
receive payment in full in cash of all the Senior Indebtedness before the
Noteholders are entitled to receive any payment, and until the Senior
Indebtedness is paid in full in cash, any payment or distribution to which
Noteholders would be entitled but for the subordination provisions of the
Indenture will be made to holders of the Senior Indebtedness as their interests
may appear (except that Holders of Notes may receive and retain (i) Permitted
Junior Securities, and (ii) payments made from the trust described under
"--Defeasance" so long as, on the date or dates the respective amounts were paid
into the trust, such payments were made with respect to the Notes without
violating the subordination provisions described herein or any other material
agreement binding on the Company, including the Credit Agreement). If a
distribution is made to Noteholders that due to the subordination provisions of
the Indenture should not have been made to them, such Noteholders are required
to hold it in trust for the holders of Senior Indebtedness and pay it over to
them as their interests may appear.

After the occurrence of an Event of Default, the Company or the Trustee shall
promptly notify the holders of each series of Designated Senior Indebtedness (or
their respective Representative) of such occurrence. If any Designated Senior
Indebtedness is outstanding, the Company may not make any payments then due on
the Notes until five Business Days after the holders or the Representative of
such Designated Senior Indebtedness receive notice of such occurrence and,
thereafter, may pay the Notes only if the subordination provisions of the
Indenture otherwise permit payment at that time.

By reason of the subordination provisions contained in the Indenture, in the
event of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the Noteholders.

The Indenture will contain identical subordination provisions relating to each
Guarantor's obligations under its Guarantee.

GUARANTEES

Each of the Company's direct and indirect Wholly Owned Subsidiaries organized
under the laws of any state of the United States of America on the Issue Date
and certain future Subsidiaries of the Company (as described below), as primary
obligors and not merely as sureties, will jointly and severally irrevocably and
unconditionally guarantee on an unsecured senior subordinated basis (as
described under "--Ranking" above) the performance and punctual payment when
due, whether at Stated Maturity, by acceleration or otherwise, of all
obligations of the Company under the Indenture and the Notes, whether for
payment of principal of, premium, if any, or interest on the Notes, expenses,
indemnification or otherwise (all such obligations guaranteed by such Guarantors
being herein called the "Guaranteed Obligations"). Such Guarantors will agree to
pay, in addition to the amount stated above, any and all expenses (including
reasonable counsel fees and expenses) Incurred by the Trustee or the Holders in
enforcing any rights under the Guarantees. Each Guarantee will be limited in
amount to an amount not to exceed the

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maximum amount that can be guaranteed by the applicable Guarantor after giving
effect to all of its other contingent and fixed liabilities (including without
limitation all of its obligations under or with respect to the Credit Agreement)
without rendering the Guarantee, as it relates to such Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally. After the Issue Date,
the Company will cause each Restricted Subsidiary organized under the laws of
the United States of America or any state or territory thereof that has Total
Assets of more than $500,000 to execute and deliver to the Trustee a
supplemental indenture pursuant to which such Restricted Subsidiary will
guarantee, payment of the Notes on an unsecured senior subordinated basis. See
"Certain Covenants--Future Guarantors" below.

Each Guarantee is a continuing guarantee and shall, until released in accordance
with the next succeeding paragraph, (i) remain in full force and effect until
payment in full of all the Guaranteed Obligations, (ii) be binding upon each
such Guarantor and its successors, and (iii) inure to the benefit of and be
enforceable by the Trustee, the Holders and their successors, transferees and
assigns.

The Guarantee of a Guarantor will be released: (i) in connection with any
transaction permitted by the Indenture after which the Guarantor ceases to be a
Restricted Subsidiary of the Company; provided that the sale or other
disposition, if any, complies with the "Asset Sale" provisions of the Indenture;
or (ii) upon satisfaction and discharge or defeasance of the Notes as provided
below under "Defeasance" and "Satisfaction and Discharge."

CHANGE OF CONTROL

Upon the occurrence of any of the following events (each, a "Change of
Control"), each Holder will have the right to require the Company to repurchase
all or any part of such Holder's Notes of any series at a purchase price in cash
equal to 101% of the principal amount thereof, plus accrued and unpaid interest,
if any, to but not including the date of repurchase (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date): (i) the sale, lease or transfer, in one or a
series of related transactions, of all or substantially all of the Company's
assets to any person or group (as such term is used in Section 13(d)(3) of the
Exchange Act) other than the Permitted Holders, (ii) the adoption of a plan
relating to the liquidation or dissolution of the Company, (iii) the acquisition
by any person or group (as such term is used in Section 13(d)(3) of the Exchange
Act) other than the Permitted Holders of a beneficial ownership of more than 50%
of the voting power of the voting stock of the Company, by way of purchase,
merger or consolidation or otherwise (other than a creation of a holding company
that does not involve a change in the beneficial ownership of the Company as a
result of such transaction), (iv) the merger or consolidation of the Company
with or into another Person or the merger of another Person into the Company
with the effect that immediately after such transaction the stockholders of the
Company immediately prior to such transaction hold, directly or indirectly, less
than 50% of the total voting power of all securities generally entitled to vote
in the election of directors, managers, or trustees of the Person surviving such
merger or consolidation, in each case other than creation of a holding company
that does not involve a change in the beneficial ownership of the Company as a
result of such transaction or (v) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors.
In order to exercise this repurchase right, a Holder must separate its IDSs into
the shares of Class A common stock and Notes represented thereby.

In the event that at the time of such Change of Control the terms of any Senior
Lender Indebtedness restrict or prohibit the repurchase of Notes pursuant to
this covenant, then prior to the mailing of the notice to Holders provided for
in the immediately following paragraph but in any event within 30 days following
any Change of Control, the Company shall (i) repay in full all Senior Lender
Indebtedness or offer to repay in full all Senior Lender Indebtedness and repay
the Senior Lender Indebtedness of each lender who has accepted such offer or
(ii) obtain the requisite consent under the agreements governing the Senior
Lender Indebtedness to permit the repurchase of the Notes as provided for in the
immediately following paragraph.

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<PAGE>

Within 30 days following any Change of Control, unless the Company has exercised
its right to redeem the Notes as described under "--Optional Redemption," the
Company shall mail a notice (a "Change of Control Offer") to each Holder with a
copy to the Trustee stating: (1) that a Change of Control has occurred and that
such Holder has the right to require the Company to purchase such Holder's Notes
at a purchase price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to but not including the date of repurchase
(subject to the right of Holders of record on a record date to receive interest
on the relevant interest payment date); (2) the circumstances and relevant facts
and financial information regarding such Change of Control; (3) whether the
agreements then governing the Senior Lender Indebtedness will permit the
repurchase of the Notes; (4) the repurchase date (which shall be no earlier than
30 days nor later than 60 days from the date such notice is mailed); and (5) the
instructions determined by the Company, consistent with this covenant, that a
Holder must follow in order to have its Notes purchased.

The Company will not be required to make a Change of Control Offer upon a Change
of Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in the
Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.

The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this covenant, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Indenture by virtue thereof.

The definition of Change of Control includes a phrase relating to the sale,
lease or transfer of "all or substantially all" the assets of the Company and
its Subsidiaries taken as a whole. Although there is a developing body of case
law interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
Holder of Notes to require the Company to repurchase such Notes as a result of a
sale, lease or transfer of less than all of the assets of the Company and its
Subsidiaries taken as a whole to another Person or group may be uncertain.

COVENANTS RELATING TO IDSS

Recombination of Notes and Class A Common Stock into IDSs. The Indenture will
provide that as long as any Notes are outstanding, any Holder of Notes and
shares of Class A common stock may, at any time and from time to time, recombine
these securities to form IDSs unless the IDSs have previously been automatically
separated as a result of the continuance of a payment default on the senior
subordinated notes for 90 days, or the redemption or maturity of any senior
subordinated notes.

Procedures Relating to Subsequent Issuance. The Indenture will provide that, in
the event there is a subsequent issuance of Additional Notes, each Holder of the
Notes or the IDSs (as the case may be) agrees that a portion of such Holder's
Notes (whether held directly in book-entry form or held as part of IDSs) will be
exchanged, without any further action of such Holder, for a portion of the
Additional Notes purchased by the Holders of such Additional Notes, such that,
following any such additional issuance and exchange, each Holder of the Notes or
the IDSs (as the case may be) owns an indivisible unit composed of the Notes and
Additional Notes of each issuance in the same proportion as each other Holder,
and the records of DTC and the Trustee will be revised to reflect each such
exchange without any further action of such Holder. The aggregate principal
amount of the Notes owned by each Holder will not change as a result of such
exchange. Any Additional Notes will be guaranteed by the Guarantors on the same
basis as the Notes. See "Material United States Federal Income Tax Consequences
to United States Holders--Senior Subordinated Notes--Additional Issuances."
There is a possibility that holders of Additional Notes having original issue
discount may not be able to collect the unamortized portion of the original
issue discount in the event of an acceleration of the senior subordinated notes
or bankruptcy of the Company as described under "Risk Factors--Risks Relating to
the IDSs, the Shares of Class A Common Stock and Senior Subordinated Notes
Represented by the IDSs, the Senior

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Subordinated Notes Offered Separately (and not in the Form of IDS), and our New
Credit Facility--Subsequent issuances of senior subordinated notes may cause you
to recognize taxable gain and/or original issue discount and may reduce your
recovery in the event of bankruptcy." Any such automatic exchange should not
impair the rights any holder would otherwise have to assert a claim against us
or the underwriters, with respect to the full amount of Notes purchased by such
holder.

CERTAIN COVENANTS

The Indenture will contain the following material covenants:

Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock.  The Indenture will provide that (i) the Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
Incur any Indebtedness (including Acquired Indebtedness) or issue any shares of
Disqualified Stock and (ii) the Company will not permit any of its Restricted
Subsidiaries to issue any shares of Preferred Stock; provided, however, that the
Company and any Restricted Subsidiary may Incur Indebtedness (including Acquired
Indebtedness) or issue shares of Disqualified Stock and any Guarantor may issue
shares of Preferred Stock if the Leverage Ratio of the Company for the most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is Incurred or such Disqualified Stock or Preferred Stock is issued
would have been no more than      to 1.0 determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been Incurred, or the Disqualified Stock or
Preferred Stock had been issued, as the case may be, and the application of
proceeds therefrom had occurred at the beginning of such four-quarter period.

The foregoing limitations will not apply to:

     (a)   the Incurrence by the Company or its Restricted Subsidiaries of
           Indebtedness under the Credit Facilities and the issuance and
           creation of letters of credit and bankers' acceptances thereunder
           (with letters of credit and bankers' acceptances being deemed to have
           a principal amount equal to the face amount thereof) up to an
           aggregate principal amount of the greater of the Borrowing Base or
           $     million then classified as having been Incurred pursuant to
           this clause (a) outstanding at any one time;

     (b)   the Incurrence by the Company and the Guarantors of Indebtedness
           represented by the Notes (not including any Additional Notes) and the
           Guarantees, as applicable;

     (c)   Indebtedness existing on the Issue Date (other than Indebtedness
           described in clauses (a) and (b));

     (d)   Indebtedness (including Capitalized Lease Obligations) Incurred by
           the Company or any of its Restricted Subsidiaries to finance the
           purchase, lease or improvement of property (real or personal) or
           equipment (whether through the direct purchase of assets or the
           Capital Stock of any Person owning such assets) in an aggregate
           principal amount which, when aggregated with the principal amount of
           all other Indebtedness then outstanding and Incurred pursuant to this
           clause (d) and all Refinancing Indebtedness (as defined below)
           Incurred to refund, refinance or replace any Indebtedness classified
           as having been Incurred pursuant to this clause (d), does not exceed
           the greater of   % of Total Assets at the time of Incurrence or
           $     million;

     (e)   Indebtedness Incurred by the Company or any of its Restricted
           Subsidiaries constituting reimbursement obligations with respect to
           letters of credit issued in the ordinary course of business,
           including without limitation letters of credit in respect of workers'
           compensation claims, health, disability or other employee benefits or
           property, casualty or liability insurance or self-insurance, or with
           respect to agreements to provide services, or other Indebtedness with
           respect to reimbursement type obligations regarding workers'
           compensation claims; provided, however, that upon the drawing of such
           letters of credit, such obligations are reimbursed within 30 days
           following such drawing;

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     (f)   Indebtedness arising from agreements of the Company or a Restricted
           Subsidiary providing for indemnification, adjustment of purchase
           price or similar obligations, in each case, Incurred in connection
           with the acquisition or disposition of any business, assets or a
           Subsidiary of the Company in accordance with the terms of the
           Indenture, other than guarantees of Indebtedness Incurred by any
           Person acquiring all or any portion of such business, assets or
           Subsidiary for the purpose of financing such acquisition;

     (g)   Indebtedness of the Company to a Restricted Subsidiary of the
           Company; provided that any such Indebtedness is subordinated in right
           of payment to the Notes; provided further that any subsequent
           issuance or transfer of any Capital Stock or any other event which
           results in any such Restricted Subsidiary ceasing to be a Restricted
           Subsidiary of the Company or any other subsequent transfer of any
           such Indebtedness (except to the Company or another Restricted
           Subsidiary) shall be deemed, in each case, to be an Incurrence of
           such Indebtedness;

     (h)   shares of Preferred Stock of a Restricted Subsidiary issued to the
           Company or another Restricted Subsidiary of the Company; provided
           that any subsequent issuance or transfer of any Capital Stock or any
           other event which results in any such Restricted Subsidiary ceasing
           to be a Restricted Subsidiary or any other subsequent transfer of any
           such shares of Preferred Stock (except to the Company or another
           Restricted Subsidiary of the Company) shall be deemed, in each case,
           to be an issuance of shares of Preferred Stock;

     (i)   Indebtedness of a Restricted Subsidiary to the Company or another
           Restricted Subsidiary of the Company; provided that (i) any such
           Indebtedness is made pursuant to an intercompany note and (ii) if a
           Guarantor Incurs such Indebtedness to a Restricted Subsidiary that is
           not a Guarantor such Indebtedness is subordinated in right of payment
           to the Guarantee of such Guarantor; provided further that any
           subsequent issuance or transfer of any Capital Stock or any other
           event which results in any Restricted Subsidiary lending such
           Indebtedness ceasing to be a Restricted Subsidiary or any other
           subsequent transfer of any such Indebtedness (except to the Company
           or another Restricted Subsidiary of the Company) shall be deemed, in
           each case, to be an Incurrence of such Indebtedness;

     (j)   Hedging Obligations that are incurred not for speculative purposes
           (1) for the purpose of fixing or hedging interest rate risk with
           respect to any Indebtedness that is permitted by the terms of the
           Indenture to be outstanding, (2) for the purpose of fixing or hedging
           currency exchange rate risk with respect to any currency exchanges or
           (3) for the purpose of fixing or hedging commodity price risk with
           respect to any commodity purchases;

     (k)   obligations in respect of performance, bid and surety bonds and
           completion guarantees provided by the Company or any Restricted
           Subsidiary in the ordinary course of business;

     (l)   Indebtedness or Disqualified Stock of the Company and any Restricted
           Subsidiary and Preferred Stock of any Restricted Subsidiary not
           otherwise permitted hereunder in an aggregate principal amount, which
           when aggregated with the principal amount or liquidation preference
           of all other Indebtedness and Disqualified Stock then outstanding and
           classified as having been Incurred pursuant to this clause (1), does
           not exceed $     million at any one time outstanding; provided,
           however, that Indebtedness of Foreign Subsidiaries, which when
           aggregated with the principal amount of all other Indebtedness of
           Foreign Subsidiaries then outstanding and classified as having been
           Incurred pursuant to this clause (1), does not exceed $     million
           (or the equivalent thereof in any other currency) at any one time
           outstanding (it being understood that any Indebtedness Incurred under
           this clause (1) shall cease to be deemed Incurred or outstanding for
           purposes of this clause (1) but shall be deemed to be Incurred for
           purposes of the first paragraph of this covenant from and after the
           first date on which the Company could have Incurred such Indebtedness
           under the first paragraph of this covenant without reliance upon this
           clause (1));

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     (m)  any guarantee by the Company or a Restricted Subsidiary of
          Indebtedness or other obligations of the Company or any of its
          Restricted Subsidiaries so long as the Incurrence of such Indebtedness
          Incurred by the Company or such Restricted Subsidiary is permitted
          under the terms of the Indenture; provided that if such Indebtedness
          is by its express terms subordinated in right of payment to the Notes
          or the Guarantee of such Restricted Subsidiary, as applicable, any
          such guarantee of any Guarantor with respect to such Indebtedness
          shall be subordinated in right of payment to such Guarantor's
          Guarantee with respect to the Notes substantially to the same extent
          as such Indebtedness is subordinated to the Notes or the Guarantee of
          such Restricted Subsidiary, as applicable;

     (n)   the Incurrence by the Company or any of its Restricted Subsidiaries
           of Indebtedness which serves to refund or refinance any Indebtedness
           Incurred as permitted under the first paragraph of this covenant and
           clauses (b) and (c) above, or any Indebtedness issued to so refund or
           refinance such Indebtedness (subject to the following proviso,
           "Refinancing Indebtedness"); provided, however, that such Refinancing
           Indebtedness:

         (i)   has a Weighted Average Life to Maturity at the time such
               Refinancing Indebtedness is Incurred which is not less than the
               remaining Weighted Average Life to Maturity of the Indebtedness
               being refunded or refinanced;

         (ii)   has a Stated Maturity which is no earlier than the Stated
                Maturity of the Indebtedness being refunded or refinanced;

         (iii)  to the extent such Refinancing Indebtedness refinances
                Indebtedness pari passu with the Notes or the Guarantees, is
                pari passu with the Notes or the Guarantees, as applicable;

         (iv)   is Incurred in an aggregate principal amount (or if issued with
                original issue discount, an aggregate issue price) that is equal
                to or less than the aggregate principal amount (or if issued
                with original issue discount, the aggregate accreted value) then
                outstanding of the Indebtedness being refinanced plus premium
                and fees Incurred in connection with such refinancing; and

         (v)   shall not include Indebtedness of a Restricted Subsidiary that is
               not a Guarantor that refinances Indebtedness of the Company;

     and provided further that subclauses (i), (ii), (iii), and (v) of this
     clause (n) will not apply to any refunding or refinancing of any Senior
     Indebtedness;

     (o)   Indebtedness, Disqualified Stock or Preferred Stock of Persons that
           are acquired by the Company or any of its Restricted Subsidiaries or
           merged into a Restricted Subsidiary in accordance with the terms of
           the Indenture; provided, however, that such Indebtedness,
           Disqualified Stock or Preferred Stock is not Incurred in
           contemplation of such acquisition or merger or to provide all or a
           portion of the funds or credit support required to consummate such
           acquisition or merger; provided further, however, that after giving
           effect to such acquisition and the Incurrence of such Indebtedness,
           Disqualified Stock or Preferred Stock either (i) the Company would be
           permitted to Incur at least $1.00 of additional Indebtedness pursuant
           to the Leverage Ratio test set forth in the first sentence of this
           covenant or (ii) the Leverage Ratio would be less than immediately
           prior to such acquisition;

     (p) Contribution Indebtedness; and

     (q) Indebtedness represented by the issuance of Additional Notes in
         connection with the issuance of shares of Class A common stock of the
         Company provided that the ratio of the aggregate principal amount of
         such Additional Notes to the number of such additional shares shall not
         exceed the equivalent ratio with respect to the IDSs outstanding prior
         to such issuance, and, in each case, the related Guarantees.

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For purposes of determining compliance with this covenant, in the event that an
item of Indebtedness meets the criteria of more than one of the categories of
permitted Indebtedness described in clauses (a) through (q) above or is entitled
to be Incurred pursuant to the first paragraph of this covenant, the Company
shall, in its sole discretion, classify or reclassify such item of Indebtedness
in any manner that complies with this covenant and such item of Indebtedness
will be treated as having been Incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. In addition, the Company may, at any
time, change the classification of an item of Indebtedness (or any portion
thereof) to any other clause or to the first paragraph hereof; provided that the
Company or Restricted Subsidiary would be permitted to incur such item of
Indebtedness (or portion thereof) pursuant to such other clause or the first
paragraph hereof, as the case may be, at such time of reclassification. Accrual
of interest, the accretion of accreted value and the payment of interest in the
form of additional Indebtedness will not be deemed to be an Incurrence of
Indebtedness for purposes of this covenant.

Limitation on Restricted Payments.  The Indenture will provide that the Company
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly:

     (i)  declare or pay any dividend or make any distribution on account of the
          Company's or any of its Restricted Subsidiaries' Equity Interests,
          including any payment made in connection with any merger or
          consolidation involving the Company (other than (A) dividends or
          distributions by the Company payable in Equity Interests (other than
          Disqualified Stock) of the Company or (B) dividends or distributions
          by a Restricted Subsidiary so long as, in the case of any dividend or
          distribution payable on or in respect of any class or series of
          securities issued by a Restricted Subsidiary other than a Wholly Owned
          Restricted Subsidiary, the Company or a Restricted Subsidiary receives
          at least its pro rata share of such dividend or distribution in
          accordance with its Equity Interests in such class or series of
          securities);

     (ii)  purchase or otherwise acquire or retire for value any Equity
           Interests of the Company or any Restricted Subsidiary; or

     (iii) make any Restricted Investment (all such payments and other actions
           set forth in this clause (iii) and in clauses (i) and (ii) above
           being collectively referred to as "Restricted Payments"),

unless, at the time of such Restricted Payment:

     (a) no Default or Event of Default shall have occurred and be continuing or
         would occur as a consequence thereof;

     (b) immediately after giving effect to such transaction on a pro forma
         basis, the Company could Incur $1.00 of additional Indebtedness under
         the provisions of the first paragraph of "Limitations on Incurrence of
         Indebtedness and Issuance of Disqualified Stock and Preferred Stock";
         and

     (c) such Restricted Payment, together with the aggregate amount of all
         other Restricted Payments made by the Company and its Restricted
         Subsidiaries after the Issue Date (including, without duplication,
         Restricted Payments permitted by clause (1), (6) and (10) of the next
         succeeding paragraph, but excluding all other Restricted Payments
         permitted by the next succeeding paragraph), is less than the sum of,
         without duplication:

        (i)     % of the Adjusted EBITDA of the Company for the period (taken as
             one accounting period) from the fiscal quarter that first begins
             after the Issue Date to the end of the Company's most recently
             ended fiscal quarter for which internal financial statements are
             available at the time of such Restricted Payment less   times the
             Consolidated Interest Expense of the Company for such period, plus

        (ii)     % of the aggregate net proceeds, including cash and the Fair
              Market Value (as determined in accordance with the next succeeding
              sentence) of property other than cash, received by the Company
              since the Issue Date from the issue or sale of Equity Interests of
              the Company (excluding Refunding Capital Stock (as defined below),
              Designated Preferred
                                       107
<PAGE>

              Stock, Excluded Contributions and Disqualified Stock), including
              Equity Interests issued upon conversion of Indebtedness,
              Disqualified Stock and Designated Preferred Stock or upon exercise
              of warrants or options (other than an issuance or sale to a
              Subsidiary of the Company or an employee stock ownership plan or
              trust established by the Company or any of its Subsidiaries), plus

        (iii)    % of the aggregate amount of contributions to the capital of
              the Company received in cash and the Fair Market Value (as
              determined in accordance with the next succeeding sentence) of
              property other than cash since the Issue Date (other than Excluded
              Contributions, Refunding Capital Stock, Designated Preferred Stock
              and Disqualified Stock), plus

        (iv)    % of the aggregate amount received in cash and the Fair Market
             Value (as determined in accordance with the next succeeding
             sentence) of property other than cash received from (A) the sale or
             other disposition (other than to the Company or a Restricted
             Subsidiary) of or on account of Restricted Investments made by the
             Company and its Restricted Subsidiaries and from repurchases and
             redemptions of such Restricted Investments from the Company and its
             Restricted Subsidiaries by any Person (other than the Company or
             any of its Subsidiaries) and from payments of interest on and
             repayments of loans or advances which constituted Restricted
             Investments, (B) the sale (other than to the Company or a
             Subsidiary) of the Capital Stock of an Unrestricted Subsidiary or
             (C) a distribution or dividend from an Unrestricted Subsidiary,
             plus

        (v)  in the event any Unrestricted Subsidiary has been redesignated as a
             Restricted Subsidiary or has been merged, consolidated or
             amalgamated with or into, or transfers or conveys its assets to, or
             is liquidated into, the Company or a Restricted Subsidiary, the
             Fair Market Value (as determined in good faith by the Board of
             Directors) of the Investment of the Company in such Unrestricted
             Subsidiary at the time of such redesignation, combination or
             transfer (or of the assets transferred or conveyed, as applicable),
             after deducting any Indebtedness associated with the Unrestricted
             Subsidiary so designated or combined or any Indebtedness associated
             with the assets so transferred or conveyed.

The Fair Market Value of property other than cash covered by clauses (ii), (iii)
and (iv) above shall be determined in good faith by the Company and (A) in the
event of property with a Fair Market Value in excess of $     million, shall be
set forth in an Officers' Certificate or (B) in the event of property with a
Fair Market Value in excess of $     million, shall be set forth in a resolution
approved by at least a majority of the Board of Directors.

The foregoing provisions will not prohibit:

     (1)  the payment of any dividend or distribution within 60 days after the
          date of declaration thereof, if at the date of declaration such
          payment would have complied with the provisions of the Indenture;

     (2)  (a) the repurchase, retirement or other acquisition of any Equity
          Interests ("Retired Capital Stock") of the Company in exchange for, or
          out of the proceeds of the substantially concurrent sale of, Equity
          Interests of the Company or contributions to the equity capital of the
          Company (other than any Disqualified Stock or any Equity Interests
          sold to a Subsidiary of the Company or to an employee stock ownership
          plan or any trust established by the Company or any of its
          Subsidiaries) (collectively, including any such contributions,
          "Refunding Capital Stock") and (b) the declaration and payment of
          accrued dividends on the Retired Capital Stock out of the proceeds of
          the substantially concurrent sale (other than to a Subsidiary of the
          Company or to an employee stock ownership plan or any trust
          established by the Company or any of its Subsidiaries) of Refunding
          Capital Stock;

     (3)  the declaration and payment of dividends or distributions to holders
          of any class or series of Disqualified Stock of the Company or any of
          its Restricted Subsidiaries issued or incurred in
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          accordance with the covenant entitled "--Limitation on Incurrence of
          Indebtedness and Issuance of Disqualified Stock and Preferred Stock";

     (4)  the declaration and payment of dividends or distributions to holders
          of any class or series of Designated Preferred Stock issued after the
          Issue Date; provided, however, that (A) for the most recently ended
          four full fiscal quarters for which internal financial statements are
          available immediately preceding the date of issuance of such
          Designated Preferred Stock, after giving effect to such issuance (and
          the payment of dividends or distributions) on a pro forma basis, the
          Company would have had a Leverage Ratio of at least           to 1.00
          and (B) the aggregate amount of dividends declared and paid pursuant
          to this clause (4) does not exceed the net cash proceeds received by
          the Company from the sale of Designated Preferred Stock issued after
          the Issue Date;

     (5)  Investments in Unrestricted Subsidiaries having an aggregate Fair
          Market Value, taken together with all other Investments made pursuant
          to this clause (5) that are at that time outstanding, not to exceed
          $     million (with the Fair Market Value of each Investment being
          measured at the time made and without giving effect to subsequent
          changes in value);

     (6)  the payment of dividends on the shares of the Company's Capital Stock
          up to an aggregate amount in any fiscal quarter not to exceed the
          Quarterly Base Dividend Level; provided, that the Company may not pay
          any dividends pursuant to this clause (6) or clause (10) below if
          interest on the Notes is being deferred or, after the end of any
          Interest Deferral Period, so long as any deferred interest and
          interest on deferred interest has not been paid in full;

     (7)  Investments that are made with Excluded Contributions;

     (8)  other Restricted Payments in an aggregate amount not to exceed $
          million;

     (9)  repurchases of Equity Interests deemed to occur upon exercise of stock
          options if such Equity Interests represent a portion of the exercise
          price of such options; and

     (10) other Restricted Payments in an aggregate amount not to exceed the
          Base Dividend Restricted Payments Basket;

provided, however, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (3), (4), (5), (6), (8) and (10), no
Default or Event of Default shall have occurred and be continuing or would occur
as a consequence thereof.

As of the Issue Date, all of the Company's Subsidiaries will be Restricted
Subsidiaries. The Company will not permit any Unrestricted Subsidiary to become
a Restricted Subsidiary except pursuant to the definition of "Unrestricted
Subsidiary." For purposes of designating any Restricted Subsidiary as an
Unrestricted Subsidiary, all outstanding Investments by the Company and its
Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so
designated will be deemed to be Restricted Payments in an amount determined as
set forth in the last sentence of the definition of "Investments." Such
designation will only be permitted if a Restricted Payment in such amount would
be permitted at such time and if such Subsidiary otherwise meets the definition
of an Unrestricted Subsidiary.

Anti-Layering.  The Company will not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is contractually subordinate
or junior in right of payment to any Senior Indebtedness of the Company and
senior in right of payment to the Notes. No Guarantor will incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
contractually subordinate or junior in right of payment to the Senior
Indebtedness of such Guarantor and senior in right of payment to such
Guarantor's Guarantee. This does not apply to distinctions between categories of
Indebtedness that exist by reason of any Liens or Guarantees securing or in
favor of some but not all of such Indebtedness or securing such Indebtedness
with greater or lesser priority or with different collateral.

Dividend and Other Payment Restrictions Affecting Subsidiaries.  The Indenture
will provide that the Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or

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otherwise cause or suffer to exist or become effective any consensual
encumbrance or consensual restriction on the ability of any Restricted
Subsidiary to:

     (a)  (i) pay dividends or make any other distributions to the Company or
          any of its Restricted Subsidiaries (1) on its Capital Stock or (2)
          with respect to any other interest or participation in, or measured
          by, its profits, or (ii) pay any Indebtedness owed to the Company or
          any of its Restricted Subsidiaries;

     (b)  make loans or advances to the Company or any of its Restricted
          Subsidiaries; or

     (c)  sell, lease or transfer any of its properties or assets to the Company
          or any of its Restricted Subsidiaries;

except in each case for such encumbrances or restrictions existing under or by
reason of:

     (1)   contractual encumbrances or restrictions in effect on the Issue Date,
           including pursuant to the Credit Facilities and the other Senior
           Credit Documents;

     (2)   the Indenture and the Notes;

     (3)   applicable law or any applicable rule, regulation or order;

     (4)   any agreement or other instrument relating to Indebtedness of a
           Person acquired by the Company or any Restricted Subsidiary which was
           in existence at the time of such acquisition (but not created in
           contemplation thereof or to provide all or any portion of the funds
           or credit support utilized to consummate such acquisition), which
           encumbrance or restriction is not applicable to any Person, or the
           properties or assets of any Person, other than the Person, or the
           property or assets of the Person, so acquired;

     (5)   any restriction with respect to a Restricted Subsidiary imposed
           pursuant to an agreement entered into for the sale or disposition of
           all or substantially all the Capital Stock or assets of such
           Restricted Subsidiary pending the closing of such sale or
           disposition;

     (6)   Secured Indebtedness otherwise permitted to be Incurred pursuant to
           the covenants described under "--Limitations on Incurrence of
           Indebtedness and Issuance of Disqualified Stock and Preferred Stock"
           and "--Liens" that limit the right of the debtor to dispose of the
           assets securing such Indebtedness;

     (7)   restrictions on cash or other deposits or net worth imposed by
           customers under contracts entered into in the ordinary course of
           business;

     (8)   customary provisions in joint venture agreements and other similar
           agreements entered into in the ordinary course of business;

     (9)   customary provisions contained in leases, agreements to provide
           services and other similar agreements entered into in the ordinary
           course of business that impose restrictions of the type described in
           clause (c) above;

     (10)  other Indebtedness of Restricted Subsidiaries permitted to be
           Incurred subsequent to the Issue Date pursuant to the covenant
           described under "Limitations on Incurrence of Indebtedness and
           Issuance of Disqualified Stock and Preferred Stock"; or

     (11)  any encumbrances or restrictions of the type referred to in clauses
           (a), (b) and (c) above imposed by any amendments, modifications,
           restatements, renewals, increases, supplements, refundings,
           replacements or refinancings of the contracts, instruments or
           obligations referred to in clauses (1) through (10) above; provided
           that such amendments, modifications, restatements, renewals,
           increases, supplements, refundings, replacements or refinancings are,
           in the good faith judgment of the Board of Directors, no more
           restrictive with respect to such dividend and other payment
           restrictions than those contained in the dividend or other payment

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           restrictions prior to such amendment, modification, restatement,
           renewal, increase, supplement, refunding, replacement or refinancing.

Asset Sales.  The Indenture will provide that the Company will not, and will not
permit any of its Restricted Subsidiaries to, cause or make an Asset Sale,
unless (x) the Company, or its Restricted Subsidiaries, as the case may be,
receives consideration at the time of such Asset Sale at least equal to the Fair
Market Value (as determined in good faith by the Company) of the assets sold or
otherwise disposed of and (y) except in the case of a Permitted Asset Swap, at
least 75% of the consideration therefor received by the Company, or such
Restricted Subsidiary, as the case may be, is in the form of Cash Equivalents;
provided that the amount of:

     (a)  any liabilities (as shown on the Company's or such Restricted
          Subsidiary's most recent balance sheet or in the notes thereto) of the
          Company or any Restricted Subsidiary (other than liabilities that are
          by their terms subordinated to the Notes) that are assumed by the
          transferee of any such assets;

     (b)  any notes or other obligations or other securities received by the
          Company or such Restricted Subsidiary from such transferee that are
          converted by the Company or such Restricted Subsidiary into Cash
          Equivalents within 180 days of the receipt thereof (to the extent of
          the Cash Equivalents received); and

     (c)  any Designated Noncash Consideration received by the Company or any of
          its Restricted Subsidiaries in such Asset Sale having an aggregate
          Fair Market Value, taken together with all other Designated Noncash
          Consideration received pursuant to this clause (c) that is at that
          time outstanding, not to exceed the greater of   % of Total Assets or
          $     million (with the Fair Market Value of each item of Designated
          Noncash Consideration being measured at the time received and without
          giving effect to subsequent changes in value)

shall be deemed to be Cash Equivalents for the purposes of this provision.

Within 365 days after the Company's or any Restricted Subsidiary's receipt of
the Net Proceeds of any Asset Sale, the Company or such Restricted Subsidiary
may apply the Net Proceeds from such Asset Sale, at its option:

     (i)   to repay Obligations under the Credit Facilities or other Senior
           Indebtedness or Pari Passu Indebtedness (provided that if the Company
           shall so reduce Obligations under Pari Passu Indebtedness, it will
           equally and ratably reduce Obligations under the Notes by making an
           offer (in accordance with the procedures set forth below for an Asset
           Sale Offer) to all Holders to purchase at a purchase price equal to
           100% of the principal amount thereof, plus accrued and unpaid
           interest, if any, the pro rata principal amount of Notes) or
           Indebtedness of a Restricted Subsidiary, in each case other than
           Indebtedness owed to the Company or a Restricted Subsidiary;

     (ii)   to an investment in any one or more businesses, capital expenditures
            or acquisitions of other assets in each case used or useful in a
            Similar Business; and/or

     (iii)  to make an investment in properties or assets that replace the
            properties and assets that are the subject of such Asset Sale.

Pending the application of any such Net Proceeds, the Company or such Restricted
Subsidiary may invest such Net Proceeds in Cash Equivalents or Investment Grade
Securities. The Indenture will provide that any Net Proceeds from any Asset Sale
that are not applied as provided and within the time period set forth in the
first sentence of this paragraph will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $     million, the Company
shall make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase
the maximum principal amount of Notes that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 100% of the principal
amount thereof, plus accrued and unpaid interest, if any, to but not including
the date fixed for the closing of such offer, in accordance with the procedures
set forth in the Indenture. The Company will
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commence an Asset Sale Offer with respect to Excess Proceeds within thirty
Business Days after the date that Excess Proceeds exceed $     million by
mailing the notice required pursuant to the terms of the Indenture, with a copy
to the Trustee. To the extent that the aggregate amount of Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
may use any remaining Excess Proceeds for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased in
the manner described below. Upon completion of any such Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.

The Company will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations to the extent such laws or
regulations are applicable in connection with the repurchase of the Notes
pursuant to an Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of the Indenture,
the Company will comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations described in the Indenture
by virtue thereof.

If more Notes are tendered pursuant to an Asset Sale Offer than the Company is
required to purchase, selection of such Notes for purchase will be made by the
Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which such Notes are listed, or if such Notes are not so
listed, on a pro rata basis, by lot or by such other method as the Trustee shall
deem fair and appropriate (and in such manner as complies with applicable legal
requirements).

Notices of an Asset Sale Offer shall be mailed by first class mail, postage
prepaid, at least 30 but not more than 60 days before the purchase date to each
Holder of Notes at such Holder's registered address. If any Note is to be
purchased in part only, any notice of purchase that relates to such Note shall
state the portion of the principal amount thereof that has been or is to be
purchased.

A new Note in principal amount equal to the unpurchased portion of any Note
purchased in part will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the purchase date unless the
Company defaults in payment of the purchase price, interest shall cease to
accrue on Notes or portions thereof purchased.

Transactions with Affiliates.  The Indenture will provide that the Company will
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, make any payment to, or sell, lease, transfer or otherwise dispose
of any of its properties or assets to, or purchase any property or assets from,
or enter into or make or amend any transaction or series of transactions,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate of the Company (each of the foregoing, an "Affiliate
Transaction") involving aggregate consideration in excess of $     million,
unless:

     (a)  such Affiliate Transaction is on terms that are not materially less
          favorable to the Company or the relevant Restricted Subsidiary than
          those that could have been obtained in a comparable transaction by the
          Company or such Restricted Subsidiary with an unrelated Person; and

     (b)  with respect to any Affiliate Transaction or series of related
          Affiliate Transactions involving aggregate consideration in excess of
          $     million, the Company delivers to the Trustee a resolution
          adopted by the majority of the Board of Directors of the Company,
          approving such Affiliate Transaction and set forth in an Officers'
          Certificate certifying that such Affiliate Transaction complies with
          clause (a) above.

The foregoing provisions will not apply to the following:

     (i)    transactions between or among the Company and/or any of its
            Restricted Subsidiaries;

     (ii)   Permitted Investments and Restricted Payments permitted by the
            provisions of the Indenture described above under the covenant
            "--Limitation on Restricted Payments";

     (iii)   the payment of reasonable and customary fees paid to, and indemnity
             provided on behalf of, officers, directors, employees or
             consultants of the Company or any Restricted Subsidiary;

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     (iv)   transactions in which the Company or any of its Restricted
            Subsidiaries, as the case may be, delivers to the Trustee a letter
            from an Independent Financial Advisor stating that such transaction
            is fair to the Company or such Restricted Subsidiary from a
            financial point of view or meets the requirements of clause (a) of
            the preceding paragraph;

     (v)    payments or loans to employees or consultants in the ordinary course
            of business which are approved by a majority of the Board of
            Directors of the Company (or a committee thereof) in good faith;

     (vi)   any agreement as in effect as of the Issue Date or any amendment
            thereto (so long as any such amendment is not disadvantageous to the
            holders of the Notes in any material respect) or any transaction
            contemplated thereby;

     (vii)   the existence of, or the performance by the Company or any of its
             Restricted Subsidiaries of its obligations under the terms of, any
             stockholders agreement (including any registration rights agreement
             or purchase agreement related thereto) to which it is a party as of
             the Issue Date and any similar agreements which it may enter into
             thereafter, provided, however, that the existence of, or the
             performance by the Company or any of its Restricted Subsidiaries of
             its obligations under any future amendment to any such existing
             agreement or under any similar agreement entered into after the
             Issue Date shall only be permitted by this clause (vii) to the
             extent that the terms of any such amendment or new agreement are
             not otherwise disadvantageous to the Holders of the Notes in any
             material respect; and

     (viii)  transactions with customers, clients, suppliers or purchasers or
             sellers of goods or services, in each case in the ordinary course
             of business and otherwise in compliance with the terms of the
             Indenture, which are fair to the Company and its Restricted
             Subsidiaries in the reasonable determination of the Board of
             Directors or the senior management of the Company, or are on terms
             at least as favorable as might reasonably have been obtained at
             such time from an unaffiliated party.

Liens. The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, Incur or
suffer to exist any Lien on any asset or property of the Company or such
Restricted Subsidiary, or any income or profits therefrom, or assign or convey
any right to receive income therefrom, that secures any Indebtedness of the
Company or any of its Subsidiaries (other than Senior Indebtedness) unless the
Notes are equally and ratably secured with (or on a senior basis to, in the case
of Indebtedness subordinated in right of payment to the Notes) the Indebtedness
so secured or until such time as such Indebtedness is no longer secured by a
Lien. The preceding sentence will not require the Company or any Restricted
Subsidiary to secure the Notes if the Lien consists of a Permitted Lien.

The Indenture will provide that no Guarantor will directly or indirectly create,
Incur or suffer to exist any Lien on any asset or property of such Guarantor or
any income or profits therefrom, or assign or convey any right to receive income
therefrom, that secures any Indebtedness of such Guarantor (other than Senior
Indebtedness of such Guarantor) unless the Guarantee of such Guarantor is
equally and ratably secured with (or on a senior basis to, in the case of
Indebtedness subordinated on right of payment to such Guarantor's Guarantee) the
Indebtedness so secured or until such time as such Indebtedness is no longer
secured by a Lien. The preceding sentence will not require any Guarantor to
secure its Guarantee if the Lien consists of a Permitted Lien.

Reports and Other Information. The Indenture will provide that notwithstanding
that the Company may not be subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act or otherwise report on an annual and quarterly
basis on forms provided for such annual and quarterly reporting pursuant to
rules and regulations promulgated by the Commission, the Company will file with
the Commission, documents and reports that are specified in Sections 13 and
15(d) of the Exchange Act within the time periods specified therein; provided,
however, the Company shall not be so obligated to file such documents and other
reports with the Commission if the Commission does not permit such filing, in
which event the

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Company will make available such information to prospective purchasers of Notes,
in addition to providing such information to the Trustee and the Holders, in
each case within 15 days after the time the Company would be required to file
such information with the Commission if it were subject to Section 13 or 15(d)
of the Exchange Act.

Future Guarantors. The Indenture will provide that the Company will cause each
Restricted Subsidiary organized under the laws of the United States of America
or any state or territory thereof that has Total Assets of more than $500,000 to
execute and deliver to the Trustee a supplemental indenture pursuant to which
such Subsidiary will guarantee payment of the Notes. Each Guarantee will be
limited to an amount not to exceed the maximum amount that can be guaranteed by
that Subsidiary without rendering the Guarantee, as it relates to such
Subsidiary, voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer or similar laws affecting the rights of creditors generally.

MERGER, CONSOLIDATION, OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS

The Indenture will provide that the Company may not consolidate or merge with or
into or wind up into (whether or not the Company is the surviving corporation),
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions, to any Person unless (i) the Company is the surviving corporation
or the Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease, conveyance
or other disposition will have been made is a corporation, partnership or
limited liability company organized or existing under the laws of the United
States, any state thereof, the District of Columbia, or any territory thereof
(the Company or such Person, as the case may be, being herein called the
"Successor Company"); (ii) the Successor Company (if other than the Company)
expressly assumes all the obligations of the Company under the Indenture and the
Notes pursuant to a supplemental indenture or other documents or instruments in
form reasonably satisfactory to the Trustee; (iii) immediately after giving
effect to such transaction (and treating any Indebtedness which becomes an
obligation of the Successor Company or any of its Restricted Subsidiaries as a
result of such transaction as having been Incurred by the Successor Company or
such Restricted Subsidiary at the time of such transaction) no Default or Event
of Default shall have occurred and be continuing; (iv) immediately after giving
pro forma effect to such transaction, as if such transaction had occurred at the
beginning of the applicable four-quarter period, either (A) the Successor
Company would be permitted to Incur at least $1.00 of additional Indebtedness
pursuant to the Leverage Ratio test set forth in the first sentence of the
covenant described under "--Limitations on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock" or (B) the Leverage Ratio
for the Successor Company and its Restricted Subsidiaries would be less than or
equal to such ratio for the Company and its Restricted Subsidiaries immediately
prior to such transaction; (v) each Guarantor, unless it is the other party to
the transactions described above, shall have by supplemental indenture confirmed
that its Guarantee shall apply to the Successor Company's obligations under the
Indenture and the Notes; and (vi) the Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture (if any)
comply with the Indenture. The Successor Company will succeed to, and be
substituted for, the Company under the Indenture and the Notes. Notwithstanding
the foregoing clauses (iii) and (iv), (a) any Restricted Subsidiary may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company or to another Restricted Subsidiary and (b) the Company
may merge with an Affiliate incorporated solely for the purpose of
reincorporating the Company in another state of the United States or changing
the form of organization of the Company to a corporation, partnership or limited
liability company so long as the amount of Indebtedness of the Company and its
Restricted Subsidiaries is not increased thereby.

The Indenture will further provide that, subject to certain limitations
described in the Indenture governing release of a Guarantee upon the sale or
disposition of a Guarantor, each Guarantor will not, and the Company will not
permit a Guarantor to, consolidate or merge with or into or wind up into
(whether or not such Guarantor is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, any Person unless

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(i) such Guarantor is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than such Guarantor) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
will have been made is a corporation, partnership or limited liability company
organized or existing under the laws of the United States, any state thereof,
the District of Columbia, or any territory thereof (such Guarantor or such
Person, as the case may be, being herein called the "Successor Guarantor"); (ii)
the Successor Guarantor (if other than such Guarantor) expressly assumes all the
obligations of such Guarantor under the Indenture and such Guarantor's Guarantee
pursuant to a supplemental indenture or other documents or instruments in form
reasonably satisfactory to the Trustee; (iii) immediately after giving effect to
such transaction (and treating any Indebtedness which becomes an obligation of
the Successor Guarantor or any of its Subsidiaries as a result of such
transaction as having been Incurred by the Successor Guarantor or such
Subsidiary at the time of such transaction) no Default or Event of Default shall
have occurred and be continuing; and (iv) the Guarantor shall have delivered or
caused to be delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture (if any) comply with the Indenture. Subject to certain
limitations described in the Indenture, the Successor Guarantor will succeed to,
and be substituted for, such Guarantor under the Indenture and such Guarantor's
Guarantee. Notwithstanding the foregoing clause (iii), a Guarantor may merge
with an Affiliate incorporated solely for the purpose of reincorporating such
Guarantor in another state of the United States or changing the form of
organization of the Guarantor to a corporation, partnership or limited liability
company so long as the amount of Indebtedness of the Guarantor is not increased
thereby.

DEFAULTS

An Event of Default will be defined in the Indenture as

     (i)    a default in any payment of interest on any Note when due, whether
            or not prohibited by the provisions described under--Ranking" above,
            continued for 30 days, subject to the interest deferral provisions
            contained in the Indenture; provided, however, that a default in any
            payment of interest on the Note required to be made on (x)
                      , 2009, and (y) any interest payment date after
                      , 2009, at a time when interest deferral would be
            prohibited under the Indenture shall immediately constitute an Event
            of Default (without regard to the length of time for which such
            default continues),

     (ii)   a default in the payment of principal or premium, if any, of any
            Note when due at its Stated Maturity, upon optional redemption, upon
            required repurchase, upon declaration or otherwise, whether or not
            such payment is prohibited by the provisions described under
            "--Ranking" above,

     (iii)   the failure by the Company to comply with its obligations under the
             covenant described under "--Merger, Consolidation or Sale of All or
             Substantially All Assets" above,

     (iv)   the failure by the Company to comply for 30 days after notice with
            any of its obligations under the covenants described under "--Change
            of Control" above (other than a failure to purchase Notes),

     (v)    the failure by the Company to comply for 60 days after notice with
            its other agreements contained in the Notes or the Indenture,

     (vi)   the failure by the Company or any Significant Subsidiary to pay any
            Indebtedness (other than Indebtedness owing to the Company or a
            Restricted Subsidiary) within any applicable grace period after
            final maturity or the acceleration of any such Indebtedness by the
            holders thereof because of a default if the total amount of such
            Indebtedness unpaid or accelerated exceeds $     million or its
            foreign currency equivalent (the "cross acceleration provision"),

     (vii)   certain events of bankruptcy, insolvency or reorganization of the
             Company or a Significant Subsidiary (the "bankruptcy provisions"),

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     (viii)  the rendering of any judgment or decree for the payment of money
             (other than judgments which are covered by enforceable insurance
             policies issued by solvent carriers) in excess of $ million or its
             foreign currency equivalent against the Company or a Significant
             Subsidiary if (A) an enforcement proceeding thereon is commenced
             and not discharged or stayed within 60 days thereafter or (B) such
             judgment or decree remains outstanding for a period of 60 days
             following such judgment and is not discharged, waived or stayed
             (the "judgment default provision"),

     (ix)   any Guarantee ceases to be in full force and effect, except as
            contemplated by the terms thereof, or any Guarantor denies or
            disaffirms its obligations under the Indenture or any Guarantee and
            the Default continues for 10 Business Days, or

     (x)   the Company pays any dividend on shares of the Company's common stock
           (A) during any interest deferral period or so long as any deferred
           interest and accrued interest thereon has not been paid in full, or
           (B) when, based on the then-available financial statements presented
           to the board of directors, such dividend exceeds the amount available
           to be paid pursuant to clause (c) or clauses (1) through (10) of the
           "Limitation on Restricted Payments" covenant.

The foregoing will constitute Events of Default whatever the reason for any such
Event of Default and whether it is voluntary or involuntary or is effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.

However, a default under clauses (iv) or (v) will not constitute an Event of
Default until the Trustee or the Holders of 25% in principal amount of the
outstanding Notes notify the Company of the default and the Company does not
cure such default within the time specified in clauses (iv) and (v) hereof after
receipt of such notice.

If an Event of Default (other than a Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company) occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the outstanding Notes by notice to the Company may declare the principal of,
premium, if any, and accrued but unpaid interest on all the Notes to be due and
payable. Upon such a declaration, such principal, premium and interest will be
due and payable immediately. If an Event of Default relating to certain events
of bankruptcy, insolvency or reorganization of the Company occurs, the principal
of, premium, if any, and interest on all the Notes will become immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holders. Under certain circumstances, the Holders of a majority in principal
amount of the outstanding Notes may rescind any such acceleration with respect
to the Notes and its consequences.

In the event of a declaration of acceleration of the Notes because an Event of
Default has occurred and is continuing as a result of the acceleration of any
Indebtedness described in the cross acceleration provision, the declaration of
acceleration of the Notes shall be automatically annulled if the holders of all
Indebtedness described in the cross acceleration provision have rescinded the
declaration of acceleration in respect of such Indebtedness within 30 Business
Days of the date of such declaration, and if the annulment of the acceleration
of the Notes would not conflict with any judgment or decree of a court of
competent jurisdiction, and all existing Events of Default, except non-payment
of principal or interest on the Notes that became due solely because of the
acceleration of the Notes, have been cured or waived.

Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Notes unless (i) such Holder has
previously given the Trustee notice that an Event of Default is continuing, (ii)
Holders of at least 25% in principal amount of the outstanding Notes have
requested the Trustee to pursue the remedy, (iii) such Holders have offered the
Trustee reasonable security or indemnity against any loss, liability or expense,
(iv) the Trustee has not

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complied with such request within 60 days after the receipt of the request and
the offer of security or indemnity, and (v) the Holders of a majority in
principal amount of the outstanding Notes have not given the Trustee a direction
inconsistent with such request within such 60-day period. Subject to certain
restrictions, the Holders of a majority in principal amount of the outstanding
Notes are given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other Holder or that would
involve the Trustee in personal liability. Prior to taking any action under the
Indenture, the Trustee will be entitled to indemnification satisfactory to it in
its sole discretion against all losses and expenses caused by taking or not
taking such action.

The Indenture will provide that if a Default occurs and is continuing and is
actually known to the Trustee, the Trustee must mail to each Holder notice of
the Default within the earlier of 90 days after it occurs or 30 days after it is
actually known to a Trust Officer or written notice of it is received by the
Trustee. Except in the case of a Default in the payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold notice if and
so long as a committee of its Trust Officers in good faith determines that
withholding notice is in the interests of the Noteholders. In addition, the
Company is required to deliver, to the Trustee, within 120 days after the end of
each fiscal year, a certificate indicating whether the signers thereof know of
any Event of Default that occurred during the previous year. The Company also is
required to deliver to the Trustee, within 30 days after the occurrence thereof,
written notice of any event which would constitute certain Defaults, their
status and what action the Company is taking or proposes to take in respect
thereof.

AMENDMENTS AND WAIVERS

Subject to certain exceptions, the Indenture may be amended with the consent of
the Holders of a majority in principal amount of the Notes then outstanding of
all series affected by such amendment and any past default or compliance with
any provisions may be waived with the consent of the Holders of a majority in
principal amount of the Notes of all series affected by such amendment then
outstanding. However, without the consent of each Holder of an outstanding Note
affected, no amendment may, among other things, (i) reduce the amount of Notes
whose Holders must consent to an amendment, (ii) reduce the rate of or extend
the time for payment of interest on any Note, (iii) reduce the principal of or
extend the Stated Maturity of any Note, (iv) reduce the premium payable upon the
redemption of any Note or change the time at which any Note may be redeemed as
described under "Optional Redemption" above, (v) make any Note payable in money
other than that stated in the Note, (vi) make any change to the subordination
provisions of the Indenture that adversely affects the rights of any Holder,
(vii) impair the right of any Holder to receive payment of principal of,
premium, if any, and interest on such Holder's Notes on or after the due dates
therefor or to institute suit for the enforcement of any payment on or with
respect to such Holder's Notes, (viii)(A) make any change to the provisions of
the indenture that prohibit the payment of dividends while interest is being
deferred, while any previously deferred interest remains unpaid or during the
continuance of any Default or Event of Default or (B) waive an Event of Default
under clause (x) of "Defaults" (in each case except in connection with an offer
by the Company to purchase all of the Notes, in which case a majority in
principal amount of Notes will be sufficient), (ix) make any change in the
amendment provisions which require each Holder's consent or in the waiver
provisions or (x) modify the Guarantees in any manner adverse to the Holders.

Without the consent of any Holder, the Company and Trustee may amend the
Indenture to cure any ambiguity, omission, defect or inconsistency, to provide
for the assumption by a successor corporation, partnership or limited liability
company of the obligations of the Company under the Indenture, to provide for
uncertificated Notes in addition to or in place of certificated Notes (provided
that the uncertificated Notes are issued in registered form for purposes of
Section 163(f) of the Internal Revenue Code, or in a manner such that the
uncertificated Notes are described in Section l63(f)(2)(B) of the Internal
Revenue Code), to add Guarantees with respect to the Notes, to secure the Notes,
to add to the covenants of the Company for the benefit of the Holders or to
surrender any right or power conferred upon the Company,

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to make any change that does not adversely affect the rights of any Holder, to
comply with any requirement of the Commission in connection with the
qualification of the Indenture under the Trust Indenture Act of 1939 or to make
certain changes to the Indenture to provide for the issuance of Additional
Notes. However, no amendment may be made to the subordination provisions of the
Indenture that adversely affects the rights of any holder of Senior Indebtedness
then outstanding unless the holders of such Senior Indebtedness (or any group or
representative thereof authorized to give a consent) consent to such change.

The consent of the Noteholders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.

After an amendment under the Indenture becomes effective, the Company is
required to mail to Noteholders a notice briefly describing such amendment.
However, the failure to give such notice to all Noteholders, or any defect
therein, will not impair or affect the validity of the amendment.

Under the terms of the Credit Agreement, we will not be permitted to effect any
amendment or modification if the effect would be to (i) increase the interest
rate applicable to the Notes or any deferred interest on the Notes, (ii) change
to an earlier date the scheduled dates of payment on any component of principal,
interest or other amounts on the Notes, (iii) increase principal repayments or
amortization payments on the Notes, (iv) alter the redemption, prepayment or
subordination provisions of the Notes, (v) add to or alter the covenants
(including, without limitation, the financial covenants), defaults and Events of
Defaults set forth in the Indenture in a manner that would make such provisions
more onerous or restrictive to the Company, or (vi) otherwise increase the
obligations of the Company or any Guarantor in respect of the Notes, the
deferred interest on the Notes or confer additional rights upon the holders
thereof which individually or in the aggregate would be adverse to the Company,
any Guarantor or the lenders of the Senior Lender Indebtedness.

DEFEASANCE

The Company at any time may terminate all its obligations under the Notes and
the Indenture ("legal defeasance"), except for certain obligations, including
those respecting the defeasance trust and obligations to register the transfer
or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes
and to maintain a registrar and paying agent in respect of the Notes. The
Company at any time may terminate its obligations under the covenants described
under "Certain Covenants" and "Change of Control," the operation of the cross
acceleration provision, the bankruptcy provisions with respect to Subsidiaries
and the judgment default provision described under "-- Defaults" above and the
limitations contained in clause (iv) of the first paragraph under "Merger,
Consolidation or Sale of All or Substantially All Assets" above ("covenant
defeasance"). If the Company exercises its legal defeasance option or its
covenant defeasance option, each Guarantor will be released from all of its
obligations with respect to its Guarantee.

The Company may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option. If the Company exercises its legal
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iv), (vi), (vii) with respect only to
Significant Subsidiaries or (viii) with respect only to Significant Subsidiaries
under "-- Defaults" above or because of the failure of the Company to comply
with clause (iv) of the first paragraph under "-- Merger, Consolidation or Sale
of All or Substantially All Assets" above.

In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium (if any) and
interest on the Notes to redemption or maturity, as the case may be, and must
comply with certain other conditions, including (i) delivery to the Trustee of
an Opinion of Counsel to the effect that holders of the Notes will not recognize
income, gain or loss for U.S. federal income tax purposes as a result of such
deposit and defeasance and will be subject to U.S. federal income tax on the
same amount and in the same manner and at the same times as would have been the
case if such deposit
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and defeasance had not occurred (and, in the case of legal defeasance only, such
Opinion of Counsel must be based on a ruling of the Internal Revenue Service or
other change in applicable U.S. federal income tax law) and (ii) so long as, on
the date or dates the respective amounts were paid into the trust, such payments
were made with respect to the Notes without violating the subordination
provisions of the Indenture or any other material agreement binding on the
Company (except for violations of the Indenture as a result of the borrowing of
funds to be applied to such payments), including the Credit Facilities.

SATISFACTION AND DISCHARGE

The Indenture will be discharged and will cease to be of further effect as to
all Notes issued thereunder, when:

(1) either:

     (a)  all Notes that have been authenticated (except lost, stolen or
          destroyed Notes that have been replaced or paid and Notes for whose
          payment money has theretofore been deposited in trust and thereafter
          repaid to the Company) have been delivered to the Trustee for
          cancellation; or

     (b)  all Notes that have not been delivered to the Trustee for cancellation
          have become due and payable by reason of the making of a notice of
          redemption or otherwise or will become due and payable within one year
          and the Company or any Guarantor has irrevocably deposited or caused
          to be deposited with the Trustee as trust funds in trust solely for
          the benefit of the Holders, Cash Equivalents, Investment Grade
          Securities, or a combination thereof, in such amounts as will be
          sufficient without consideration of any reinvestment of interest, to
          pay and discharge the entire indebtedness on the Notes not delivered
          to the Trustee for cancellation for principal, premium and additional
          interest, if any, and accrued interest to the date of maturity or
          redemption;

(2)  no Event of Default (other than one resulting solely from the borrowing of
     funds to provide such deposit) shall have occurred and be continuing on the
     date of such deposit or shall occur as a result of such deposit and such
     deposit will not result in a breach or violation of, or constitute a
     default under, any other instrument to which the Company or any Guarantor
     is a party or by which the Company or any Guarantor is bound;

(3)  the Company or any Guarantor has paid or caused to be paid all sums payable
     by it under the Indenture; and

(4)  the Company has delivered irrevocable instructions to the Trustee under the
     Indenture to apply the deposited money toward the payment of the Notes at
     maturity or the redemption date, as the case may be.

CONCERNING THE TRUSTEE

          is to be the Trustee under the Indenture.

GOVERNING LAW

The Indenture will provide that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York.

CERTAIN DEFINITIONS

"Acquired Indebtedness" means, with respect to any specified Person:

     (i)   Indebtedness of any other Person existing at the time such other
           Person is merged with or into or becomes a Restricted Subsidiary of
           such specified Person; and

     (ii)   Indebtedness secured by a Lien encumbering any asset acquired by
            such specified Person,

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in each case, other than Indebtedness Incurred as consideration in, in
contemplation of, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a Restricted
Subsidiary or was otherwise acquired by such Person, or such asset was acquired
by such person, as applicable.

"Adjusted EBITDA" means, with respect to any Person for any period, the
Consolidated Net Income of such Person for such period plus, without
duplication:

     (i)   provision for taxes based on income or profits of such Person for
           such period deducted in computing Consolidated Net Income, plus

     (ii)   Consolidated Interest Expense (plus amortization of deferred
            financing fees) of such Person for such period to the extent the
            same was deducted in computing Consolidated Net Income, plus

     (iii)  Consolidated Depreciation and Amortization Expense of such Person
            for such period to the extent such Consolidated Depreciation and
            Amortization Expense was deducted in computing Consolidated Net
            Income, plus

     (iv)   any non-recurring fees, expenses or charges deducted in such period
            in computing Consolidated Net Income, plus

     (v)   any other non-cash charges reducing Consolidated Net Income for such
           period (excluding any such charge which requires an accrual of, or
           cash reserve for, anticipated cash charges for any future period).

Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization of, a Subsidiary of the
Company shall be added to Consolidated Net Income to compute Adjusted EBITDA
only to the extent (and in the same proportion) that the Net Income of such
Subsidiary was included in calculating Consolidated Net Income.

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.

"Asset Sale" means:

     (i)   the sale, conveyance, transfer or other disposition (whether in a
           single transaction or a series of related transactions) of property
           or assets (including by way of a Sale/Leaseback Transaction) of the
           Company or any Restricted Subsidiary not in the ordinary course of
           business (each referred to in this definition as a "disposition"); or

     (ii)  the issuance or sale of Equity Interests of any Restricted Subsidiary
           (other than to the Company or another Restricted Subsidiary) (whether
           in a single transaction or a series of related transactions), in each
           case other than:

        (1)  a disposition of Cash Equivalents or Investment Grade Securities or
             obsolete or worn out equipment in the ordinary course of business;

        (2)  the disposition of all or substantially all of the assets of the
             Company in a manner permitted pursuant to the provisions described
             above under "--Merger, Consolidation or Sale of All or
             Substantially All Assets" or any disposition that constitutes a
             Change of Control;

        (3)  any Restricted Payment or Permitted Investment that is permitted to
             be made, and is made, under the covenant described above under
             "Limitation on Restricted Payments";

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        (4)  any disposition of assets with an aggregate Fair Market Value of
             less than $          million;

        (5)  any disposition of property or assets by a Restricted Subsidiary to
             the Company or by the Company or a Restricted Subsidiary to a
             Restricted Subsidiary;

        (6)  any exchange of like-kind property pursuant to Section 1031 of the
             Internal Revenue Code of 1986, as amended, for use in a Similar
             Business;

        (7)  sales of assets received by the Company upon the foreclosure on a
             Lien;

        (8)  any sale of Equity Interests in, or Indebtedness or other
             securities of, an Unrestricted Subsidiary;

        (9)  licenses of intellectual property;

        (10)  any disposition of Designated Noncash Compensation; and

        (11)  sales of inventory in the ordinary course of business consistent
              with past practices and sales of equipment upon termination of a
              contract with a client entered into in the ordinary course of
              business pursuant to the terms of such contract.

"Base Dividend Restricted Payments Basket" shall initially equal $0, provided,
however, that if during any fiscal quarter the Company has paid dividends on the
Company's Common Stock in an aggregate amount that is less than the Quarterly
Base Dividend Level for such quarter, an amount equal to the difference between
(i) the Quarterly Base Dividend Level for such quarter and (ii) the aggregate
amount of dividends actually paid on the Company's Common Stock during such
quarter shall be added to the Base Dividend Restricted Payments Basket as of the
last day of such fiscal quarter.

"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.

"Borrowing Base" means the product of (i) Adjusted EBITDA for the most recent
four fiscal quarters for which internal financial statements are available and
(ii) three.

"Business Day" means a day other than a Saturday, Sunday or other day on which
banking institutions in New York State are authorized or required by law to
close.

"Capitalized Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized and reflected as a liability on a
balance sheet (excluding the footnotes thereto) in accordance with GAAP.

"Capital Expenditures" means any expenditure required to be classified as a
capital expenditure in accordance with GAAP.

"Capital Stock" means:

     (i)   in the case of a corporation, corporate stock, including, without
           limitation, corporate stock represented by IDSs and corporate stock
           outstanding upon the separation of IDSs into the securities
           represented thereby;

     (ii)   in the case of an association or business entity, any and all
            shares, interests, participations, rights or other equivalents
            (however designated) of corporate stock;

     (iii)  in the case of a partnership or limited liability company,
            partnership or membership interests (whether general or limited);
            and

     (iv)   any other interest or participation that confers on a Person the
            right to receive a share of the profits and losses of, or
            distributions of assets of, the issuing Person.

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"Cash Equivalents" means:

     (i)    U.S. dollars and foreign currency exchanged into U.S. dollars within
            180 days;

     (ii)   securities issued or directly and fully guaranteed or insured by the
            United States government or any agency or instrumentality thereof;

     (iii)   certificates of deposit, time deposits and eurodollar time deposits
             with maturities of one year or less from the date of acquisition,
             bankers' acceptances with maturities not exceeding one year and
             overnight bank deposits, in each case with any commercial bank
             having capital and surplus in excess of $500.0 million and whose
             long-term debt is rated at least "A" or the equivalent thereof by
             Moody's or S&P;

     (iv)   repurchase obligations for underlying securities of the types
            described in clauses (ii) and (iii) above entered into with any
            financial institution meeting the qualifications specified in clause
            (iii) above;

     (v)    commercial paper issued by a corporation (other than an Affiliate of
            the Company) rated at least "A-2" or the equivalent thereof by
            Moody's or S&P and in each case maturing within one year after the
            date of acquisition;

     (vi)   investment funds investing at least 95% of their assets in
            securities of the types described in clauses (i) through (v) above;

     (vii)   readily marketable direct obligations issued by any state of the
             United States of America or any political subdivision thereof
             having one of the two highest rating categories obtainable from
             either Moody's or S&P; and

     (viii)  Indebtedness or preferred stock issued by Persons with a rating of
             "A" or higher from S&P or "A-2" or higher from Moody's.

"Company" means Valor Communications Group, Inc. until a successor replaces it
and, thereafter, means the successor and, for purposes of any provision
contained in the Indenture and required by the Trust Indenture Act, each other
obligor on the Notes.

"Consolidated Depreciation and Amortization Expense" means with respect to any
Person for any period, the total amount of depreciation and amortization expense
of such Person and its Restricted Subsidiaries for such period on a consolidated
basis and otherwise determined in accordance with GAAP.

"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum, without duplication, of: (i) consolidated interest expense of
such Person and its Restricted Subsidiaries for such period, to the extent such
expense was deducted in computing Consolidated Net Income (including
amortization of original issue discount, the interest component of Capitalized
Lease Obligations (or any financing lease which has substantially the same
economic effect as a Capitalized Lease Obligation) and net payments and receipts
(if any) pursuant to Hedging Obligations and excluding amortization of deferred
financing fees), (ii) consolidated capitalized interest of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and (iii) the
earned discount or yield with respect to the sale of receivables.

"Consolidated Net Income" means, with respect to any Person for any period, the
aggregate of the Net Income of such Person and its Restricted Subsidiaries for
such period, on a consolidated basis; provided, however, that:

     (i)  any net after-tax extraordinary gains or losses (less all fees and
          expenses relating thereto) shall be excluded;

     (ii) any increase in amortization or depreciation resulting from purchase
          accounting in relation to any acquisition that is consummated after
          the Issue Date, net of taxes, shall be excluded;

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     (iii) the Net Income for such period shall not include the cumulative
           effect of a change in accounting principles during such period;

     (iv) any net after-tax income or loss from discontinued operations and any
          net after-tax gains or losses on disposal of discontinued operations
          shall be excluded;

     (v)  any net after-tax gains or losses (less all fees and expenses relating
          thereto) attributable to asset dispositions other than in the ordinary
          course of business (as determined in good faith by the Board of
          Directors) shall be excluded; and

     (vi) the Net Income for such period of any Person that is not a Subsidiary
          of such Person, or is an Unrestricted Subsidiary, or that is accounted
          for by the equity method of accounting, shall be included only to the
          extent of the amount of dividends or distributions or other payments
          paid in cash (or to the extent converted into cash) to the referent
          Person or a Restricted Subsidiary thereof in respect of such period.

"Continuing Directors" means, as of any date of determination, any member of the
Company's Board of Directors who:

     (i) was a member of the Company's Board of Directors on the date of the
         Indenture; or

     (ii) was nominated for election or elected to the Board of Directors with
          the affirmative vote of at least a majority of the Continuing
          Directors who were members of the Company's Board of Directors at the
          time of the nomination or election.

"Contribution Indebtedness" means Indebtedness of the Company in an aggregate
principal amount not greater than the amount of all Specified Cash
Contributions, provided that such Contribution Indebtedness (i) has a Stated
Maturity later than the Stated Maturity of the Notes, (ii) is Incurred
substantially concurrently with such Specified Cash Contributions, and (iii) is
so designated as Contribution Indebtedness pursuant to an Officers' Certificate
on the Incurrence date thereof.

"Credit Agreement" means the credit agreement to be dated as of           ,
2004, as amended, restated, supplemented, waived, replaced, restructured,
repaid, increased, refunded, refinanced or otherwise modified from time to time
(whether or not terminated and whether    with the original lenders or
otherwise), among the Company, the Subsidiaries of the Company named therein,
the financial institutions from time to time a party thereto and      , as
Administrative Agent, Fronting Bank and Swingline Lender, including any
successor or replacement facility extending the maturity thereof or otherwise
restructuring all or any portion of the Indebtedness under such agreement or
increasing the amount of available borrowings thereunder (except to the extent
that any such amendment, restatement, supplement, waiver, replacement,
refunding, refinancing or other modification thereto would be prohibited by the
terms of the Indenture, unless otherwise agreed to by the Holders of at least a
majority in aggregate principal amount of Notes at the time outstanding).

"Credit Facilities" means, one or more debt facilities (including, without
limitation, the Credit Agreement and indentures or debt securities) or
commercial paper facilities, in each case with banks or other institutional
lenders providing for revolving credit loans, term debt, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time, including any
refunding, replacement or refinancing thereof through the issuance of debt
securities.

"Default" means any event which is, or after notice or passage of time or both
would be, an Event of Default.

"Designated Noncash Consideration" means the Fair Market Value of noncash
consideration received by the Company or one of its Restricted Subsidiaries in
connection with an Asset Sale that is so designated as Designated Noncash
Consideration pursuant to an Officers' Certificate, setting forth the basis of
such

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valuation, less the amount of Cash Equivalents received in connection with a
subsequent sale of such Designated Noncash Consideration.

"Designated Preferred Stock" means Preferred Stock of the Company (other than
Disqualified Stock) that is issued (other than to a Subsidiary of the Company or
an employee stock ownership plan or trust established by the Company or any of
its Subsidiaries) and is so designated as Designated Preferred Stock, pursuant
to an Officers' Certificate, on the issuance date thereof, the proceeds of which
are excluded from the calculation set forth in clause (c) of the covenant
described under "--Limitation on Restricted Payments."

"Designated Senior Indebtedness" means (i) the Senior Lender Indebtedness and
(ii) any other Senior Indebtedness of the Company with a principal amount in
excess of $25 million.

"Disqualified Stock" means, with respect to any Person, any Capital Stock of
such Person which, by its terms (or by the terms of any security into which it
is convertible or for which it is redeemable or exchangeable), or upon the
happening of any event;

     (i)  matures or is mandatorily redeemable, pursuant to a sinking fund
          obligation or otherwise;

     (ii) is convertible or exchangeable for Indebtedness or Disqualified Stock;
          or

     (iii) is redeemable at the option of the holder thereof, in whole or in
           part, in each case prior to the first anniversary of the maturity
           date of the Notes;

provided, however, that only the portion of Capital Stock which so matures or is
mandatorily redeemable, is so convertible or exchangeable or is so redeemable at
the option of the holder thereof prior to such dates shall be deemed to be
Disqualified Stock; provided further, however, that if such Capital Stock is
issued to any employee or to any plan for the benefit of employees of the
Company or its Subsidiaries or by any such plan to such employees, such Capital
Stock shall not constitute Disqualified Stock solely because it may be required
to be repurchased by the Company in order to satisfy applicable statutory or
regulatory obligations or as a result of such employee's termination, death or
disability. Notwithstanding clause (iii) of this definition, any Capital Stock
that would constitute Disqualified Stock solely because the holders thereof have
the right to require the Company to repurchase such Capital Stock upon the
occurrence of a change of control or an asset sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with the covenant described above
under the caption "--Certain Covenants--Restricted Payments."

"Equity Interests" means Capital Stock and all warrants, options or other rights
to acquire Capital Stock (but excluding any debt security that is convertible
into, or exchangeable for, Capital Stock).

"Excess Cash" shall mean, with respect to any period, Adjusted EBITDA minus the
sum of (i) cash interest expense, (ii) cash income tax expense and (iii) Capital
Expenditures (except to the extent financed with an incurrence of indebtedness),
in each case, for such period.

"Excluded Contributions" means the net proceeds received by the Company after
the Issue Date from (i) contributions to its common equity capital and (ii) the
sale (other than to a Subsidiary of the Company or to any Company or Subsidiary
management equity plan or stock incentive plan or any other management or
employee benefit plan or agreement) of Capital Stock (other than Disqualified
Stock and Designated Preferred Stock) of the Company, in each case designated as
Excluded Contributions pursuant to an Officers' Certificate executed by an
Officer of the Company, the proceeds of which are excluded from the calculation
set forth in clause (c) of the first paragraph of the "--Limitation on
Restricted Payments" covenant.

"Fair Market Value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction.

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"GAAP" means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date. For the purposes of the
Indenture, the term "consolidated" with respect to any Person shall mean such
Person consolidated with its Restricted Subsidiaries, and shall not include any
Unrestricted Subsidiary, but the interest of such Person in an Unrestricted
Subsidiary will be accounted for as an Investment.

"guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness or other obligations.

"Guarantee" means any guarantee of the obligations of the Company under the
Indenture and the Notes by any Person in accordance with the provisions of the
Indenture.

"Guarantor" means any Person that Incurs a Guarantee; provided that upon the
release or discharge of such Person from its Guarantee in accordance with the
Indenture, such Person ceases to be a Guarantor.

"Hedging Obligations" means, with respect to any Person, the obligations of such
Person under (i) currency exchange, interest rate or commodity swap agreements,
currency exchange, interest rate or commodity cap agreements and currency
exchange, interest rate or commodity collar agreements and (ii) other agreements
or arrangements designed to protect such Person against fluctuations in currency
exchange, interest rates or commodity prices.

"Holder" or "Noteholder" means the Person in whose name a Note is registered on
the Registrar's books.

"IDS" means the Company's Income Deposit Securities, whether currently
outstanding or as may be issued from time to time.

"Incur" means issue, assume, guarantee, incur or otherwise become liable for;
provided, however, that any Indebtedness or Capital Stock of a Person existing
at the time such person becomes a Subsidiary (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be Incurred by such person at the
time it becomes a Subsidiary.

"Indebtedness" means, with respect to any Person:

     (i)  the principal and premium (if any) of any indebtedness of such Person,
          whether or not contingent:

     (1)  in respect of borrowed money;

     (2)  evidenced by bonds, notes, debentures or similar instruments or
          letters of credit or bankers' acceptances (or, without duplication,
          reimbursement agreements in respect thereof);

     (3)  representing the deferred and unpaid purchase price of any property,
          except any such balance that constitutes a trade payable or similar
          obligation to a trade creditor or an accrued expense;

     (4)  in respect of Capitalized Lease Obligations; or

     (5)  representing any Hedging Obligations,

if and to the extent that any of the foregoing Indebtedness (other than letters
of credit and Hedging Obligations) would appear as a liability on a balance
sheet (excluding the footnotes thereto) of such Person prepared in accordance
with GAAP;

     (ii)   to the extent not otherwise included, any obligation of such Person
            to be liable for, or to pay, as obligor, guarantor or otherwise, on
            the Indebtedness of another Person (other than by endorsement of
            negotiable instruments for collection in the ordinary course of
            business); and

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     (iii)  to the extent not otherwise included, Indebtedness of another Person
            secured by a Lien on any asset owned by such Person (whether or not
            such Indebtedness is assumed by such Person); provided, however,
            that the amount of such Indebtedness will be the lesser of (a) the
            Fair Market Value of such asset at such date of determination and
            (b) the amount of such Indebtedness of such other Person; provided,
            further, that any obligation of the Company or any Restricted
            Subsidiary in respect of (i) minimum guaranteed commissions, or
            other similar payments, to clients, minimum returns to clients or
            stop loss limits in favor of clients or indemnification obligations
            to clients, in each case pursuant to contracts to provide services
            to clients entered into in the ordinary course of business, and (ii)
            account credits to participants under the LTIP or any successor or
            similar compensation plan, shall be deemed not to constitute
            Indebtedness.

"Independent Financial Advisor" means an accounting, appraisal or investment
banking firm or consultant to Persons engaged in a similar business of
nationally recognized standing that is, in the good faith determination of the
Company, qualified to perform the task for which it has been engaged.

"Investment Grade Securities" means:

     (i)   securities issued or directly and fully guaranteed or insured by the
           United States government or any agency or instrumentality thereof
           (other than Cash Equivalents);

     (ii)   debt securities or debt instruments with a rating of BBB- or higher
            by S&P or Baa3 or higher by Moody's or the equivalent of such rating
            by such rating organization, or if no rating of S&P or Moody's then
            exists, the equivalent of such rating by any other nationally
            recognized securities rating agency, but excluding any debt
            securities or instruments constituting loans or advances among the
            Company and its Subsidiaries; and

     (iii)  investments in any fund that invests exclusively in investments of
            the type described in clauses (i) and (ii) which fund may also hold
            cash.

"Investments" means, with respect to any Person, all investments by such Person
in other Persons (including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding accounts receivable,
trade credit and advances to customers and commission, travel and similar
advances to officers, employees and consultants made in the ordinary course of
business), purchases or other acquisitions for consideration (including
agreements providing for the adjustment of purchase price) of Indebtedness,
Equity Interests or other securities issued by any other Person and investments
that are required by GAAP to be classified on the balance sheet of the Company
in the same manner as the other investments included in this definition to the
extent such transactions involve the transfer of cash or other property.

For purposes of the definition of "Unrestricted Subsidiary" and the covenant
described under "Limitation on Restricted Payments":

     (i)   "Investments" shall include the portion (proportionate to the
           Company's equity interest in such Subsidiary) of the Fair Market
           Value of the net assets of a Subsidiary of the Company at the time
           that such Subsidiary is designated an Unrestricted Subsidiary;
           provided, however, that upon a redesignation of such Subsidiary as a
           Restricted Subsidiary, the Company shall be deemed to continue to
           have a permanent "Investment" in an Unrestricted Subsidiary equal to
           an amount (if positive) equal to (x) the Company's "Investment" in
           such Subsidiary at the time of such redesignation less (y) the
           portion (proportionate to the Company's equity interest in such
           Subsidiary) of the Fair Market Value of the net assets of such
           Subsidiary at the time of such redesignation; and

     (ii)  any property transferred to or from an Unrestricted Subsidiary shall
           be valued at its Fair Market Value at the time of such transfer, in
           each case as determined in good faith by the Board of Directors.

"Issue Date" means the date on which the Notes are authenticated.
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"Leverage Ratio" means, with respect to any Person for any period, the ratio of
Net Debt of such Person at the end of such period to the Adjusted EBITDA of such
Person for such period. In the event that the Company or any of its Restricted
Subsidiaries Incurs or redeems any Indebtedness or issues or redeems Preferred
Stock subsequent to the end of the period for which the Leverage Ratio is being
calculated but prior to the event for which the calculation of the Leverage
Ratio is made (the "Calculation Date"), then the Leverage Ratio shall be
calculated giving pro forma effect to such Incurrence or redemption of
Indebtedness, or such issuance or redemption of Preferred Stock, as if the same
had occurred at the end of the applicable four-quarter period.

For purposes of making the computation referred to above, Investments,
acquisitions, dispositions, mergers, consolidations and discontinued operations
(as determined in accordance with GAAP), in each case with respect to an
operating unit of a business, that have been made by the Company or any of its
Restricted Subsidiaries during the four-quarter reference period or subsequent
to such reference period and on or prior to or simultaneously with the
Calculation Date shall be calculated on a pro forma basis assuming that all such
Investments, acquisitions, dispositions, discontinued operations, mergers and
consolidations (and the reduction of any associated interest coverage
obligations and the change in Adjusted EBITDA resulting therefrom) had occurred
on the first day of the four-quarter reference period. If since the beginning of
such period any Person (that subsequently became a Restricted Subsidiary or was
merged with or into the Company or any Restricted Subsidiary since the beginning
of such period) shall have made any Investment, acquisition or disposition, have
discontinued any operation, or have engaged in merger or consolidation, in each
case with respect to an operating unit of a business, that would have required
adjustment pursuant to this definition, then the Leverage Ratio shall be
calculated giving pro forma effect thereto for such period as if such
Investment, acquisition, disposition, discontinued operation, merger or
consolidation had occurred at the beginning of the applicable four-quarter
period.

For purposes of this definition, whenever pro forma effect is to be given to any
transaction, the pro forma calculations shall be made in good faith by a
responsible financial or accounting officer of the Company. Any such pro forma
calculation may include adjustments appropriate, in the reasonable determination
of the Company as set forth in an Officers' Certificate, to reflect operating
expense reductions reasonably expected to result from any acquisition or merger.

"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction); provided that in
no event shall an operating lease be deemed to constitute a Lien.

"LTIP" means any long-term incentive or similar compensation plan maintained by
the Company or its Restricted Subsidiaries.

"Moody's" means Moody's Investors Service, Inc.

"Net Debt" means, with respect to the Company, on a consolidated basis at any
time, the actual outstanding amount of funded indebtedness, plus, without
duplication, the principal component of all Capitalized Lease Obligations and,
without duplication, other Indebtedness of the Company and its Restricted
Subsidiaries at such time, less (i) any early termination payments that would be
owed to the Company and its Subsidiaries if all outstanding Hedging Obligations
were terminated, and (ii) the amount of cash and Cash Equivalents of the Company
and its Subsidiaries on the balance sheet as of the date of determination.

"Net Income" means, with respect to any Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect
of Preferred Stock dividends or other dividends.

"Net Proceeds" means the aggregate cash proceeds received by the Company or any
of its Restricted Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received in respect of or upon the sale or other
disposition of any Designated Noncash Consideration received in any Asset Sale
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and any cash payments received by way of deferred payment of principal pursuant
to a note or installment receivable or otherwise, but only as and when received,
but excluding the assumption by the acquiring person of Indebtedness relating to
the disposed assets or other considerations received in any other noncash form),
net of the direct costs relating to such Asset Sale and the sale or disposition
of such Designated Noncash Consideration (including, without limitation, legal,
accounting and investment banking fees, and brokerage and sales commissions),
and any relocation expenses Incurred as a result thereof, taxes paid or payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements related thereto), amounts required
to be applied to the repayment of principal, premium (if any) and interest on
Indebtedness required (other than pursuant to clause (i) of the second paragraph
of the covenant described under "--Asset Sales") to be paid as a result of such
transaction, and any deduction of appropriate amounts to be provided by the
Company as a reserve in accordance with GAAP against any liabilities associated
with the asset disposed of in such transaction and retained by the Company after
such sale or other disposition thereof, including, without limitation, pension
and other post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with
such transaction.

"Notes" means the   % senior subordinated notes of the Company, including any
Additional Notes unless expressly provided otherwise.

"Obligations" means any principal, interest, penalties, fees, indemnifications,
reimbursements (including, without limitation, reimbursement obligations with
respect to letters of credit and bankers' acceptances), damages and other
liabilities payable under the documentation governing any Indebtedness; provided
that Obligations with respect to the Notes shall not include fees or
indemnifications in favor of the Trustee and other third parties other than the
Holders of the Notes.

"Officer" means the Chairman of the Board, the President, the Chief Financial
Officer, any Executive Vice President, Senior Vice President or Vice President,
the Treasurer or the Secretary of the Company.

"Officers' Certificate" means a certificate signed on behalf of the Company by
two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company that meets the requirements set forth in the
Indenture.

"Opinion of Counsel" means a written opinion from legal counsel. The counsel may
be an employee of or counsel to the Company.

"Pari Passu Indebtedness" means (i) with respect to the Company, the Notes and
any other Indebtedness of the Company, other than Senior Indebtedness, Secured
Indebtedness or Subordinated Indebtedness of the Company and (ii) with respect
to any Guarantor, its Guarantee and any other Indebtedness of such Guarantor,
other than Senior Indebtedness, Secured Indebtedness and Subordinated
Indebtedness of such Guarantor.

"Permitted Asset Swap" means any one or more transactions in which the Company
or any Restricted Subsidiary exchanges assets for consideration consisting of
(i) assets used or useful in a Similar Business and (ii) any cash or Cash
Equivalents, provided that such cash or Cash Equivalents will be considered Net
Proceeds from an Asset Sale.

"Permitted Holders" means Welsh, Carson Anderson & Stowe and Vestar Capital
Partners and their respective Affiliates.

"Permitted Investments" means:

     (i)     any Investment in the Company or any Restricted Subsidiary;

     (ii)    any Investment in Cash Equivalents or Investment Grade Securities;

     (iii)   any Investment by the Company or any Restricted Subsidiary of the
             Company in a Person that is primarily engaged in a Similar Business
             if as a result of such Investment (a) such Person becomes a
             Restricted Subsidiary or (b) such Person, in one transaction or a
             series of related transactions, is merged, consolidated or
             amalgamated with or into, or transfers or
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             conveys substantially all of its assets to, or is liquidated into,
             the Company or a Restricted Subsidiary;

     (iv)    any Investment in securities or other assets not constituting Cash
             Equivalents and received in connection with an Asset Sale made
             pursuant to the provisions of "--Asset Sales" or any other
             disposition of assets not constituting an Asset Sale;

     (v)    any Investment existing on the Issue Date;

     (vi)   advances to employees not in excess of $10 million outstanding at
            any one time in the aggregate;

     (vii)   any Investment acquired by the Company or any of its Restricted
             Subsidiaries (a) in exchange for any other Investment or accounts
             receivable held by the Company or any such Restricted Subsidiary in
             connection with or as a result of a bankruptcy, workout,
             reorganization or recapitalization of the issuer of such other
             Investment or accounts receivable or (b) as a result of a
             foreclosure by the Company or any of its Restricted Subsidiaries
             with respect to any secured Investment or other transfer of title
             with respect to any secured Investment in default;

     (viii)  Hedging Obligations;

     (ix)    additional Investments having an aggregate Fair Market Value, taken
             together with all other Investments made pursuant to this clause
             (ix) that are at that time outstanding, not to exceed the greater
             of   % of Total Assets or $     million at the time of such
             Investment (with the Fair Market Value of each Investment being
             measured at the time made and without giving effect to subsequent
             changes in value);

     (x)    loans and advances to officers, directors and employees for
            business-related travel expenses, moving expenses and other similar
            expenses, in each case Incurred in the ordinary course of business,
            and account credits and payments to participants under the LTIP or
            any successor or similar compensation plan;

     (xi)    Investments the payment for which consists of Equity Interests of
             the Company (other than Disqualified Stock); provided, however,
             that such Equity Interests will not increase the amount available
             for Restricted Payments under clause (c) of the "--Limitation on
             Restricted Payments" covenant;

     (xii)   any transaction to the extent it constitutes an Investment that is
             permitted by and made in accordance with the provisions of the
             second paragraph of the covenant described under "--Transactions
             with Affiliates" (except transactions described in clauses (ii),
             (iii) and (vi) of such paragraph);

     (xiii)  Investments consisting of the licensing or contribution of
             intellectual property pursuant to joint marketing arrangements with
             other Persons;

     (xiv)  Guarantees issued in accordance with "Limitations on Incurrence of
            Indebtedness and Issuance of Disqualified Stock and Preferred
            Stock";

     (xv)   any Investment by Restricted Subsidiaries in other Restricted
            Subsidiaries and Investments by Subsidiaries that are not Restricted
            Subsidiaries in other Subsidiaries that are not Restricted
            Subsidiaries;

     (xvi)  Investments consisting of purchases and acquisitions of inventory,
            supplies, materials and equipment or purchases of contract rights or
            licenses or leases of intellectual property, in each case in the
            ordinary course of business.

"Permitted Junior Securities" shall mean debt or equity securities of the
Company or any successor corporation issued pursuant to a plan of reorganization
or readjustment of the Company that are subordinated to the payment of all
then-outstanding Senior Indebtedness of the Company at least to the
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<PAGE>

same extent that the Notes are subordinated to the payment of all Senior
Indebtedness of the Company on the Issue Date, so long as to the extent that any
Senior Indebtedness of the Company outstanding on the date of consummation of
any such plan of reorganization or readjustment is not paid in full in cash on
such date, either (a) the holders of any such Senior Indebtedness not so paid in
full in cash have consented to the terms of such plan of reorganization or
readjustment or (b) such holders receive securities which constitute Senior
Indebtedness and which have been determined by the relevant court to constitute
satisfaction in full in cash of any Senior Indebtedness not paid in full in
cash.

"Permitted Liens" means, with respect to any Person:

     (a)   pledges or deposits by such Person under workmen's compensation laws,
           unemployment insurance laws or similar legislation, or good faith
           deposits in connection with bids, tenders, contracts (other than for
           the payment of Indebtedness) or leases to which such Person is a
           party, or deposits to secure public or statutory obligations of such
           Person or deposits of cash or United States government bonds to
           secure surety or appeal bonds to which such Person is a party, or
           deposits as security for contested taxes or import duties or for the
           payment of rent, in each case Incurred in the ordinary course of
           business;

     (b)   Liens imposed by law, such as carriers', warehousemen's and
           mechanics' Liens, in each case for sums not yet due or being
           contested in good faith by appropriate proceedings or other Liens
           arising out of judgments or awards against such Person with respect
           to which such Person shall then be proceeding with an appeal or other
           proceedings for review;

     (c)   Liens for taxes, assessments or other governmental charges not yet
           due or payable or subject to penalties for nonpayment or which are
           being contested in good faith by appropriate proceedings;

     (d)   Liens in favor of issuers of performance and surety bonds or bid
           bonds or completion guarantees or with respect to other regulatory
           requirements or letters of credit issued pursuant to the request of
           and for the account of such Person in the ordinary course of its
           business;

     (e)   minor survey exceptions, minor encumbrances, easements or
           reservations of, or rights of others for, licenses, rights-of-way,
           sewers, electric lines, telegraph and telephone lines and other
           similar purposes, or zoning or other restrictions as to the use of
           real properties or Liens incidental to the conduct of the business of
           such Person or to the ownership of its properties which were not
           Incurred in connection with Indebtedness and which do not in the
           aggregate materially adversely affect the value of said properties or
           materially impair their use in the operation of the business of such
           Person;

     (f)   Liens securing Indebtedness permitted to be incurred pursuant to
           clause (d) of the second paragraph of the covenant described under
           "--Limitations on Incurrence of Indebtedness and Issuance of
           Disqualified Stock and Preferred Stock";

     (g)   Liens to secure Indebtedness permitted pursuant to clause (a) of the
           second paragraph of the covenant described under "--Limitations on
           Incurrence of Indebtedness and Issuance of Disqualified Stock and
           Preferred Stock";

     (h)   Liens existing on the Issue Date;

     (i)   Liens on property or shares of stock of a Person at the time such
           Person becomes a Subsidiary; provided, however, such Liens are not
           created or Incurred in connection with, or in contemplation of, such
           other Person becoming such a Subsidiary; provided further, however,
           that such Liens may not extend to any other property owned by the
           Company or any Restricted Subsidiary;

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     (j)   Liens on property at the time the Company or a Restricted Subsidiary
           acquired the property, including any acquisition by means of a merger
           or consolidation with or into the Company or any Restricted
           Subsidiary; provided further, however, that such Liens are not
           created or Incurred in connection with, or in contemplation of, such
           acquisition; provided further, however, that the Liens may not extend
           to any other property owned by the Company or any Restricted
           Subsidiary;

     (k)   Liens securing Indebtedness or other obligations of a Restricted
           Subsidiary owing to the Company or another Restricted Subsidiary
           permitted to be incurred in accordance with the covenant described
           under "--Limitations on Incurrence of Indebtedness and Issuance of
           Disqualified Stock and Preferred Stock";

     (l)   Liens securing Hedging Obligations so long as the related
           Indebtedness is, and is permitted to be under the Indenture, secured
           by a Lien on the same property securing such Hedging Obligations;

     (m)  Liens on specific items of inventory or other goods and proceeds of
          any Person securing such Person's obligations in respect of bankers'
          acceptances, issued or created for the account of such Person to
          facilitate the purchase, shipment or storage of such inventory or
          other goods;

     (n)   leases and subleases of real property which do not materially
           interfere with the ordinary conduct of the business of the Company or
           any of its Restricted Subsidiaries;

     (o)   Liens arising from Uniform Commercial Code financing statement
           filings regarding operating leases entered into by the Company and
           its Restricted Subsidiaries in the ordinary course of business;

     (p)   Liens in favor of the Company;

     (q)   Liens on equipment of the Company granted in the ordinary course of
           business to the Company's client at which such equipment is located;

     (r)   Liens encumbering deposits made in the ordinary course of business to
           secure obligations arising from statutory, regulatory, contractual or
           warranty requirements, including rights of offset and set-off;

     (s)   Liens on the Equity Interests of Unrestricted Subsidiaries securing
           obligations of Unrestricted Subsidiaries not otherwise prohibited by
           the Indenture;

     (t)   Liens to secure Indebtedness permitted by clause (1) of the second
           paragraph of the covenant described under "--Limitations on
           Incurrence of Indebtedness and Issuance of Disqualified Stock and
           Preferred Stock"; and

     (u)   Liens to secure any refinancing, refunding, extension, renewal or
           replacement (or successive refinancings, refundings, extensions,
           renewals or replacements) as a whole, or in part, of any Indebtedness
           secured by any Lien referred to in the foregoing clauses (f), (g),
           (h), (i), (j), (k), (1) and (t); provided, however, that (x) such new
           Lien shall be limited to all or part of the same property that
           secured the original Lien (plus improvements on such property) and
           (y) the Indebtedness secured by such Lien at such time is not
           increased to any amount greater than the sum of (A) the outstanding
           principal amount or, if greater, committed amount of the Indebtedness
           described under clauses (f), (g), (h), (i), (j), (k), (1) or (t) at
           the time the original Lien became a Permitted Lien under the
           Indenture and (B) an amount necessary to pay any fees and expenses,
           including premiums, related to such refinancing, refunding,
           extension, renewal or replacement.

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"Person" means any individual, corporation, partnership, business trust, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

"Preferred Stock" means any Equity Interest with preferential right of payment
of dividends or upon liquidation, dissolution, or winding up.

"Quarterly Base Dividend Level" means, for any fiscal quarter,   % of the
Company's Excess Cash for the 12-month period ending on the last day of the
Company's then most recently ended fiscal quarter for which internal financial
statements are available at the time such dividend is declared and paid divided
by four (4).

"Representative" means the trustee, agent or representative (if any) for an
issue of Senior Indebtedness.

"Restricted Investment" means an Investment other than a Permitted Investment.

"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.

"Sale/Leaseback Transaction" means an arrangement relating to property now owned
or hereafter acquired by the Company or a Restricted Subsidiary whereby the
Company or a Restricted Subsidiary transfers such property to a Person and the
Company or such Restricted Subsidiary leases it from such Person, other than
leases between the Company and a Wholly Owned Subsidiary or between Wholly Owned
Subsidiaries.

"Secured Indebtedness" means any Indebtedness of the Company or any Subsidiary
secured by a Lien.

"S&P" means Standard and Poor's Ratings Group.

"Senior Credit Documents" means the collective reference to the Credit
Facilities, the notes issued pursuant thereto and the guarantees thereof, and
the collateral documents relating thereto.

"Senior Lender Indebtedness" means any and all amounts payable under or in
respect of the Credit Facilities, the Senior Credit Documents with respect
thereto and any Refinancing Indebtedness with respect thereto, as amended from
time to time, including principal, premium (if any), interest (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company or any Guarantor, as applicable, whether
or not a claim for post-filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement obligations, guarantees and all other amounts
payable thereunder or in respect thereof.

"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.

"Similar Business" means a business, the majority of whose revenues are derived
from providing telecommunications services.

"Specified Cash Contributions" means the aggregate amount of cash contributions
(other than Excluded Contributions) made to the capital of the Company which are
designated as "Specified Cash Contributions" pursuant to an Officers'
Certificate.

"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the final payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).

"Subordinated Indebtedness" means, any Indebtedness of the Company or any
Guarantor, the instrument under which such Indebtedness is incurred expressly
provides that it is subordinated in right of payment to the Notes or any
Guarantee.
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"Subsidiary" means, with respect to any Person:

     (i)   any corporation, association or other business entity (other than a
           partnership, joint venture or limited liability company) of which
           more than 50% of the total voting power of shares of Capital Stock
           entitled (without regard to the occurrence of any contingency) to
           vote in the election of directors, managers or trustees thereof is at
           the time of determination owned or controlled, directly or
           indirectly, by such Person or one or more of the other Subsidiaries
           of that Person or a combination thereof; and

     (ii)  any partnership, joint venture or limited liability company of which
           (x) more than 50% of the capital accounts, distribution rights, total
           equity and voting interests or general and limited partnership
           interests, as applicable, are owned or controlled, directly or
           indirectly, by such Person or one or more of the other Subsidiaries
           of that Person or a combination thereof, whether in the form of
           membership, general, special or limited partnership interests or
           otherwise and (y) such Person or any Wholly Owned Restricted
           Subsidiary of such Person is a controlling general partner or
           otherwise controls such entity.

"Total Assets" means the total consolidated assets of the Company and its
Restricted Subsidiaries, as shown on the most recent balance sheet of the
Company.

"Trustee" means the party named as such in the Indenture until a successor
replaces it and, thereafter, means the successor, and if at any time there is
more than one such party, "Trustee" as used with respect to the securities of
any series shall mean the trustee with respect to securities of that series.

"Trust Officer" means (i) any officer within the corporate trust department of
the Trustee, including any vice president, assistant vice president, assistant
secretary, assistant treasurer, trust officer or any other officer of the
Trustee who customarily performs functions similar to those performed by the
Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of such person's knowledge of and
familiarity with the particular subject and (ii) who shall have direct
responsibility for the administration of the Indenture.

"Unrestricted Subsidiary" means:

     (i)   any Subsidiary of the Company that at the time of determination shall
           be designated an Unrestricted Subsidiary by the Board of Directors in
           the manner provided below; and

     (ii)  any Subsidiary of an Unrestricted Subsidiary.

The Board of Directors may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary of the Company) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Equity Interests or Indebtedness of, or owns or holds any Lien on any
property of, the Company or any other Subsidiary of the Company that is not a
Subsidiary of the Subsidiary to be so designated; provided, however, that the
Subsidiary to be so designated and its Subsidiaries do not at the time of
designation have and do not thereafter Incur any Indebtedness pursuant to which
the lender has recourse to any of the assets of the Company or any of its
Restricted Subsidiaries; provided further, however, that either (a) the
Subsidiary to be so designated has total consolidated assets of $1,000 or less
or (b) if such Subsidiary has consolidated assets greater than $1,000, then such
designation would be permitted under the covenant entitled "--Limitation on
Restricted Payments."

The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that immediately after giving effect
to such designation (x)(1) the Company could Incur $1.00 of additional
Indebtedness pursuant to the Leverage Ratio test described under "--Limitations
on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred
Stock" or (2) the Leverage Ratio for the Company and its Restricted Subsidiaries
would be greater than such ratio for the Company and its Restricted Subsidiaries
immediately prior to such designation, in each case on a pro forma basis taking
into account such designation and (y) no Default shall have occurred and be
continuing. Any such

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designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.

"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.

"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

"Weighted Average Life to Maturity" means, when applied to any Indebtedness or
Disqualified Stock, as the case may be, at any date, the quotient obtained by
dividing (i) the sum of the products of the number of years from the date of
determination to the date of each successive scheduled principal payment of such
Indebtedness or redemption or similar payment with respect to such Disqualified
Stock multiplied by the amount of such payment, by (ii) the sum of all such
payments.

"Wholly Owned Restricted Subsidiary" is any Wholly Owned Subsidiary that is a
Restricted Subsidiary.

"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person 100%
of the outstanding Capital Stock or other ownership interests of which (other
than directors' qualifying shares) shall at the time be owned by such Person
and/or by one or more Wholly Owned Subsidiaries of such Person.

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                         IDSS ELIGIBLE FOR FUTURE SALE

Future sales or the availability for sale of substantial amounts of IDSs or
shares of our common stock or a significant principal amount of our senior
subordinated notes in the public market could adversely affect prevailing market
prices and could impair our ability to raise capital through future sales of our
securities. Upon completion of this offering, we will have      IDSs
outstanding, in respect of           shares of our Class A common stock in the
aggregate and $     million aggregate principal amount of our senior
subordinated notes. All of these IDSs and securities represented thereby will be
freely tradable without restriction or further registration under the Securities
Act or securities legislation in all the provinces of Canada, unless the IDSs or
securities represented thereby are owned by "affiliates" as that term is defined
in Rule 144 under the Securities Act. Upon completion of this offering, the
existing equity holders will own, as part of the IDSs, shares of Class A common
stock representing an aggregate      % ownership interest in us after the
offering, or      % if the underwriters' over-allotment option is exercised in
full. In addition, our equity sponsors will hold      shares of Class B common
stock, which following the second anniversary of the consummation of this
offering may be exchanged, subject to certain conditions, for
IDSs in connection with the sale of such Class B common stock. The existing
equity holders will have demand and piggyback registration rights for their
shares of Class A common stock, which may be sold in the form of IDSs as well as
for their shares of Class B common stock and the IDSs for which they may be
exchanged. In addition, certain members of management will have piggyback
registration rights for their IDSs. See "Related Party
Transactions--Registration Rights." Collectively, our existing equity holders
will be issued           IDSs in this offering. Registration rights may not be
exercised during the lock-up period.

We may issue shares of our common stock or senior subordinated notes, which may
be in the form of IDSs, or other securities from time to time as consideration
for future acquisitions and investments. In the event any such acquisition or
investment is significant, the number of shares of our common stock or senior
subordinated notes, which may be in the form of IDSs, or other securities that
we may issue may in turn be significant. In addition, we may also grant
registration rights covering those shares of our common stock or senior
subordinated notes and IDSs, if applicable, or other securities in connection
with any such acquisitions and investments.

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             MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following discussion, insofar as it relates to matters of United States
federal income tax law (and, to the extent specified, United States federal
estate tax law) or legal conclusions with respect thereto, constitutes the
opinion of our counsel, Kirkland & Ellis LLP, as to the material United States
federal income tax considerations to a United States holder or, as the case may
be, a non-United States holder, in each case as defined below, arising from the
purchase, ownership and disposition of IDSs, senior subordinated notes or Class
A common stock. This discussion is based on the provisions of the United States
Internal Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder, judicial authority, published administrative positions
of the Internal Revenue Service (the "IRS") and other applicable authorities,
all as in effect on the date of this prospectus, and all of which are subject to
change or differing interpretations, possibly on a retroactive basis. No
statutory, administrative or judicial authority directly addresses the treatment
of IDSs or instruments similar to IDSs for United States federal income tax
purposes, and we have not sought any ruling from the IRS with respect to the
statements made and the conclusions reached in the following discussion. As a
result, we cannot assure you that the IRS or the courts will agree with the tax
consequences described herein. A different treatment from that discussed below
could adversely affect the amount, timing and character of income and gain
realized by a holder in respect of an investment in IDSs, senior subordinated
notes or Class A common stock. In the case of non-United States holders, a
different treatment could subject such holders to the same United States federal
withholding tax or estate tax consequences with respect to the senior
subordinated notes as they will be subject to with respect to the Class A common
stock. Payments to non-United States holders will not be grossed up for or in
respect of any such tax. In addition, a different treatment could result in our
losing all or part of the deduction for interest that we pay on the senior
subordinated notes.

This discussion deals only with holders that purchase IDSs or senior
subordinated notes at their original issuance at their original issue price and
that will hold IDSs, senior subordinated notes and Class A common stock as
"capital assets" (within the meaning of Section 1221 of the Code). This summary
does not purport to deal with all aspects of United States federal income
taxation that might be relevant to particular holders, in light of their
personal investment circumstances or status, such as banks, insurance companies,
certain other financial institutions, tax-exempt organizations, S corporations,
partnerships or other pass-through entities, real estate investment trusts,
regulated investment companies, dealers or traders in securities or currencies,
and taxpayers subject to the alternative minimum tax. This discussion also does
not address IDSs, senior subordinated notes or Class A common stock held as part
of a hedge, straddle, integrated, synthetic security or conversion transaction,
or situations in which the "functional currency" of a United States holder (as
defined below) is not the United States dollar. Moreover, except to the extent
specified with respect to United States federal estate tax, the effect of any
applicable United States federal estate or gift, state, local or non-United
States tax laws is not discussed.

THE FOLLOWING DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT A
SUBSTITUTE FOR CAREFUL TAX PLANNING AND ADVICE. INVESTORS CONSIDERING THE
PURCHASE OF IDSS, SENIOR SUBORDINATED NOTES OR CLASS A COMMON STOCK SHOULD
CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED
STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS, AS WELL AS ANY
TAX CONSEQUENCES ARISING UNDER THE ESTATE OR GIFT TAX LAWS OR THE LAWS OF ANY
STATE, LOCAL OR NON-UNITED STATES TAXING JURISDICTION OR UNDER ANY APPLICABLE
TAX TREATY.

The term "United States holder" means a holder of IDSs, senior subordinated
notes or Class A common stock that is, for United States federal income tax
purposes:

          (1) An individual who is a citizen or resident of the United States;

          (2) a corporation, or other entity taxable as a corporation for United
     States federal income tax purposes, created or organized under the laws of
     the United States or of any political subdivision thereof; or

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          (3) an estate or trust, the income of which is subject to United
     States federal income taxation regardless of its source.

The term "non-United States holder" means a holder of IDSs, senior subordinated
notes or Class A common stock that is, for United States federal income tax
purposes:

          (1) a nonresident alien individual;

          (2) a foreign corporation; or

          (3) a foreign estate or trust.

In the case of a holder of IDSs, senior subordinated notes or Class A common
stock that is classified as a partnership for United States federal income tax
purposes, the tax treatment of the IDSs, senior subordinated notes or Class A
common stock to a partner of the partnership generally will depend upon the tax
status of the partner and the activities of the partnership. If you are a
partner of a partnership holding IDSs, senior subordinated notes or Class A
common stock, then you should consult your own tax advisors.

UNITED STATES HOLDERS

  IDSS

  Allocation of Purchase Price

Your acquisition of an IDS should be treated as an acquisition of separate
securities, the share of our Class A common stock and the senior subordinated
note represented by the IDS, rather than as a purchase of a single integrated
security, and, by purchasing the IDS, you will agree to that treatment. If that
treatment is not respected, then the acquisition of IDSs may be treated as an
acquisition only of our stock, in which case the senior subordinated notes would
be treated in effect as stock rather than as debt for United States federal
income tax purposes. See "--Senior Subordinated Notes--Characterization." The
remainder of this discussion assumes that the acquisition of IDSs will be
treated as an acquisition of shares of our Class A common stock and the senior
subordinated notes, rather than as a purchase of a single integrated security.

The purchase price of each IDS will be allocated between the share of Class A
common stock and the senior subordinated note comprising the IDS in proportion
to their respective fair market values at the time of purchase. This allocation
will establish your initial tax basis in each of the share of Class A common
stock and the senior subordinated note. We will report the initial fair market
value of each share of Class A common stock as $     and the initial fair market
value of each $     principal amount of senior subordinated notes as $     , and
by purchasing an IDS, you will agree to that allocation. If this allocation is
not respected by the IRS or the courts, then it is possible that the senior
subordinated notes will be treated as having been issued with original issue
discount or amortizable bond premium. You generally would have to include
original issue discount in income in advance of the receipt of cash attributable
to that income, and would be able to elect to amortize bond premium over the
remaining term of the senior subordinated notes. The remainder of this
discussion assumes that the allocation of the purchase price of the IDSs
described above will be respected.

  Separation and Recombination

If you separate your IDSs into the shares of Class A common stock and senior
subordinated notes represented thereby or recombine the applicable number of
shares of Class A common stock and principal amount of senior subordinated notes
to form IDSs, then you will not recognize gain or loss upon the separation or
recombination. You will continue to take into account items of income or
deduction otherwise includible or deductible with respect to the shares of Class
A common stock and the senior subordinated notes, and your tax basis in and
holding period with respect to the shares of Class A common stock and the senior
subordinated notes will not be affected by the separation or recombination.

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  SENIOR SUBORDINATED NOTES

  Characterization

Our counsel, Kirkland & Ellis LLP, is of the opinion that the senior
subordinated notes should be treated as separate from the Class A common stock
and as debt for United States federal income tax purposes, and based upon that
opinion, we believe that the senior subordinated notes should be so treated. In
addition, the lead underwriters have received an opinion from their counsel,
Skadden, Arps, Slate, Meagher & Flom LLP, to the effect that the senior
subordinated notes should be treated as separate from the Class A common stock
and as debt for United States federal income tax purposes. These opinions are
based on certain representations and determinations, which are discussed in more
detail in the following paragraphs. These opinions are not binding on the IRS or
the courts, which could disagree. We will treat the senior subordinated notes as
debt for United States federal income tax purposes, and, by acquiring senior
subordinated notes, directly or in the form of an IDS, you agree likewise to
treat the senior subordinated notes as our indebtedness for all purposes.

The determination as to whether an instrument is treated as debt or as equity
for United States federal income tax purposes is based on all of the facts and
circumstances. There is no clear statutory definition of debt and the
characterization of an instrument as debt or as equity is governed by principles
developed in the case law, which analyzes numerous factors that are intended to
identify the formal characteristics of, and the economic substance of, the
holder's interest in the issuer. Our determination that the senior subordinated
notes should be treated as separate from the Class A common stock and as debt
for United States federal income tax purposes, and the opinions of counsel to
this effect referred to above, rely upon certain representations and
determinations made by us, the lead underwriters and independent appraisal
firms, including representations and determinations substantially to the effect
that:

   --  after 45 days from the closing of this offering, an investor holding IDSs
       may separate the Class A common stock and senior subordinated notes
       composing the IDSs without material market impediment;

   --  the term, interest rate and other material provisions of the senior
       subordinated notes, including, inter alia, restrictions on incurrence of
       debt and payment of dividends, are commercially reasonable and are
       substantially similar to those terms to which an unrelated third party
       lender not otherwise owning equity in Valor, bargaining at arm's length
       with Valor, would reasonably agree;

   --  taking this offering and our reorganization into account, on a pro forma
       basis, the aggregate amount of our indebtedness in relation to the
       aggregate fair market value of our equity is commercially reasonable
       under the circumstances and is comparable to similarly situated corporate
       bond issuers;

   --  taking this offering and our reorganization into account, on a pro forma
       basis, the ratio of (i) the sum of all of our outstanding indebtedness to
       (ii) the fair market value of our equity does not exceed approximately
                 to 1; and

   --  based on our detailed financial forecasts (and assuming without verifying
       that those forecasts are correct), Valor should be able to repay the
       principal amount of the senior subordinated notes at their maturity and
       it is likely that such repayment would be made with accumulated cash
       and/or by refinancing with short term (five years or less) unsubordinated
       debt, or a combination thereof.

In light of the representations and determinations described above and their
relevance to several of the factors analyzed in the case law, and taking into
account the facts and circumstances relating to the issuance of the senior
subordinated notes (including the separate issuance of senior subordinated notes
in this offering), we (and our counsel) are of the view that the senior
subordinated notes should be treated as separate from the Class A common stock
and as debt for United States federal income tax purposes. However, there is no
authority that directly addresses the tax treatment of instruments with terms
substantially similar to the senior subordinated notes or offered under
circumstances such as this offering (that is, senior subordinated notes offered
as a unit with common stock). In light of this absence of direct authority,
neither we nor our counsel can conclude with certainty that the senior
subordinated notes will be treated as debt for United States federal income tax
purposes. The consequences to United States holders and non-United States
holders described

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below assume that the senior subordinated notes will be respected as debt.
However, no ruling on this issue has been requested from the IRS and, thus,
there can be no assurance that the classification of the senior subordinated
notes as debt will not be challenged by the IRS or will be sustained if
challenged.

If the senior subordinated notes were treated as equity rather than as debt for
United States federal income tax purposes, then stated interest paid on the
senior subordinated notes generally would be treated as a dividend to the extent
paid out of our current or accumulated earnings and profits, as determined under
United States federal income tax principles, but those dividends likely would
not qualify for the special 15% rate described below. We would not be permitted
to deduct interest on the senior subordinated notes for United States federal
income tax purposes. In addition, as discussed below under "--Non-United States
Holders--Class A Common Stock," non-United States holders could be subject to
withholding or estate taxes with respect to the senior subordinated notes in the
same manner as they will be with respect to the Class A common stock. Our
inability to deduct interest on the senior subordinated notes could materially
increase our taxable income and, thus, our United States federal income tax
liability. This would reduce our after-tax cash flow and could materially and
adversely impact our ability to make interest and dividend payments on the
senior subordinated notes and the Class A common stock.

In addition, there can be no assurance that the IRS will not challenge the
determination that the interest rate on the senior subordinated notes represents
an arm's length interest rate. If the IRS were successful in such a challenge,
then any excess of the interest paid on the senior subordinated notes over the
deemed arm's length amount would not be deductible by us and could be
recharacterized as a dividend payment instead of an interest payment for United
States federal income tax purposes. In such case, our taxable income and, thus,
our United States federal income tax liability could be materially increased. In
addition, as discussed below under "--Non-United States Holders--Class A Common
Stock," non-United States holders could be subject to withholding taxes with
respect to the excess amount paid on the senior subordinated notes in the same
manner as they will be with respect to dividends paid on the Class A common
stock. If the interest rate paid on the senior subordinated notes were
determined to be less than the arm's length rate, then the senior subordinated
notes could be treated as issued with original issue discount, which original
issue discount you would be required to include in income over the term of the
senior subordinated notes.

  Payments of Interest; Deferral of Interest

Subject to the discussion of deferred interest immediately below, stated
interest on the senior subordinated notes will be taxable to you as ordinary
income, at the time it is paid or accrued in accordance with your method of
accounting for United States federal income tax purposes.

Under applicable Treasury regulations, a "remote" contingency that stated
interest will not be timely paid will be ignored in determining whether a debt
instrument is issued with original issue discount, referred to as OID. Although
there is no authority that directly describes when a contingency such as the
interest deferral option described in "Description of the Senior Subordinated
Notes--Terms of the Notes--Interest Deferral" should be considered "remote",
based on our financial forecasts, we believe that the likelihood of deferral of
interest payments on the senior subordinated notes is remote within the meaning
of the Treasury regulations relating to OID. Based on the foregoing, although
the matter is not free from doubt because of the lack of direct authority, the
option to defer interest should not cause the senior subordinated notes to be
considered to be issued with OID at the time of their original issuance.

Under the Treasury regulations, if the option to defer any payment of interest
on the senior subordinated notes were determined not to be a "remote"
contingency, or if, as discussed above, the interest rate on the senior
subordinated notes was determined to be less than the arm's length interest rate
by more than a de minimis amount, or if any payment of interest actually were
deferred, then the senior subordinated notes would be treated as issued with OID
at the time of issuance or at the time of such occurrence, as the case may be.
At such time, all stated interest on the senior subordinated notes thereafter
would be treated as OID as long as the senior subordinated notes remained
outstanding. In such event:

   --  you would be required to include the yield on the senior subordinated
       notes in income as OID on an economic accrual basis over the term of the
       senior subordinated notes, possibly before the receipt of the cash
       attributable to the OID, and without regard to your overall method of tax
       accounting;
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   --  actual payments of stated interest would not be reported as taxable
       income;

   --  any amount of OID included in your gross income (whether or not during a
       deferral period) with respect to the senior subordinated notes would
       increase your tax basis in the senior subordinated notes; and

   --  the amount of payments in respect of such accrued OID would reduce your
       tax basis in the senior subordinated notes.

Consequently, during a deferral period, a United States holder would be required
to continue to include OID in gross income as it accrued, even though we would
not make any actual cash payments on the senior subordinated notes.

No rulings or other interpretations have been issued by the IRS that address the
meaning of the term "remote" as used in the Treasury regulations relating to
OID, and it is possible that the IRS could take a position contrary to our
position.

  Sale, Exchange or Retirement

Upon the sale, exchange, retirement or other taxable disposition of an IDS, you
will be treated as having sold, exchanged, retired or disposed of the senior
subordinated note that constitutes a portion of the IDS. Upon the sale,
exchange, retirement or other taxable disposition of a senior subordinated note,
you will recognize gain or loss in an amount equal to the difference between the
portion of the proceeds allocable to, or received for, the senior subordinated
note (less amounts received in respect of accrued and unpaid interest, which
will be treated as a payment of interest for United States federal income tax
purposes) and your adjusted tax basis in the senior subordinated note. As
described above under "--United States Holders--IDSs--Allocation of Purchase
Price," your tax basis in the senior subordinated note generally will be the
portion of the purchase price of your IDS allocable to the senior subordinated
note or your purchase price of the note, as the case may be. Such gain or loss
will be capital gain or loss and will be long-term capital gain or loss if you
have held the IDSs for more than one year. The deductibility of capital losses
is subject to limitations.

  Additional Issuances

The indenture governing the senior subordinated notes will permit us, from time
to time, to issue additional senior subordinated notes having terms that are
substantially identical to those of the senior subordinated notes offered
hereby. Such subsequently issued senior subordinated notes may be issued with
OID if they are issued at a discount to their face value (for example, as a
result of changes in prevailing interest rates). The United States federal
income tax consequences to you of the subsequent issuance of senior subordinated
notes with OID (or any issuance of senior subordinated notes thereafter) are
unclear. The indenture governing the senior subordinated notes and the
agreements with DTC will provide that, in the event that there is a subsequent
issuance of senior subordinated notes having terms substantially identical to
the senior subordinated notes offered hereby, each holder of senior subordinated
notes or IDSs, as the case may be, agrees that a portion of such holder's senior
subordinated notes will be automatically exchanged for a portion of the senior
subordinated notes acquired by the holders of such subsequently issued senior
subordinated notes. Consequently, immediately following each such subsequent
issuance and exchange, each holder of subsequently issued senior subordinated
notes, held either as part of IDSs or separately, and each holder of existing
senior subordinated notes or IDSs, as the case may be, will own an inseparable
unit composed of notes of each separate issuance in the same proportion as each
other holder. Because a subsequent issuance will affect the senior subordinated
notes in the same manner, regardless of whether those senior subordinated notes
are held as part of IDSs or separately, the combination of senior subordinated
notes and shares of Class A common stock to form IDSs, or the separation of
IDSs, should not affect your tax treatment.

The aggregate stated principal amount of senior subordinated notes owned by each
holder will not change as a result of such subsequent issuance and exchange.
However, under applicable law, it is possible that the holders of subsequently
issued senior subordinated notes (to the extent issued with OID) will not be
entitled to a claim for the portion of their principal amount that represents
unaccrued OID in the event of an acceleration of the senior subordinated notes
or a bankruptcy proceeding occurring prior to the maturity

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of the senior subordinated notes. Whether the receipt of subsequently issued
senior subordinated notes in exchange for previously issued senior subordinated
notes in this automatic exchange constitutes a taxable exchange for United
States federal income tax purposes depends on whether the subsequently issued
senior subordinated notes are viewed as differing materially from the senior
subordinated notes exchanged. Due to a lack of applicable guidance, it is
unclear whether the subsequently issued senior subordinated notes would be
viewed as differing materially from the previously issued senior subordinated
notes for this purpose. Consequently, it is unclear whether an exchange of
senior subordinated notes for subsequently issued senior subordinated notes
results in a taxable exchange for United States federal income tax purposes, and
it is possible that the IRS might successfully assert that such an exchange
should be treated as a taxable exchange.

If the IRS successfully asserted that an automatic exchange following a
subsequent issuance of senior subordinated notes is a taxable exchange, then an
exchanging holder generally would recognize gain or loss in an amount equal to
the difference between the fair market value of the subsequently issued senior
subordinated notes received and such holder's adjusted tax basis in the senior
subordinated notes exchanged. See "--Senior Subordinated Notes--Sale, Exchange
or Retirement." It is also possible that the IRS might successfully assert that
any such loss should be disallowed under the wash sale rules, in which case the
holder's basis in the subsequently issued senior subordinated notes would be
increased to reflect the amount of the disallowed loss. In the case of a taxable
exchange, a holder's initial tax basis in the subsequently issued senior
subordinated notes received in the exchange would be the fair market value of
such senior subordinated notes on the date of exchange (adjusted to reflect any
disallowed loss) and a holder's holding period in such senior subordinated notes
would begin on the day after such exchange.

Regardless of whether the exchange is treated as a taxable event, such exchange
may result in an increase in the amount of OID, if any, that you are required to
accrue with respect to senior subordinated notes. Following any subsequent
issuance of senior subordinated notes with OID (or any issuance of senior
subordinated notes thereafter) and resulting exchange, we (and our agents) will
report any OID on any subsequently issued senior subordinated notes ratably
among all holders of senior subordinated notes and IDSs, and each holder of
senior subordinated notes and IDSs will, by purchasing senior subordinated notes
or IDSs, as the case may be, agree to report OID in a manner consistent with
this approach. Consequently, holders that acquire senior subordinated notes in
this offering may be required to report OID as a result of a subsequent issuance
(even though they purchased senior subordinated notes having no OID). This will
generally result in such holders reporting more interest income over the term of
the senior subordinated notes than they would have reported had no such
subsequent issuance and exchange occurred, and any such additional interest
income will be reflected as an increase in the tax basis of the senior
subordinated notes, which will generally result in a capital loss (or reduced
capital gain) upon a sale, exchange or retirement of the senior subordinated
notes. However, the IRS may assert that any OID should be reported only to the
persons that initially acquired such subsequently issued senior subordinated
notes (and their transferees). In such case, the IRS might further assert that,
unless a holder can establish that it is not such a person (or a transferee
thereof), all of the senior subordinated notes held by such holder will have
OID. Any of these assertions by the IRS could create significant uncertainties
in the pricing of IDSs and senior subordinated notes and could adversely affect
the market for IDSs and senior subordinated notes.

It is possible that senior subordinated notes that we issue in a subsequent
issuance will be issued at a discount to their face value and, accordingly, may
have "significant OID" and thus be classified as "applicable high yield discount
obligations." If any senior subordinated notes were so classified, then a
portion of the OID on those senior subordinated notes could be nondeductible by
us and the remainder would be deductible only when paid. This treatment would
have the effect of increasing our taxable income and may adversely affect our
cash flow available for interest payments and distributions to our
equityholders.

Due to the complexity and uncertainty surrounding the United States federal
income tax treatment of subsequent issuances and exchanges of senior
subordinated notes, prospective investors are urged to consult their tax
advisors regarding the applicable tax consequences to them in light of their
particular circumstances.

                                       141
<PAGE>

  CLASS A COMMON STOCK

  Dividends

The gross amount of dividends paid to you on our Class A common stock will be
treated as dividend income to you, to the extent paid out of our current or
accumulated earnings and profits (as determined under United States federal
income tax principles). To the extent, if any, that the amounts of dividends
paid to you on a share of our Class A common stock exceed our current and
accumulated earnings and profits, the excess will be treated first as a tax-free
return of your tax basis in the shares of Class A common stock and thereafter as
capital gain. Pursuant to recently enacted legislation, if you are an
individual, then dividends that we pay to you through 2008 will be subject to
tax at long-term capital gain rates (up to 15%), provided that certain holding
period and other requirements are satisfied.

 Sale or Exchange

Upon the sale, exchange or other taxable disposition of an IDS, you will be
treated as having sold, exchanged or disposed of the share of Class A common
stock constituting a portion of the IDS. Upon the sale, exchange or other
taxable disposition of a share of our Class A common stock (other than, in some
circumstances, a sale of shares to us), you will recognize gain or loss in an
amount equal to the difference between the portion of the proceeds allocable to
your share of Class A common stock and your tax basis in the share of Class A
common stock. As described above under "--United States Holders--IDSs--
Allocation of Purchase Price," your tax basis in the share of Class A common
stock generally will be the portion of the purchase price of your IDS allocable
to the share of Class A common stock. Such gain or loss will be capital gain or
loss, and will be long-term capital gain or loss if you have held the Class A
common stock for more than one year. The deductibility of capital losses is
subject to limitations.

  INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

In general, we, our paying agents and certain other intermediaries must report
certain information to the IRS with respect to payments of principal and
interest on the senior subordinated notes, payments of dividends on the Class A
common stock, and payments of the proceeds of the sale of senior subordinated
notes, Class A common stock or IDSs to certain non-corporate United States
holders. The payor (which may be us or an intermediary) will be required to
impose backup withholding tax, currently at a rate of 28%, if (i) the payee
fails to furnish a taxpayer identification number ("TIN") to the payor or
otherwise to establish an exemption from backup withholding tax, (ii) the IRS
notifies the payor that the TIN furnished by the payee is incorrect, (iii) there
has been a notified payee underreporting described in Section 3406(c) of the
Code or (iv) the payee has not certified under penalties of perjury that it has
furnished a correct TIN and that the IRS has not notified the payee that it is
subject to backup withholding tax under the Code. Any amounts withheld under the
backup withholding tax rules from a payment to a United States holder will be
allowed as a credit against that holder's United States federal income tax
liability and may entitle the holder to a refund, provided that the required
information is furnished to the IRS.

NON-UNITED STATES HOLDERS

The following discussion applies only to non-United States holders, and assumes
that no item of income, gain, deduction or loss derived by the non-United States
holder in respect of the senior subordinated notes, Class A common stock or IDSs
at any time is effectively connected with the conduct of a United States trade
or business. Special rules may apply to certain non-United States holders, such
as:

   --  United States expatriates,

   --  controlled foreign corporations,

   --  passive foreign investment companies,

   --  foreign personal holding companies,

   --  corporations that accumulate earnings to avoid United States federal
       income tax,

   --  investors in pass-through entities that are subject to special treatment
       under the Code, and

                                       142
<PAGE>

   --  non-United States holders that are engaged in the conduct of a United
       States trade or business.

Such non-United States holders should consult their own tax advisors to
determine the United States federal, state, local and other tax consequences
that may be relevant to them.

  SENIOR SUBORDINATED NOTES

  Characterization

As discussed above under "--United States Holders--Senior Subordinated
Notes--Characterization," we believe that the senior subordinated notes should
be treated as debt for United States federal income tax purposes. However, no
ruling on this issue has been requested from the IRS and thus there can be no
assurance that this position will be sustained if challenged by the IRS. If the
senior subordinated notes were treated as equity rather than as debt for United
States federal income tax purposes, then the senior subordinated notes would be
treated in the same manner as shares of Class A common stock are treated, as
described below under "--Non-United States Holders--Class A Common
Stock--Dividends," and, in particular, payments of interest on the senior
subordinated notes would be subject to United States federal withholding tax at
rates up to 30%. Payments to non-United States holders will not be grossed-up on
account of any such taxes. The remainder of this discussion assumes that the
characterization of the senior subordinated notes as debt for United States
federal income tax purposes will be respected.

  Stated Interest

Generally, subject to the discussion of backup withholding tax below, interest
paid on the senior subordinated notes to a non-United States holder will be
exempt from United States withholding tax under the "portfolio interest
exemption;" provided that (i) the holder does not actually or constructively own
10% or more of the combined voting power of all classes of our stock entitled to
vote, (ii) the holder is not a controlled foreign corporation related to us
actually or constructively through stock ownership, (iii) the holder is not a
bank that acquired the senior subordinated notes in consideration for an
extension of credit made pursuant to a loan agreement entered into in the
ordinary course of business and (iv) either (a) the holder provides an
applicable IRS Form W-8 (or a suitable substitute form) signed under penalties
of perjury that includes its name and address and certifies as to its non-United
States status in compliance with applicable law and regulations or (b) a
securities clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business holds the
senior subordinated notes and provides a statement to us or our agent under
penalties of perjury in which it certifies that an applicable Form W-8 (or a
suitable substitute) has been received by it from the non-United States holder
or qualifying intermediary and furnishes a copy to us or our agent. The
statement requirement referred to in the preceding sentence may be satisfied
with other documentary evidence in the case of a senior subordinated note held
in an offshore account or through certain foreign intermediaries.

  Sale, Exchange or Retirement

Upon the sale, exchange, retirement or other taxable disposition of an IDS, you
will be treated as having sold, exchanged, retired or disposed of the senior
subordinated note that constitutes a portion of the IDS. Any gain realized upon
the sale, exchange, retirement or other disposition of senior subordinated notes
generally will not be subject to United States federal income tax, unless you
are an individual, you are present in the United States for 183 days or more in
the taxable year of such sale, exchange, retirement or other disposition and
certain other conditions are met.

 United States Federal Estate Tax

Senior subordinated notes beneficially owned by an individual who at the time of
death is a non-United States holder should not be subject to United States
federal estate tax, provided that any payment of interest to such individual on
the notes would be eligible for exemption from the United States federal
withholding tax under the rules described above under "--Non-United States
Holders--Senior Subordinated Notes--Stated Interest" without regard to the
statement requirement described therein.

                                       143
<PAGE>

  CLASS A COMMON STOCK

  Dividends

Dividends paid to you generally will be subject to withholding of United States
federal income tax at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty. If you wish to claim the benefit of an applicable
treaty rate for dividends (and to avoid backup withholding tax as discussed
below), you will be required to:

   --  complete the applicable IRS Form W-8 (or suitable substitute form) and
       certify, under penalties of perjury, that you are not a United States
       person, or

   --  if the shares of our Class A common stock are held through certain
       foreign intermediaries, satisfy the relevant certification requirements
       of applicable Treasury regulations.

Special certification and other requirements apply to certain non-United States
holders that are entities rather than individuals. If you are eligible for a
reduced rate of United States withholding tax pursuant to an income tax treaty,
you may obtain a refund of any excess amounts withheld by filing an appropriate
claim for refund with the IRS.

 Sale or Exchange

Upon the sale, exchange or other taxable disposition of an IDS, you will be
treated as having sold, exchanged or disposed of the share of Class A common
stock constituting a portion of the IDS. You generally will not be subject to
United States federal income tax with respect to gain recognized on a sale or
other disposition of shares of our Class A common stock, unless:

   --  if you are an individual, you are present in the United States for 183 or
       more days in the taxable year of the sale or other disposition and
       certain other conditions are met, or

   --  we are or have been a United States real property holding corporation for
       United States federal income tax purposes.

We believe that we are not, and we do not anticipate becoming, a United States
real property holding corporation for United States federal income tax purposes.

  United States Federal Estate Tax

Shares of our Class A common stock held by an individual non-United States
holder at the time of death will be included in such holder's gross estate for
United States federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise.

  INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

The amount of interest and dividends paid to you and the amount of tax, if any,
withheld with respect to such payments will be reported annually to the IRS.
Copies of the information returns reporting such interest, dividends and
withholding of tax may also be made available to the tax authorities in the
country in which you reside under the provisions of an applicable income tax
treaty. Backup withholding tax may be required with respect to payments made by
us or any paying agent to you, unless the statement described in "Non-United
States Holders--Senior Subordinated Notes--Stated Interest" has been received
(and we or the paying agent do not have actual knowledge or reason to know that
you are a United States person).

Information reporting and, depending on the circumstances, backup withholding
tax will apply to the proceeds of a sale of IDSs, senior subordinated notes or
Class A common stock within the United States or conducted through United
States-related financial intermediaries unless the statement described in
"Non-United States Holders--Senior Subordinated Notes--Stated Interest" has been
received (and we or the paying agent do not have actual knowledge or reason to
know that you are a United States person) or you otherwise establish an
exemption. Any amounts withheld under the backup withholding tax rules will be
allowed as a refund or a credit against your United States federal income tax
liability, provided that the required information is furnished to the IRS.

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<PAGE>

                          CERTAIN ERISA CONSIDERATIONS

The following is a summary of certain considerations associated with the
purchase of the IDSs by employee benefit plans that are subject to Title I of
the U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
plans, individual retirement accounts and other arrangements that are subject to
Section 4975 of the Code or provisions under any federal, state, local, non-U.S.
or other laws or regulations that are similar to such provisions of the Code or
ERISA (collectively, "Similar Laws"), and entities whose underlying assets are
considered to include "plan assets" of such plans, accounts and arrangements
(each, a "Plan").

  General Fiduciary Matters

ERISA and the Code impose certain duties on persons who are fiduciaries or other
interested parties of a Plan subject to Title I of ERISA or Section 4975 of the
Code and prohibit certain transactions involving the assets of a Plan and its
fiduciaries or other interested parties. Under ERISA and the Code, any person
who exercises any discretionary authority or control over the administration of
such a Plan or the management or disposition of the assets of such a Plan, or
who renders investment advice for a fee or other compensation to such a Plan, is
generally considered to be a fiduciary of the Plan.

In considering an investment in the IDSs or the separate senior subordinated
notes of a portion of the assets of any Plan, a fiduciary should determine
whether the investment is in accordance with the documents and instruments
governing the Plan and the applicable provisions of ERISA, the Code or any
Similar Law relating to a fiduciary's duties to the Plan including, without
limitation, the prudence, diversification, delegation of control and prohibited
transaction provisions of ERISA, the Code and any other applicable Similar Laws.

  Prohibited Transaction Issues

Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans from
engaging in specified transactions involving plan assets with persons or
entities who are "parties in interest," within the meaning of Section 406 of
ERISA, or "disqualified persons," within the meaning of Section 4975 of the
Code, unless an exemption is available. A party in interest or disqualified
person who engaged in a non-exempt prohibited transaction may be subject to
excise taxes and other penalties and liabilities under ERISA and the Code.

Whether or not our underlying assets are deemed to include "plan assets," as
described below, the acquisition and/or holding of the IDSs or the separate
senior subordinated notes by a Plan with respect to which we, the underwriter,
the trustee or the guarantor is considered a party in interest or a disqualified
person may constitute or result in a direct or indirect prohibited transaction
under Section 406 of ERISA and/or Section 4975 of the Code, unless the
investment is acquired and is held in accordance with an applicable statutory,
class or individual prohibited transaction exemption. In this regard, the U.S.
Department of Labor (the "DOL") has issued prohibited transaction class
exemptions, or "PTCEs," that may apply to the acquisition and holding of the
IDSs or the separate senior subordinated notes. These class exemptions include,
without limitation, PTCE 84-14 respecting transactions determined by independent
qualified professional asset managers, PTCE 90-1 respecting insurance company
pooled separate accounts, PTCE 91-38 respecting bank collective investment
funds, PTCE 95-60 respecting insurance company general accounts and PTCE 96-23
respecting transactions determined by in-house asset managers, although there
can be no assurance that and or all of the conditions of any such exemptions
will be satisfied.

Because of the foregoing, the IDSs or the separate senior subordinated notes
should not be purchased or held by any person investing "plan assets" of any
Plan, unless such purchase and holding will not constitute a non-exempt
prohibited transaction under ERISA and the Code or similar violation of any
applicable Similar Laws.

  Representation

Accordingly, by acceptance of the IDSs or the separate senior subordinated
notes, each purchaser and subsequent transferee of the IDSs or the separate
senior subordinated notes, as applicable, will be deemed to have represented and
warranted that either (i) no portion of the assets used by such purchaser or
transferee to acquire and hold the IDSs or the separate senior subordinated
notes constitutes assets of any Plan or (ii) the purchase and holding of the
IDSs or the separate senior subordinated notes by such
                                       145
<PAGE>

purchaser or transferee will not constitute a non-exempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code or similar violation
under any applicable Similar Laws.

The foregoing discussion is general in nature and is not intended to be
all-inclusive. Due to the complexity of these rules and the penalties that may
be imposed upon persons involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries, or other persons considering purchasing
the IDSs or the separate senior subordinated notes on behalf of, or with the
assets of, any Plan, consult with their counsel regarding the potential
applicability of ERISA, Section 4975 of the Code and any Similar Laws to such
investment and whether an exemption would be applicable to the purchase and
holding of the IDSs or the separate senior subordinated notes.

  Plan Asset Issues

ERISA and the Code do not define "plan assets." However, regulations (the "Plan
Asset Regulations") promulgated under ERISA by the DOL generally provide that
when a Plan acquires an equity interest in an entity that is an "operating
company", or the equity interest is a "publicly-offered security" (in each case
as defined in the Plan Asset Regulations), such equity interest will be deemed a
"plan asset," but the underlying assets of the entity will not be deemed "plan
assets." The Plan Asset Regulations define an "equity interest" as any interest
in an entity, other than an instrument that is treated as indebtedness under
applicable local law and which has no substantial equity features. Therefore, we
anticipate that shares of our common stock would be considered an equity
interest and our notes should be treated as indebtedness. Under the Plan Asset
Regulations, an "operating company" is defined as "an entity that is primarily
engaged, directly or through a majority owned subsidiary or subsidiaries, in the
production or sale of a product or service other than the investment of
capital." We believe that we are an "operating company" for purposes of the Plan
Asset Regulations, although no assurance can be given in this regard.

Alternatively, under the Plan Asset Regulations, a "publicly offered security"
is a security that is (a) "freely transferable", (b) part of a class of
securities that is "widely held," and (c)(i) sold to the Plan as part of an
offering of securities to the public pursuant to an effective registration
statement under the Securities Act of 1933, as amended, and the class of
securities to which such security is a part is registered under the Securities
Exchange Act of 1934, as amended, within 120 days after the end of the fiscal
year of the issuer during which the offering of such securities to the public
has occurred, or (ii) is part of a class of securities that is registered under
Section 12(b) or 12(g) of the Exchange Act. In connection with this offering, we
are effecting such a registration of the IDSs and the separate senior
subordinated notes under the Securities Act and Securities Exchange Act. The
Plan Asset Regulations provide that a security is "widely held" only if it is
part of a class of securities that is owned by 100 or more investors independent
of the issuer and one another. A security will not fail to be "widely held"
because the number of independent investors falls below 100 subsequent to the
initial offering thereof as a result of events beyond the control of the issuer.
It is anticipated that the IDSs and the separate senior subordinated notes will
be "widely held" within the meaning of the Plan Asset Regulations, although no
assurance can be given in this regard. The Plan Asset Regulations provide that
whether a security is "freely transferable" is a factual question to be
determined on the basis of all the relevant facts and circumstances. It is
anticipated that the IDSs and the separate senior subordinated notes will be
"freely transferable" within the meaning of the Plan Asset Regulations, although
no assurance can be given in this regard.

  Plan Asset Consequences

If we cease to be an operating company for purposes of the Plan Asset
Regulations and the IDSs or the separate senior subordinated notes cease to be
publicly-offered securities within the meaning of the Plan Asset Regulations,
our assets could be deemed to be "plan assets" under ERISA, unless, at such
time, another exemption is available under the Plan Asset Regulations. This
would result, among other things, in (i) the application of the prudence and
other fiduciary responsibility standards of ERISA to investments made by us, and
(ii) the possibility that certain transactions in which we might seek to engage
could constitute "prohibited transactions" under ERISA and the Code.

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<PAGE>

                                  UNDERWRITING

We and the selling securityholders will enter into an underwriting agreement,
dated           , 2004 (the "U.S. Underwriting Agreement") with the underwriters
named in the table below (the "U.S. Underwriters"). CIBC World Markets Corp.,
Merrill Lynch, Pierce Fenner & Smith Incorporated and Lehman Brothers Inc. are
acting as representatives of the U.S. Underwriters (the "U.S. Representatives").
We will also enter into an underwriting agreement, dated           , 2004 (the
"Canadian Underwriting Agreement" and, together with the U.S. Underwriting
Agreement, the "Underwriting Agreements"), with CIBC World Markets Inc. and
Merrill Lynch Canada Inc. (collectively, the "Canadian IDS Underwriters" and,
together with the U.S. Underwriters, the "Underwriters"). CIBC World Markets
Inc. and Merrill Lynch Canada Inc. are acting as representatives of the Canadian
IDS Underwriters (the "Canadian Representatives" and, together with the U.S.
Representatives, the "Representatives"). Subject to the terms and conditions
described in the Underwriting Agreements, we will agree to sell to the IDS
Underwriters (as defined below), and the selling securityholders have agreed to
sell to the U.S. Underwriters (such underwriters, the "U.S. IDS Underwriters"
and, together with the Canadian IDS Underwriters, the "IDS Underwriters") and
the IDS Underwriters severally have agreed to purchase from us, and the U.S. IDS
Underwriters severally have agreed to purchase from the selling securityholders,
the number of IDSs listed opposite their names below. In addition, subject to
the terms and conditions described in the U.S. Underwriting Agreement, certain
U.S. Underwriters (such U.S. Underwriters, the "Note Underwriters") severally
have also agreed to purchase $     million aggregate principal amount of our   %
senior subordinated notes due 2014 (not in the form of IDSs). (References to
Underwriters in the table below include, where applicable, in respect of the
offering under the Canadian Underwriting Agreement, the respective affiliated
Canadian IDS Underwriter.)

<Table>
<Caption>
                                                  NUMBER OF   NUMBER OF
                                                    IDSS        IDSS
                                                    UNDER       UNDER       TOTAL        SENIOR
                                                    U.S.      CANADIAN    NUMBER OF   SUBORDINATED
   UNDERWRITERS                                   OFFERING    OFFERING      IDSS         NOTES
   ------------                                   ---------   ---------   ---------   ------------
   <S>                                            <C>         <C>         <C>         <C>
   CIBC World Markets Corp. ....................
   Merrill Lynch, Pierce Fenner & Smith
               Incorporated.....................
   Lehman Brothers Inc. ........................
   Banc of America Securities LLC...............
   J.P. Morgan Securities Inc. .................
                                                  --------    --------    --------      --------
     Total......................................
                                                  ========    ========    ========      ========
</Table>

The offering of the IDSs is conditioned upon the offering of our      % senior
subordinated notes due 2014 (not in the form of IDSs). Under the Underwriting
Agreements, we and, in the case of the U.S. Underwriting Agreement, the selling
securityholders, will agree to sell and the Underwriters will agree to purchase
the IDSs offered under this offering at a price of $     and the Note
Underwriters will agree to purchase the senior subordinated notes offered under
this offering at a price of $     , in each case payable in cash to us and the
selling securityholders, as the case may be, against delivery.

The offerings in the United States and Canada are conditioned upon each other.
The IDS Underwriters will agree to purchase all of the IDSs and the Note
Underwriters will agree to purchase all of the senior subordinated notes sold
separately under the respective Underwriting Agreements if any of the IDSs or
senior subordinated notes sold separately thereunder, as applicable, are
purchased. Under each Underwriting Agreement, if an Underwriter defaults in its
commitment to purchase the IDSs or senior subordinated notes sold separately, as
applicable, the commitments of non-defaulting Underwriters thereunder may be
increased or the applicable Underwriting Agreement may be terminated, depending
on the circumstances. Under the Underwriting Agreements, the Underwriters will
purchase IDSs and the senior subordinated notes sold separately directly from us
or, in the case of the U.S. Underwriting Agreement, the selling securityholders,
as applicable.

                                       147
<PAGE>

The IDSs and senior subordinated notes sold separately should be ready for
delivery on or about           , 2004, but in any event no later than
          , 2004 against payment in immediately available funds. The
Underwriters are offering the IDSs and senior subordinated notes sold
separately, as applicable, in their respective jurisdictions subject to various
parallel conditions and may reject all or part of any order. The Underwriting
Agreements provide that the obligations of the Underwriters to purchase the IDSs
or senior subordinated notes sold separately, as applicable, in this offering
are subject to approval of legal matters by counsel and to other conditions. The
U.S. Representatives have advised us that the U.S. Underwriters and the Note
Underwriters propose to offer the IDSs and the senior subordinated notes sold
separately, respectively, directly to the public at the public offering price
that appears on the cover page of this prospectus. The Canadian Representatives
have advised us that the Canadian IDS Underwriters propose to offer IDSs
directly to the public at the public offering price that appears on the cover
page of the Canadian prospectus. In addition, the Representatives may offer some
of the IDSs to other securities dealers at such price less a concession of
$     per IDS (or C$     per IDS, in the case of the Canadian offering). The IDS
Underwriters may also allow, and such dealers may reallow, a concession not in
excess of $     per IDS (or C$     per IDS, in the case of the Canadian
offering) to other dealers. In addition, the Note Underwriters may offer some of
the senior subordinated notes sold separately to other securities dealers at the
price that appears on the cover page of this prospectus less a concession of
$     per senior subordinated note and such dealers may reallow a concession not
in excess of $     per senior subordinated note. After the IDSs and the senior
subordinated notes sold separately are released for sale to the public, the
Representatives and the Note Underwriters, as applicable, may change the
offering price and other selling terms at various times. The IDSs and senior
subordinated notes sold separately are being offered in the United States in
U.S. dollars and the IDSs are being offered in Canada in Canadian dollars, at
the same offering price and underwriting discounts and commissions calculated
based on the noon buying rate on the date of this prospectus as quoted by the
Federal Reserve Bank of New York.

The selling securityholders have granted the U.S. IDS Underwriters an
over-allotment option, exercisable for 30 days from the date of this prospectus,
to purchase up to           additional IDSs at the public offering price that
appears on the cover page of this prospectus, less the underwriting discount. No
over-allotment option has been granted to the Canadian IDS Underwriters or to
the Note Underwriters. The U.S. IDS Underwriters may exercise the option solely
for the purpose of covering over-allotments, if any, in connection with the U.S.
offering. The U.S. IDS Underwriters have severally agreed that, to the extent
the over-allotment option is exercised, they will each purchase a number of
additional IDSs proportionate to the U.S. IDS Underwriters' initial amount
reflected in the foregoing table.

Pursuant to both the Underwriting Agreements and the agreement between the U.S.
IDS Underwriters and the Canadian IDS Underwriters relating to the two
offerings, each of the U.S. IDS Underwriters has agreed that, as part of the
distribution of the IDSs offered by this prospectus and subject to certain
exceptions, it will not offer, sell and deliver the IDSs to investors in Canada,
and each of the Canadian IDS Underwriters has agreed that it will not sell or
deliver IDSs in the United States or to any U.S. persons. For such purposes,
"United States" means the United States, its territories, possessions and other
areas subject to its jurisdiction, and "U.S. persons" means (a) any individual
who is a resident of the United States or (b) any corporation, partnership or
other entity organized in or under the laws of the Unites States or any
political subdivision thereof and whose office most directly involved with the
purchase is located in the United States. Subject to applicable law, the IDS
Underwriters may offer the IDSs outside of the United States and Canada.

                                       148
<PAGE>

The following table shows the underwriting discounts and commissions that we and
the selling securityholders will pay to the Underwriters in connection with the
offerings. These amounts are shown assuming both no exercise and, in the case of
the U.S. offering, full exercise of the U.S. IDS Underwriters' option to
purchase additional IDSs:

<Table>
<Caption>
                                                                                                       CANADIAN
                                                           U.S. OFFERING                               OFFERING
                                     ----------------------------------------------------------   -------------------
                                                                          SENIOR SUBORDINATED
                                               IDS OFFERING                 NOTES OFFERING
                                     --------------------------------   -----------------------
                                                  TOTAL       TOTAL
                                                 WITHOUT    WITH FULL
                                                EXERCISE    EXERCISE
                                                OF OVER-    OF OVER-     PER SENIOR
                                                ALLOTMENT   ALLOTMENT   SUBORDINATED
UNDERWRITING DISCOUNT TO BE PAID BY  PER IDS     OPTION      OPTION         NOTE        TOTAL     PER IDS     TOTAL
-----------------------------------  --------   ---------   ---------   ------------   --------   --------   --------
<S>                                  <C>        <C>         <C>         <C>            <C>        <C>        <C>
Valor Communications Group, Inc. ..  $          $           $             $            $          C$         C$
Selling Securityholders...........
                                     --------   --------    --------      --------     --------   --------   --------
Total.............................   $          $           $             $            $          C$         C$
                                     ========   ========    ========      ========     ========   ========   ========
</Table>

We estimate that our total expenses of this offering, excluding the underwriting
discount, will be approximately $          .

We and the selling security holders have agreed to indemnify the underwriters
against certain liabilities, including liabilities under the Securities Act.

We, our executive officers and all significant existing equity investors will
agree to a 180-day "lock up," subject to certain exceptions, with respect to all
IDSs and shares of our common stock, including securities that are convertible
into such securities and securities that are exchangeable or exercisable for
such securities, which we may issue or they own prior to this offering or
purchase in or after this offering, as the case may be. This means that for a
period of 180 days following the date of this prospectus, we and such persons
may not offer, sell, pledge or otherwise dispose of any of these securities or
request or demand that we file a registration statement related to any of these
securities without the prior written consent of the Representatives, subject to
specified exceptions.

The Representatives have informed us that they do not expect discretionary sales
by the IDS Underwriters to exceed 5% of the IDSs offered by both offerings.

There is no established trading market for the shares of our common stock, the
senior subordinated notes or the IDSs. The offering price for the IDSs will be
determined by us and the Representatives, and the offering price of the senior
subordinated notes sold separately will be determined by us and the Note
Underwriters based, in each case, on the following factors:

   --  prevailing market and general economic conditions;

   --  our financial information;

   --  our history and prospects;

   --  the history of and prospects for the industry in which we compete;

   --  an assessment of our management, our past and present operations, and the
       prospects for, and timing of, our future revenues; and

   --  the above factors in relation to market values and various valuation
       measures of other companies engaged in activities similar to ours.

We will apply to list the IDSs on the      under the trading symbol "     " and
on the Toronto Stock Exchange under the trading symbol "     ". We will apply to
list our shares of class A common stock on the Toronto Stock Exchange under the
trading symbol "     ". The Note Underwriters have advised us that they intend
to make a market in the senior subordinated notes as permitted by applicable
law.

Rules of the SEC may limit the ability of (i) the U.S. IDS Underwriters to bid
for or purchase IDSs and (ii) the Note Underwriters to bid for or purchase the
senior subordinated notes sold separately, before the

                                       149
<PAGE>

distribution of the IDSs or the senior subordinated notes sold separately, as
applicable, is completed. However, the U.S. IDS Underwriters or the Note
Underwriters, as applicable, may engage in the following activities in
accordance with the rules:

   --  Stabilizing transactions--The Representatives and the Note Underwriters
       may make bids or purchases for the purpose of pegging, fixing or
       maintaining the price of the IDSs or the senior subordinated notes sold
       separately, so long as stabilizing bids do not exceed a specified
       maximum.

   --  Over-allotment and syndicate covering transactions--The U.S. IDS
       Underwriters and the Note Underwriters may sell more IDSs or senior
       subordinated notes, as applicable, in connection with this offering than
       the number of such securities that they have committed to purchase. This
       over-allotment creates a short position for the applicable Underwriters.
       This short sales position may involve, in the case of the U.S. IDS
       Underwriters, either "covered" short sales or "naked" short sales and, in
       the case of the Note Underwriters, "naked" short sales. Covered short
       sales are short sales made in an amount not greater than the U.S. IDS
       Underwriters' over-allotment option to purchase additional IDSs in this
       offering described above. The U.S. IDS Underwriters may close out any
       covered short position either by exercising their over-allotment option
       or by purchasing IDSs in the open market. To determine how they will
       close the covered short position, the U.S. IDS Underwriters will
       consider, among other things, the price of IDSs available for purchase in
       the open market as compared to the price at which they may purchase IDSs
       through the over-allotment option. Naked short sales are, in the case of
       the U.S. IDS Underwriters, short sales in excess of the over-allotment
       option and, in the case of the Note Underwriters, in excess of the
       principal amounts of senior subordinated notes to be purchased by the
       Note Underwriters. The U.S. IDS Underwriters and the Note Underwriters
       must close out any naked short position by purchasing IDSs or senior
       subordinated notes, as applicable, in the open market. A naked short
       position is more likely to be created if such Underwriters are concerned
       that, in the open market after pricing, there may be downward pressure on
       the price of the IDSs or senior subordinated notes, as applicable, that
       could adversely affect investors who purchase IDSs or senior subordinated
       notes, as applicable, in this offering.

   --  Penalty bids--If the U.S. Representatives purchase IDSs in the open
       market in a stabilizing transaction or syndicate covering transaction,
       they may reclaim a selling concession from the U.S. IDS Underwriters and
       selling group members who sold those IDSs as part of the U.S. offering.
       If the U.S. Representatives purchase senior subordinated notes in the
       open market in a stabilizing transaction or syndicate covering
       transaction, they may reclaim a selling concession from the Note
       Underwriters and selling group members who sold those senior subordinated
       notes as part of the U.S. offering.

In accordance with policy statements of the L'Agence nationale d'encadrement du
secteur financier and the Ontario Securities Commission, the Canadian IDS
Underwriters may not, throughout the period of distribution, bid for or purchase
the IDSs. Such restriction is subject to certain exceptions, provided that the
bid or purchase was not engaged in for the purpose of creating actual or
apparent active trading in, or raising the price of the IDSs, including: (1) a
bid or purchase permitted under the by-laws and rules of the Toronto Stock
Exchange relating to market stabilization and passive market activities; and (2)
a bid or purchase made for and on behalf of a customer where the order was not
solicited during the period of the distribution. Under the first mentioned
exemption, in connection with this offering, the Canadian IDS Underwriters may
over-allot or effect transactions which stabilize or maintain the market price
of the IDSs at a level other than that which might otherwise prevail in the open
market. Such transactions, if commenced, may be discontinued at any time.

Similar to other purchase transactions, the purchases by the U.S. IDS
Underwriters or the Note Underwriters to cover their short sales or to stabilize
the market price of the IDSs or the senior subordinated notes sold separately,
as applicable, or the imposition of penalty bids may have the effect of raising
or maintaining the market price of the IDSs or the senior subordinated notes
sold separately, as applicable, or preventing or mitigating a decline in the
market price of the IDSs or the senior subordinated notes sold separately, as
applicable. As a result, the price of the IDSs or the senior subordinated notes
sold separately, as applicable, may be higher than the price that might
otherwise exist in the open market. The

                                       150
<PAGE>

imposition of a penalty bid might also have an effect on the price of the IDSs
or the senior subordinated notes sold separately, as applicable, if it
discourages resales of such securities.

Neither we nor the relevant Underwriters make any representation or prediction
as to the effect that the transactions described above may have on the price of
the IDSs or the senior subordinated notes sold separately, as applicable. If
such transactions are commenced, they may be discontinued without notice at any
time. These transactions with respect to the IDSs may occur on the           ,
the Toronto Stock Exchange or otherwise.

We were advised by the U.S. Representatives that the Notes Underwriters
currently intend to facilitate a secondary market in the senior subordinated
notes sold separately and, upon the separation of the IDSs, the notes and the
Class A common stock, which means that they will make commercially reasonable
attempts to match buyers of such securities with sellers of such securities, in
each case, as between persons the Notes Underwriters have knowledge that they
are potential buyers or sellers of securities, considering, when doing so, any
relevant credit issues they deem appropriate. However, the Notes Underwriters
are not obligated to facilitate a secondary market and may discontinue any such
facilitation, if commenced, at any time and without notice. Moreover, if and to
the extent that the Notes Underwriters facilitate any market for such
securities, there can be no assurance that such market would provide sufficient
liquidity for any holder of any such securities.

A prospectus in electronic format may be made available on the websites
maintained by one or more of the U.S. Underwriters. The Representatives may
agree to allocate a number of IDSs to U.S. IDS Underwriters for sale to their
online brokerage account holders. The Representatives will allocate IDSs to U.S.
IDS Underwriters that may make Internet distributions on the same basis as other
allocations. Other than the prospectus in electronic format, the information on
any of these websites and any other information contained on a website
maintained by an Underwriter or syndicate member is not part of this prospectus.

An automatic exchange described elsewhere in this prospectus should not impair
the rights any holder would otherwise have to assert a claim against us, the
selling securityholders or the underwriters, with respect to the full amount of
notes purchased by such holder.

Banc of America Securities LLC and CIBC World Markets Corp. are the joint lead
arrangers and joint book-managers of the new credit facility. In addition, Banc
of America Securities LLC acted as the collateral agent and administrative agent
and CIBC World Markets Corp. acted as syndication agent under our existing
senior credit facilities. The underwriters have provided, and may continue to
provide, from time to time investment banking, commercial banking, advisory and
other services to us and the existing equity investors for customary fees and
expenses in the ordinary course of their business.

                                 LEGAL MATTERS

The validity of the issuance of the IDSs offered hereby and the shares of our
common stock and senior subordinated notes represented thereby, the validity of
the separate issuance of senior subordinated notes not in the form of IDSs and
the validity of the issuance of the subsidiary guarantees by the Delaware
subsidiary guarantors, will be passed upon for us by Kirkland & Ellis LLP, New
York, New York. The validity of the issuance of the subsidiary guarantees by the
Texas subsidiary guarantors will be passed upon for us by Cynthia Ayers, Esq.,
Senior Attorney for Valor. Certain legal matters relating to this offering will
be passed upon for the underwriters by Skadden, Arps, Slate, Meagher & Flom LLP,
New York, New York.

                                       151
<PAGE>

                                    EXPERTS

The financial statements as of December 31, 2002 and 2003 and for each of the
three years in the period ended December 31, 2003 included in this prospectus
and the related financial statement schedule included elsewhere in the
registration statement have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports appearing herein (which reports express an
unqualified opinion and include an explanatory paragraph relating to the
adoption of the provisions of Statement of Financial Accounting Standards
("SFAS") No. 142, "Goodwill and Other Intangible Assets" as of January 1, 2002
and SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended, as of January 1, 2001) and have been so included in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.

                      WHERE CAN YOU FIND MORE INFORMATION

We have filed a Registration Statement on Form S-1 with the SEC regarding this
offering. This prospectus, which is part of the registration statement, does not
contain all of the information included in the registration statement, and you
should refer to the registration statement and its exhibits to read that
information. As a result of the effectiveness of the registration statement, we
are subject to the informational reporting requirements of the Exchange Act of
1934 and, under that Act, we will file reports, proxy statements and other
information with the Commission. You may read and copy the registration
statement, the related exhibits and the reports, proxy statements and other
information we file with the SEC at the SEC's public reference facilities
maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. You can also request copies of those documents, upon payment of a
duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference rooms. The SEC
also maintains an Internet site that contains reports, proxy and information
statements and other information regarding issuers that file with the SEC. The
site's Internet address is www.sec.gov.

Upon completion of this offering, Valor will become subject to the information
and periodic reporting requirements of the Securities Exchange Act of 1934, and,
in accordance with the requirements of the Securities Exchange Act of 1934, will
file periodic reports, proxy statements and other information with the SEC.
These periodic reports, proxy statements and other information will be available
for inspection and copying at the regional offices, public reference facilities
and web site of the SEC referred to above.

You may also request a copy of these filings, at no cost, by writing or
telephoning us at:

                        VALOR COMMUNICATIONS GROUP, INC.
                    201 E. John Carpenter Freeway, Suite 200
                              Irving, Texas 75062
                                 (972) 373-1000

                                       152
<PAGE>

                         VALOR TELECOMMUNICATIONS, LLC

                         INDEX TO FINANCIAL STATEMENTS

<Table>
<S>                                                           <C>
Independent Auditors' Report................................  F-2
Consolidated Balance Sheets as of December 31, 2002 and
  2003......................................................  F-3
Consolidated Statements of Operations and Comprehensive Loss
  for the years ended December 31, 2001, 2002 and 2003......  F-4
Consolidated Statements of Cash Flows for the years ended
  December 31, 2001, 2002 and 2003..........................  F-5
Consolidated Statements of Changes in Common Owners' Equity
  for the years ended December 31, 2001, 2002 and 2003......  F-6
Notes to Consolidated Financial Statements..................  F-7
</Table>

                                       F-1
<PAGE>

                         VALOR TELECOMMUNICATIONS, LLC

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
Valor Telecommunications, LLC
Irving, TX

We have audited the accompanying consolidated balance sheets of Valor
Telecommunications, LLC and subsidiaries (the "Company") as of December 31, 2002
and 2003 and the related consolidated statements of operations and comprehensive
income (loss), changes in common owners' equity, and cash flows for the three
years ended December 31, 2003. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2002
and 2003, and the results of its operations and its cash flows for the three
years ended December 31, 2003 in conformity with accounting principles generally
accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, effective
January 1, 2002, the Company changed its method of accounting for goodwill and
other intangible assets to conform to Statement of Financial Accounting
Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets" and effective
January 1, 2001, the Company changed its method of accounting for derivative
financial instruments to conform to SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended.

/s/ DELOITTE & TOUCHE LLP

Dallas, Texas
March 2, 2004

                                       F-2
<PAGE>

                         VALOR TELECOMMUNICATIONS, LLC

                          CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)

<Table>
<Caption>
                                                                 2002          2003
                                                              ----------    ----------
<S>                                                           <C>           <C>
                                        ASSETS
CURRENT ASSETS
  Cash and cash equivalents.................................  $    1,289    $    1,414
  Accounts receivable:
     Customers, net of allowance for doubtful accounts of
      $3,997 and $2,672, respectively.......................      31,501        26,550
     Carriers and other, net of allowance for doubtful
      accounts of $793 and $652, respectively...............      36,294        34,223
  Materials and supplies, at average cost...................       1,990         1,922
  Other current assets......................................       7,893         9,052
                                                              ----------    ----------
     TOTAL CURRENT ASSETS...................................      78,967        73,161
                                                              ----------    ----------
NET PROPERTY, PLANT AND EQUIPMENT...........................     779,758       769,570
INVESTMENTS AND OTHER ASSETS
  Goodwill..................................................   1,057,007     1,057,007
  Other.....................................................     146,672       139,305
                                                              ----------    ----------
     TOTAL OTHER ASSETS.....................................   1,203,679     1,196,312
                                                              ----------    ----------
     TOTAL ASSETS...........................................  $2,062,404    $2,039,043
                                                              ==========    ==========
                                LIABILITIES AND EQUITY
CURRENT LIABILITIES
  Current maturities of long-term debt......................  $   25,152    $   37,318
  Accounts payable..........................................      21,126        14,458
  Notes payable.............................................       1,175         6,687
  Accrued expenses and other current liabilities:
     Taxes..................................................      12,843        11,983
     Salaries and benefits..................................      11,891        14,372
     Interest...............................................       3,591         3,190
     Other..................................................      15,684        14,405
  Advance billings and customer deposits....................      16,820        16,958
                                                              ----------    ----------
     TOTAL CURRENT LIABILITIES..............................     108,282       119,371
                                                              ----------    ----------
LONG-TERM DEBT..............................................   1,519,133     1,426,655
DEFERRED CREDITS AND OTHER LIABILITIES......................      49,032        48,072
REDEEMABLE PREFERRED INTERESTS..............................     370,231       370,231
                                                              ----------    ----------
     TOTAL LIABILITIES......................................   2,046,678     1,964,329
                                                              ----------    ----------
MINORITY INTERESTS..........................................      21,284        24,852
COMMITMENTS AND CONTINGENCIES (SEE NOTE 12)
COMMON OWNERS' EQUITY
  Class A common interests, no par or stated value,
     500,000,000 interests authorized, 65,568,694 issued and
     65,534,944 outstanding.................................      64,633        64,633
  Class B common interests, no par or stated value,
     5,184,255 interests authorized, 5,056,755 issued and
     outstanding............................................           -             -
  Class C interests, no par or stated value, 50,000,000
     interests authorized, 46,000,000 issued and
     outstanding............................................      46,000        46,000
  Treasury stock............................................         (34)          (34)
  Accumulated other comprehensive loss......................      (4,558)       (7,371)
  Accumulated deficit.......................................    (111,599)      (53,366)
                                                              ----------    ----------
     Total common owners' equity............................      (5,558)       49,862
                                                              ----------    ----------
TOTAL LIABILITIES AND EQUITY................................  $2,062,404    $2,039,043
                                                              ==========    ==========
</Table>

          See accompanying notes to consolidated financial statements
                                       F-3
<PAGE>

                         VALOR TELECOMMUNICATIONS, LLC

          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
             (Dollars in thousands, except per owner unit amounts)

<Table>
<Caption>
                                                                YEARS ENDED DECEMBER 31,
                                                            ---------------------------------
                                                              2001        2002        2003
                                                            ---------   ---------   ---------
<S>                                                         <C>         <C>         <C>
OPERATING REVENUES........................................  $ 424,916   $ 479,883   $ 497,334
                                                            ---------   ---------   ---------
OPERATING EXPENSES
  Cost of service (exclusive of depreciation and
     amortization shown separately below).................    105,357     113,891     106,527
  Selling, general and administrative.....................    105,418     133,468     126,896
  Depreciation and amortization...........................    110,843      73,273      81,638
                                                            ---------   ---------   ---------
     Total operating expenses.............................    321,618     320,632     315,061
                                                            ---------   ---------   ---------
OPERATING INCOME..........................................    103,298     159,251     182,273
OTHER INCOME (EXPENSE)
  Interest expense........................................   (133,156)   (127,365)   (119,185)
  Loss on interest rate hedging arrangements..............    (14,292)    (12,348)     (2,113)
  Earnings from unconsolidated cellular partnerships......          -       2,757       3,258
  Other income and expense, net...........................        358        (268)        (62)
                                                            ---------   ---------   ---------
     Total other income (expense).........................   (147,090)   (137,224)   (118,102)
                                                            ---------   ---------   ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME
  TAXES, MINORITY INTEREST AND CUMULATIVE EFFECT OF CHANGE
  IN ACCOUNTING PRINCIPLE.................................    (43,792)     22,027      64,171
Income tax expense........................................          -       1,649       2,478
                                                            ---------   ---------   ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE MINORITY
  INTEREST AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
  PRINCIPLE...............................................    (43,792)     20,378      61,693
Minority interest.........................................      3,595        (615)     (3,568)
                                                            ---------   ---------   ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE CUMULATIVE
  EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE................    (40,197)     19,763      58,125
Discontinued operations...................................     (8,443)     (3,461)        108
                                                            ---------   ---------   ---------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN
  ACCOUNTING PRINCIPLE....................................    (48,640)     16,302      58,233
Cumulative effect of change in accounting principle.......     (4,715)          -           -
                                                            ---------   ---------   ---------
NET (LOSS) INCOME.........................................    (53,355)     16,302      58,233
OTHER COMPREHENSIVE LOSS:
Minimum pension liability adjustment......................          -      (4,558)     (2,813)
                                                            ---------   ---------   ---------
COMPREHENSIVE (LOSS) INCOME...............................  $ (53,355)  $  11,744   $  55,420
                                                            =========   =========   =========
EARNINGS PER OWNERS' UNIT:
Basic and diluted (loss) income from continuing
  operations:
  Class A and B common interests..........................  $    (.58)  $     .22   $     .73
  Class C interests.......................................  $       -   $     .09   $     .15
Basic and diluted net (loss) income:
  Class A and B common interests..........................  $    (.77)  $     .17   $     .73
  Class C interests.......................................  $       -   $     .09   $     .15
</Table>

          See accompanying notes to consolidated financial statements

                                       F-4
<PAGE>

                         VALOR TELECOMMUNICATIONS, LLC

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)

<Table>
<Caption>
                                                                YEARS ENDED DECEMBER 31,
                                                           ----------------------------------
                                                             2001        2002         2003
                                                           --------    ---------    ---------
<S>                                                        <C>         <C>          <C>
OPERATING ACTIVITIES
  Net (loss) income......................................  $(53,355)   $  16,302    $  58,233
  Adjustments to reconcile net income (loss) to net cash
     provided by operating activities:
  Depreciation and amortization..........................   110,843       73,273       81,638
  Deferred income taxes..................................         -           93          450
  Loss (income) from discontinued operations.............     8,443        3,461         (108)
  Cumulative effect of change in accounting principle....     4,715            -            -
  Amortization of debt issuance costs....................     5,735        6,801        8,105
  Non-cash interest expense..............................    29,025       32,612       17,788
  Non-cash unrealized loss (gain) on interest rate
     hedging arrangements................................     9,892        2,748       (8,487)
  Earnings from unconsolidated cellular partnerships.....         -       (2,757)      (3,258)
  Provision for doubtful accounts receivable.............    11,378       11,393        3,298
  Minority interest......................................    (3,595)         615        3,568
  Changes in current assets and current liabilities:
     Accounts receivable.................................       206       (5,147)       3,786
     Accounts payable....................................   (15,818)       3,235       (6,668)
     Accrued interest....................................   (17,196)      (1,466)        (401)
     Other current assets and current liabilities, net...     2,885        6,669        3,316
  Other, net.............................................     7,143        2,551        4,805
                                                           --------    ---------    ---------
  Net cash provided by operating activities from
     continuing operations...............................   100,301      150,383      166,065
                                                           --------    ---------    ---------
INVESTING ACTIVITIES
  Acquisition, net of cash acquired......................         -     (128,135)           -
  Additions to property, plant and equipment.............  (107,869)     (89,527)     (69,850)
  Distributions from unconsolidated cellular
     partnerships........................................         -        1,939        3,507
  Other, net.............................................     1,255       (1,050)          44
                                                           --------    ---------    ---------
  Net cash used in investing activities from continuing
     operations..........................................  (106,614)    (216,773)     (66,299)
                                                           --------    ---------    ---------
FINANCING ACTIVITIES
  Proceeds from issuance of debt.........................    51,500      116,500       61,500
  Repayments of long-term debt...........................   (53,743)     (77,304)    (161,549)
  Notes payable, net.....................................    10,197      (11,497)       1,742
  Proceeds from issuance of common interests.............         -       46,000            -
  Proceeds from issuance of minority interests...........       163          110            -
  Payments of debt issuance costs........................         -       (2,794)      (1,158)
                                                           --------    ---------    ---------
  Net cash provided by (used in) financing activities
     from continuing operations..........................     8,117       71,015      (99,465)
                                                           --------    ---------    ---------
Net increase in cash and cash equivalents from continuing
  operations.............................................     1,804        4,625          301
Net cash used in discontinued operations (See Note 4)....    (8,373)      (3,662)        (176)
                                                           --------    ---------    ---------
Net (decrease) increase in cash and cash equivalents.....    (6,569)         963          125
Cash and cash equivalents at beginning of year...........     6,895          326        1,289
                                                           --------    ---------    ---------
Cash and cash equivalents at end of year.................  $    326    $   1,289    $   1,414
                                                           ========    =========    =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITY:
Cash paid for interest...................................  $126,850    $ 102,895    $ 109,368
Income taxes paid........................................         -        1,780        2,390
Debt issued for capitalized leases.......................     1,995        3,057        1,949
Note payable issued for insurance policies...............         -        2,475        3,770
Minimum pension liability adjustment.....................         -        4,650        3,054
</Table>

          See accompanying notes to consolidated financial statements

                                       F-5
<PAGE>

                         VALOR TELECOMMUNICATIONS, LLC

                       CONSOLIDATED STATEMENTS OF CHANGES
                            IN COMMON OWNERS' EQUITY
                FOR YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003
<Table>
<Caption>
         OWNER UNITS                                                                  OWNERS' INTERESTS
  --------------------------                                                --------------------------------------
  CLASS A  CLASS B                                                          CLASS A   CLASS B             TREASURY
  COMMON   COMMON    CLASS C                                                COMMON    COMMON    CLASS C    STOCK
  -------  -------   -------                                                -------   -------   -------   --------
                                                                                    (Dollars in thousands)
  <C>      <C>       <C>       <S>                                          <C>       <C>       <C>       <C>
   65,535   3,984         -    Balance, January 1, 2001...................  $64,633   $    -    $     -     $(34)
        -       -         -    Net loss...................................        -        -          -        -
  -------   -----    ------                                                 -------   ------    -------     ----
   65,535   3,984         -    Balance, December 31, 2001.................  $64,633   $    -    $     -     $(34)
        -   1,073    46,000    Issuance of common interests...............        -        -     46,000        -
        -       -         -    Minimum pension liability, net of tax......        -        -          -        -
        -       -         -    Net income.................................        -        -          -        -
  -------   -----    ------                                                 -------   ------    -------     ----
   65,535   5,057    46,000    Balance, December 31, 2002.................  $64,633   $    -    $46,000     $(34)
        -       -         -    Minimum pension liability, net of tax......        -        -          -        -
        -       -         -    Net income.................................        -        -          -        -
  -------   -----    ------                                                 -------   ------    -------     ----
   65,535   5,057    46,000    Balance, December 31, 2003.................  $64,633   $    -    $46,000     $(34)
  =======   =====    ======                                                 =======   ======    =======     ====

<Caption>
         OWNER UNITS
  --------------------------                                               ACCUMULATED OTHER                  COMMON
  CLASS A  CLASS B                                                           COMPREHENSIVE     ACCUMULATED   OWNERS'
  COMMON   COMMON    CLASS C                                                     LOSS            DEFICIT      EQUITY
  -------  -------   -------                                               -----------------   -----------   --------
                                                                                     (Dollars in thousands)
  <C>                                                                      <C>                 <C>           <C>
   65,535   3,984         -    Balance, January 1, 2001..................       $     -         $ (74,546)   $ (9,947)
        -       -         -    Net loss..................................             -           (53,355)    (53,355)
  -------   -----    ------                                                     -------         ---------    --------
   65,535   3,984         -    Balance, December 31, 2001................       $     -         $(127,901)   $(63,302)
        -   1,073    46,000    Issuance of common interests..............             -                 -      46,000
        -       -         -    Minimum pension liability, net of tax.....        (4,558)                -      (4,558)
        -       -         -    Net income................................             -            16,302      16,302
  -------   -----    ------                                                     -------         ---------    --------
   65,535   5,057    46,000    Balance, December 31, 2002................       $(4,558)        $(111,599)   $ (5,558)
        -       -         -    Minimum pension liability, net of tax.....        (2,813)                -      (2,813)
        -       -         -    Net income................................             -            58,233      58,233
  -------   -----    ------                                                     -------         ---------    --------
   65,535   5,057    46,000    Balance, December 31, 2003................       $(7,371)        $ (53,366)   $ 49,862
  =======   =====    ======                                                     =======         =========    ========
</Table>

          See accompanying notes to consolidated financial statements

                                       F-6
<PAGE>

                         VALOR TELECOMMUNICATIONS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              (Dollars in thousands except per owner unit amounts)

1.  BACKGROUND AND BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Valor
Telecommunications, LLC (VTC) and its majority-owned subsidiaries (collectively,
the Company). All significant intercompany transactions have been eliminated.
The parent of VTC is Valor Communications Group, Inc. (Valor). Valor is a
holding company and has no direct operations. Valor's principle assets are the
direct and indirect equity interests of its subsidiaries.

The Company was created in 1999 for the purpose of acquiring three groups of
rural local telephone exchange properties clustered in New Mexico, Oklahoma,
Arkansas and Texas from GTE Southwest Corporation (GTE). The Company purchased
all of the GTE access lines in Oklahoma and New Mexico, and approximately 15% of
GTE's access lines in Texas. A portion of the access lines acquired in Texas is
physically located in Texarkana, Arkansas. In addition to local exchange
services, the Company also offers long distance and Internet access service
through other subsidiaries. On January 31, 2002, the Company acquired Kerrville
Communications Corporation, Inc. (KCC), a local telephone company serving
Kerrville, Texas, and has included the operating results of KCC in its
consolidated results since the date of acquisition.

VTC's lead equity investor is Welsh, Carson, Anderson & Stowe (WCAS), one of the
largest private equity firms in the country. Other equity sponsors include
Vestar Capital Partners, (Vestar) and Citicorp Venture Capital (CVC)
(collectively, the Sponsors). WCAS, Vestar and CVC made their equity investment
into VTC, which has as its primary asset, its membership interest in two
majority-owned subsidiaries, Valor Telecommunications Southwest, LLC (Southwest)
and Valor Telecommunications Southwest II, LLC (Southwest II). A group of
prominent Hispanic investors made a direct equity investment in Southwest and
Southwest II. WCAS and the other Sponsors also made a Senior Subordinated Debt
investment in Southwest. See Note 8 for additional information.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES--The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

REVENUE RECOGNITION--Revenue is recognized when evidence of an arrangement
exists, the earnings process is complete and collectibility is reasonably
assured. The prices for most services are filed in tariffs with the appropriate
regulatory bodies that exercise jurisdiction over the various services.

Basic local services, enhanced calling features such as caller ID, special
access circuits, long distance flat rate calling plans, and most data services
are billed one month in advance. Revenue for these services is recognized in the
month services are rendered. The portion of advance-billed revenue associated
with services that will be delivered in a subsequent period is deferred and
recorded as a current liability under "Advance billings and customer deposits"
in the Consolidated Balance Sheets.

Amounts billed to customers for activating service are deferred and recognized
over the average life of the customer. The costs associated with activating such
services are deferred and recognized as an operating expense over the same
period. Costs in excess of revenues are recognized as expense in the period in
which activation occurs.

                                       F-7
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Revenues for providing usage based services, such as per-minute long distance
service and access charges billed to long distance companies for originating and
terminating long distance calls on the Company's network, are billed in arrears.
Revenues for these services are recognized in the month services are rendered.

Universal Service revenues are government-sponsored support received in
association with providing service in mostly rural, high-cost areas. These
revenues are typically based on information provided by the Company and are
calculated by the government agency responsible for administering the support
program. Revenues are recognized in the period the service is provided.

CASH AND CASH EQUIVALENTS--For purposes of reporting cash flows, the Company
considers all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents. Cash equivalents are stated at
cost, which approximates fair value.

PROPERTY, PLANT AND EQUIPMENT--Telephone property, plant and equipment are
recorded at original cost of acquisition or construction and related costs,
including payroll and other direct and indirect costs related to construction
activity. Major replacements and improvements are capitalized. Repairs are
charged to operating expense as incurred. Depreciation on telephone plant is
based on the estimated remaining lives of the various classes of depreciable
property and is calculated using straight-line composite rates. This method
provides for the recovery of the remaining net investment in telephone plant,
less salvage value, over the remaining asset lives. The composite depreciation
rates range from 2.5% to 33%. Normal retirements are charged to accumulated
depreciation, and any gain or loss on dispositions is amortized over the
remaining asset lives of the remaining net investment in telephone plant.

Non-telephone property is depreciated on a straight-line basis. When these
assets are retired or otherwise disposed of, the related cost and accumulated
depreciation are removed and any gains or losses on disposition are recognized
in income.

Property, plant and equipment, as well as other long-lived assets, are evaluated
for impairment in accordance with Statement of Financial Accounting Standards
(SFAS) No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets"
whenever events or circumstances indicate that the carrying value may not be
recoverable.

INCOME TAXES--VTC has elected to be taxed as a partnership for federal income
tax purposes. VTC is not an operating entity itself, but is the direct majority
interest owner of Southwest and Southwest II. Since VTC has elected partnership
tax treatment, there are no federal income taxes to be reflected in the
financial statements for this entity's operations.

Southwest is taxed as a partnership for federal income tax purposes. Therefore,
the taxable income or loss from this entity flows directly into the VTC tax
return via the Form K-1 received from Southwest. For Southwest, each legal
operating entity owned directly or indirectly by Southwest is legally formed as
either a limited liability company or a limited partnership.

However, each of these entities is considered a disregarded entity (a division
of a corporation) for federal income tax purposes and for state income tax
purposes in each state in which the entity operates, except for Texas. Since
Southwest has elected partnership tax treatment, there are no federal income
taxes to be reflected in the financial statements for this entity.

Southwest II has elected to be taxed as a corporation for federal income tax
purposes. Each legal operating entity owned directly or indirectly by Southwest
II is legally formed as either a limited liability company, a limited
partnership, or a corporation. However, each of these entities is treated for
federal income tax purposes either as a corporation or a disregarded entity.
Operations for all entities directly or

                                       F-8
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

indirectly owned by Southwest II are included in a consolidated federal income
tax return filed by Southwest II.

The financial statement provision for Southwest II's income taxes includes
federal income taxes currently payable and those deferred due to temporary
differences between the financial statement and tax bases of assets and
liabilities. These differences result from the use of different accounting
methods for financial and tax reporting purposes with respect principally to
depreciable assets, materials and supplies, revenue recognition, income tax
related regulatory liabilities and pension cost.

The Second Amended and Restated Limited Liability Company Agreement for VTC
dated January 31, 2002, requires profits and losses to be allocated to the
members of VTC based upon specific ordering rules. For the years ended December
31, 2001, 2002 and 2003, tax losses are allocated based on the owner's
respective capital account ratio. This capital account ratio is adjusted to
reflect changes in the capital accounts on specific dates due to additional
capital contributions, interest transfers, and taxable income or loss allocable
to each partner for the applicable time period.

As noted above, in most states VTC will be treated as a partnership for state
income tax purposes just as it is for federal income tax purposes. Therefore,
for these states, there are no state income taxes to be reflected in the
financial statements. However, those operating legal entities which are
organized as limited liability companies and have operations in Texas are
subject to Texas Franchise Tax on a separate legal entity basis. For the years
ended December 31, 2001 and 2002, there are no amounts to report as state income
tax for Texas Franchise Tax. For the year ended December 31, 2003, Southwest
paid state income tax for Texas Franchise Tax in the amount of $3.

SEGMENT REPORTING--The Company has two operating segments, rural local exchange
carrier, or RLEC, and Other.

As an RLEC, the Company provides regulated telecommunications services to
customers in its service areas. These services include local calling services to
residential and business customers, as well as providing interexchange carriers
(IXC) with call origination and termination services, on both a flat-rate and
usage-sensitive basis, allowing them to complete long distance calls for their
customers who reside in the Company's service areas.

In Other, the Company provides unregulated telecommunications services to
customers throughout its RLEC service areas. These services include long
distance and Internet services. Long distance is provided through resale
agreements with national long distance carriers.

The Company has considered the aggregation criteria in SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information" and
determined that these operating segments are similar in respect to:

   --  The nature of the services;

   --  Their processes;

   --  The type or class of customer for these services;

   --  The methods used to provide these services; and

   --  The nature of the overall regulatory environment.

                                       F-9
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Based on the above criteria, the Company believes the economic characteristics
of the two operating segments, as well as their expected future performance, to
be similar, and accordingly, has aggregated the two operating segments into a
single reportable segment.

EQUITY METHOD INVESTMENTS--Investments in companies in which the Company owns 20
percent to 50 percent of the voting common stock or otherwise exercises
significant influence over operating and financial policies of the company are
accounted for under the equity method.

STOCK COMPENSATION--The Company accounts for its employee stock compensation
plan in accordance with Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees" as allowed by SFAS No. 123,
"Accounting for Stock-Based Compensation". As permitted by SFAS No. 123, the
Company measures compensation using the intrinsic value based method as
prescribed by APB Opinion No. 25, but is required to make pro forma disclosures
in the footnotes to the financial statements as if the measurement provisions of
SFAS No. 123 and SFAS No. 148 "Accounting for Stock-Based
Compensation-Transition and Disclosure--an Amendment of SFAS No. 123" had been
adopted. Under the intrinsic value method, compensation is measured as the
difference between the market value of the stock on the grant date, less the
amount required to be paid for the stock. The difference, if any, is charged to
expense over the vesting period of the options. No stock-based employee
compensation cost is reflected in net income (loss), since options granted under
the plan had an exercise price equal to the market value of the underlying
common stock on the date of grant. See Note 15 for additional information. If
compensation cost for the options had been determined in accordance with SFAS
No. 123, the Company's net income (loss) and per owner unit amounts would have
been as follows:

<Table>
<Caption>
                                                                   2001      2002      2003
                                                                 --------   -------   -------
   <S>                                                           <C>        <C>       <C>
   Net (loss) income as reported:..............................  $(53,355)  $16,302   $58,233
   Deduct: Total stock-based employee compensation expense
     determined under fair value based method..................      (361)     (417)     (447)
   Add: Total stock-based employee compensation expense
     determined under intrinsic value based method.............
                                                                 --------   -------   -------
   Pro forma net (loss) income.................................  $(53,716)  $15,885   $57,786
                                                                 ========   =======   =======
   Earnings per owners' unit:
     Basic and diluted net (loss) income as reported:
        Class A and B common interests.........................  $   (.77)  $   .17   $   .73
        Class C interests......................................  $      -   $   .09   $   .15
     Basic and diluted net (loss) income pro forma:
        Class A and B common interests.........................  $   (.77)  $   .17   $   .72
        Class C interests......................................  $      -   $   .09   $   .15
</Table>

REGULATORY ACCOUNTING--Certain of the Company's operating subsidiaries,
specifically the telephone operations of Southwest II, prepare their financial
statements in accordance with the provisions of SFAS No. 71, "Accounting for the
Effects of Certain Types of Regulation". The provisions of SFAS No. 71 require,
among other things, that regulated enterprises reflect rate actions of
regulators in their financial statements, when appropriate. These rate actions
can provide reasonable assurance of the existence of an asset, reduce or
eliminate the value of an asset, or impose a liability on a regulated
enterprise. The Company periodically reviews its position as to the
applicability of SFAS No. 71 based on the current regulatory and competitive
environment.

DERIVATIVE FINANCIAL INSTRUMENTS--Effective January 1, 2001, the Company adopted
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", as
amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB
                                       F-10
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Statement No. 133", and SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities". SFAS No. 133, as amended, requires
that all derivative instruments, such as interest rate swap and interest rate
collar agreements, be recognized on the balance sheet at fair value, regardless
of the purpose or intent of holding them. In addition, SFAS No. 133 provides
that for derivative instruments that qualify for hedge accounting, changes in
the fair value will either be offset against the change in fair value of the
hedged assets, liabilities, or firm commitments through earnings or recognized
in owners' equity as a component of accumulated other comprehensive income
(loss) until the hedged item is recognized in earnings, depending on whether the
derivative is being used to hedge changes in fair value or cash flows. The
ineffective portion of a derivative's change in fair value will be immediately
recognized in earnings.

During 2000, the Company entered into an interest rate swap and interest rate
collar agreement, which did not meet the criteria for hedge accounting upon
adoption of SFAS No. 133 on January 1, 2001. The transitional unrealized loss of
$4,715 is reflected as a "Cumulative effect of change in accounting principle"
in the Consolidated Statements of Operations, while all settlements and
subsequent adjustments to fair value are recorded in "Loss on interest rate
hedging arrangements". See Note 8 for additional information.

The Company does not have any other derivative financial instruments, nor does
it use such instruments for speculative purposes.

GOODWILL AND INTANGIBLES--In June 2001, the Financial Accounting Standards Board
(FASB) issued two new statements, SFAS No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 requires that the
purchase method be used for all business combinations initiated after June 30,
2001. SFAS No. 142 requires that goodwill no longer be amortized to earnings,
but instead be reviewed for impairment. The Company adopted SFAS No. 142, on
January 1, 2002. See Note 7 for additional information.

ASSET RETIREMENT OBLIGATIONS--On January 1, 2003, the Company adopted SFAS No.
143, "Accounting for Asset Retirement Obligations". SFAS No. 143 addresses
financial accounting and reporting for legal obligations associated with the
retirement of tangible long-lived assets and the related asset retirement costs.
SFAS No. 143 requires that companies recognize the fair value of a liability for
an asset retirement obligation in the period in which it is incurred and
capitalize the expected retirement costs as part of the book value of the
long-lived asset. The Company generally has had no legal obligation to remove
assets and therefore, has not accrued a liability for anticipated removal costs.
Removal costs are expensed as they are incurred. The telephone operations of the
Company's subsidiary, Southwest II, are subject to SFAS No. 71 and therefore,
have historically included a component for removal costs in excess of the
related estimated salvage value even though there is no legal obligation to
remove the assets. Notwithstanding the adoption of SFAS No. 143, SFAS No. 71
requires the Company to continue to reflect this accumulated liability for
removal costs in excess of salvage value even though there is no legal
obligation to remove the assets. As a result, the adoption of SFAS No. 143 did
not have a material effect on the Company's financial statements.

RECENT ACCOUNTING PRONOUNCEMENTS--In June 2002, the FASB issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities". This
Statement addresses financial accounting and reporting for costs associated with
exit or disposal activities and nullifies Emerging Issues Task Force Issue No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." The provisions of this Statement are effective for exit or
disposal activities that are initiated after December 31, 2002. The Company
adopted

                                       F-11
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

this Statement on January 1, 2003. The adoption of this standard did not have a
material impact on the Company's financial position or the results of
operations.

Financial Accounting Standards Board Interpretation (FIN) No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others--an Interpretation of FASB Statements No.
5, 57, and 107 and Rescission of FIN No. 34" was issued in November 2002 and
became effective for disclosures made in December 31, 2002 financial statements.
The interpretation requires expanded disclosures of guarantees. In addition, the
interpretation requires recording the fair value of guarantees upon issuance or
modification after January 1, 2003. While the Company has various guarantees
included in contracts in the normal course of business, these guarantees do not
represent significant commitments or contingent liabilities related to the
indebtedness of others.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities, an Interpretation of Accounting Research Bulletin No. 51 (ARB 51)",
which clarifies the consolidation accounting guidance in ARB 51, "Consolidated
Financial Statements," as it applies to certain entities in which equity
investors who do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entities to finance
their activities without additional subordinated financial support from other
parties. Such entities are known as variable interest entities (VIEs). FIN No.
46 requires that the primary beneficiary of a VIE consolidates the VIE. FIN No.
46 also requires new disclosures for significant relationships with VIEs,
whether or not consolidation accounting is used or anticipated. In December
2003, the FASB revised and re-released FIN No. 46 as "FIN No. 46(R)." The
provisions of FIN No. 46(R) are effective for periods ending after March 15,
2004. However, the Company has elected to adopt FIN No. 46(R) as of December 31,
2003. The adoption of FIN No. 46(R) did not have a material impact on the
Company's financial position or the results of operations.

In May 2003, the FASB issued SFAS No. 150 "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." This Statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability because that financial instrument embodies an obligation of the
issuer. This Statement is effective for periods beginning after June 15, 2003.
The Company has included the redeemable preferred interests as part of total
liabilities at December 31, 2002 and 2003.

In January 2004, FASB Staff Position (FSP) No. 106-1, "Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003" was issued. FSP No. 106-1 permits the deferral of
recognizing the effects of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the Act) in the accounting for post-retirement health
care plan under SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions," and in providing disclosures related to the plan required
by SFAS No. 132 (revised 2003), "Employers' Disclosures about Pensions and Other
Postretirement Benefits." The deferral of the accounting for the Act continues
to apply until authoritative guidance is issued on the accounting for the
federal subsidy provided by the Act or until certain other events requiring plan
remeasurement. We have elected the deferral provided by this FSP and are
evaluating the magnitude of the potential favorable impact of this FSP on our
results of operations and financial position. See Note 11 for further discussion
of postretirement benefits.

3.  ACQUISITION

On January 31, 2002, the Company purchased all the outstanding common stock,
preferred stock and common stock equivalents of KCC in a transaction accounted
for as a purchase business combination. As

                                       F-12
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

a result of this acquisition, the Company also acquired a 32% general partner
interest in CGKC&H Rural Cellular Limited Partnership (CGKC&H) and CGKC&H #2
Rural Cellular Limited Partnership (CGKC&H #2) which provide wireless telephone
service to certain rural service areas in Texas.

The purchase price allocation in accordance with SFAS No. 141, "Business
Combinations", for the January 31, 2002 purchase business combination is as
follows:

<Table>
   <S>                                                           <C>
   Consideration given--cash paid to former owners.............  $126,375
   Consideration received--fair value of net tangible assets
     and identified intangible assets purchased................   (55,712)
   Transaction costs--cash paid for transaction costs..........     2,471
                                                                 --------
   Goodwill....................................................  $ 73,134
                                                                 ========
</Table>

The following unaudited financial information assumes that the KCC acquisition
that was consummated during the year ended December 31, 2002 had occurred on
January 1, 2001. The pro forma information is not necessarily indicative of the
operating results that would have occurred if the acquisitions had been
consummated as of January 1, 2001 nor is it necessarily indicative of future
operating results.

<Table>
<Caption>
                                                                   2001        2002
                                                                 --------    --------
   <S>                                                           <C>         <C>
   Revenue.....................................................  $451,948    $482,195
   (Loss) income before cumulative effect of a change in
     accounting principle......................................   (44,072)     16,587
   Net (loss) income...........................................   (48,486)     16,587
   Basic and diluted net (loss) income per owners' unit:
     Class A and B common interests............................  $  (0.77)   $   0.17
     Class C interests.........................................  $   0.11    $   0.10
</Table>

4.  DISCONTINUED OPERATIONS

As a result of the Company's sale of its competitive local exchange business in
Texas in 2002, the results of such operations have been reflected as
discontinued operations in the Company's financial statements in accordance with
SFAS No. 144.

The following table provides the components of the Company's discontinued
operations for the years ended December 31, 2001, 2002 and 2003:

<Table>
<Caption>
                                                                 2001       2002       2003
                                                                -------    -------    -------
   <S>                                                          <C>        <C>        <C>
   Revenue....................................................  $   570    $   563    $     -
   Net (loss) income..........................................  $(8,443)   $(3,461)   $   108
</Table>

In connection with the discontinued operations in 2002, the Company recorded a
liability of approximately $2,000 related to certain employee termination
benefits and other exit costs, including a non-cancelable lease. As of December
31, 2002 and 2003, approximately $400 and $100, respectively, of the $2,000 had
not been paid. These amounts have been classified as current liabilities in the
Consolidated Balance Sheets. Income from discontinued operations of $108 in 2003
represents a revision to the estimates made in 2002 for recording certain
employee termination benefits and other exit costs.

                                       F-13
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5.  OTHER CURRENT ASSETS

Other current assets consist of the following:

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                                 ----------------
                                                                  2002      2003
                                                                 ------    ------
   <S>                                                           <C>       <C>
   Deferred service activation costs...........................  $5,058    $5,208
   Other.......................................................   2,835     3,844
                                                                 ------    ------
   Total.......................................................  $7,893    $9,052
                                                                 ======    ======
</Table>

6.  PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

<Table>
<Caption>
                                                            WEIGHTED
                                                            AVERAGE          DECEMBER 31,
                                                              LIFE      ----------------------
                                                            IN YEARS      2002         2003
                                                            --------    ---------    ---------
   <S>                                                      <C>         <C>          <C>
   Land...................................................      -       $   4,723    $   4,686
   Buildings and leasehold improvements...................     29          81,688       83,858
   Central office equipment...............................      9         269,820      301,737
   Outside communications plant...........................     18         514,414      540,202
   Furniture, vehicles and other equipment................      6          43,486       50,269
   Construction in progress...............................      -          10,380        9,436
                                                                        ---------    ---------
                                                                          924,511      990,188
   Less accumulated depreciation..........................               (144,753)    (220,618)
                                                                        ---------    ---------
   Property, plant and equipment, net.....................              $ 779,758    $ 769,570
                                                                        =========    =========
</Table>

The above table references the weighted average depreciable life of the
Company's property, plant and equipment. For the majority of its property, plant
and equipment, the Company calculates depreciation expense based on its estimate
of the useful life of the assets. Certain of the Company's total property, plant
and equipment are accounted for under the requirements of SFAS No. 71. SFAS No.
71 allows the Company to depreciate its assets over useful lives as prescribed
by regulatory authorities, which can exceed the actual useful lives of the
assets.

Included in the furniture, vehicles and other equipment amount at December 31,
2002 and 2003 is $5,024 and $6,918, respectively, for vehicles under capital
leases. The related accumulated depreciation for these leases is $1,039 and
$2,389 at December 31, 2002 and 2003, respectively.

Depreciation expense, excluding discontinued operations, was $56,943, $73,273
and $81,638 for the years ended December 31, 2001, 2002 and 2003, respectively,
and is included in "Depreciation and amortization" in the Company's Consolidated
Statements of Operations. Depreciation expense for 2001, 2002 and 2003 includes
$128, $911 and $1,350, respectively, related to assets acquired under capital
lease obligations.

                                       F-14
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

7.  INVESTMENTS AND OTHER ASSETS

Investments and other assets consist of the following:

<Table>
<Caption>
                                                                      DECEMBER 31,
                                                                 -----------------------
                                                                    2002         2003
                                                                 ----------   ----------
   <S>                                                           <C>          <C>
   Goodwill....................................................  $1,057,007   $1,057,007
   RTFC equity certificates....................................      61,822       62,318
   Unamortized debt issuance costs.............................      61,311       54,364
   Investment in cellular partnerships.........................      18,234       17,986
   Other.......................................................       5,305        4,637
                                                                 ----------   ----------
   Total.......................................................  $1,203,679   $1,196,312
                                                                 ==========   ==========
</Table>

The Company's goodwill represents the excess price paid by the Company over the
fair value of the tangible and intangible assets and liabilities of the
telephone operating properties purchased in Oklahoma, New Mexico, Arkansas and
Texas, on the date of acquisition net of accumulated amortization of $74,429. In
accordance with SFAS No. 142, the goodwill balance is no longer amortized, but
instead will be subject to an annual assessment of impairment by applying a
fair-value based test.

The Company will evaluate the carrying value of goodwill in the third quarter of
each year. As part of the evaluation, the Company compares the carrying value of
the goodwill with its fair value to determine whether an impairment exists. The
Company discounts future cash flow projections to determine if the goodwill can
be recovered. Cash flow projections, although subject to a degree of
uncertainty, are based on trends of historical performance and management's
estimate of future performance, giving consideration to existing and anticipated
competitive and economic conditions. Upon completion of its initial assessments
and its annual assessment in the third quarters of 2002 and 2003, the Company
determined that no write-down in the carrying value of the goodwill was
required.

The following financial information is presented as if SFAS No. 142 was adopted
at the beginning of the year ended January 1, 2001:

<Table>
<Caption>
                                                                   2001      2002      2003
                                                                 --------   -------   -------
   <S>                                                           <C>        <C>       <C>
   Reported net (loss) income..................................  $(53,355)  $16,302   $58,233
   Goodwill amortization.......................................    53,900         -         -
                                                                 --------   -------   -------
   Adjusted net income.........................................  $    545   $16,302   $58,233
                                                                 --------   -------   -------
   EARNINGS PER OWNERS' UNIT:
   Basic and diluted net (loss) income as reported:
     Class A and B common interests............................  $   (.77)  $   .17   $   .73
     Class C interests.........................................  $      -   $   .09   $   .15
   Basic and diluted net income adjusted:
     Class A and B common interests............................  $    .01   $   .17   $   .73
     Class C interests.........................................  $      -   $   .09   $   .15
</Table>

In accordance with the terms of the Rural Telephone Finance Cooperative (RTFC)
loans, the Company was required to purchase an equity certificate in RTFC equal
to 10% of the total amount borrowed from the RTFC. RTFC provided a loan to
finance the purchase of the equity certificate. The funds invested in this
equity certificate will be refunded to the Company upon repayment of the
outstanding loan balance. The RTFC certificate is not marketable and is carried
at cost. As a member of RTFC, the Company receives non-cash patronage capital
certificates based on RTFC earnings. During the year ended December 31, 2002 and
2003, the Company recorded patronage capital certificates with a present value
of

                                       F-15
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

$324 and $430, respectively. These non-cash patronage capital certificates will
accrue interest on a monthly basis and will be redeemed for approximately $1,234
and $1,360 in the years 2017 and 2018, respectively.

As a result of amending the terms of its revolving credit facility in 2003, the
Company expensed $555 of its debt issuance costs related to the original debt
due to the reduced borrowing capacity of the facility upon execution of the
amendment. In addition, the Company deferred an additional $1,158 of new debt
issuance costs incurred as a result of this same amendment. See Note 8 for
additional information. Debt issuance costs are amortized utilizing the
effective interest rate method over the term of the related debt.

Investments in cellular partnerships represent the Company's 32% ownership in
both CGKC&H and CGKC&H #2. The Company accounts for its investments using the
equity method of accounting. Income taxes on the Company's equity in earnings of
the partnerships are included in the Company's provision for federal income
taxes.

The Company leases telecommunications equipment to customers usually over
five-year terms. These long-term receivables are included in "Investments and
other assets" on the Consolidated Balance Sheets. Future minimum rentals to be
received under sales-type leases in effect at December 31, 2002 and 2003 are as
follows:

<Table>
<Caption>
   YEAR                                                          2002    2003
   ----                                                          -----   -----
   <S>                                                           <C>     <C>
   2003........................................................  $ 168   $   -
   2004........................................................    141     198
   2005........................................................     86     130
   2006........................................................     71     107
   2007........................................................     58      92
   2008........................................................      -      62
   Thereafter..................................................     68      23
                                                                 -----   -----
   Total minimum lease payments................................    592     612
   Less current portion........................................   (168)   (198)
                                                                 -----   -----
   Long-term portion...........................................  $ 424   $ 414
                                                                 =====   =====
</Table>

8.  LONG-TERM DEBT

Long-term debt outstanding is as follows:

<Table>
<Caption>
                                                                      DECEMBER 31,
                                                                 -----------------------
                                                                    2002         2003
                                                                 ----------   ----------
   <S>                                                           <C>          <C>
   6.2%* Senior Credit Facilities, due in installments through
     2013......................................................  $1,244,016   $1,145,383
   10.0% Senior Subordinated Debt, due 2010....................     296,469      314,257
   5.4%* Leases, due in installments through 2008..............       3,800        4,333
                                                                 ----------   ----------
   Total long-term debt........................................   1,544,285    1,463,973
   Less current maturities.....................................     (25,152)     (37,318)
                                                                 ----------   ----------
   Long-term debt, excluding current maturities................  $1,519,133   $1,426,655
                                                                 ==========   ==========
</Table>

---------------------------
* weighted average interest rate at December 31, 2003

The Senior Credit Facilities consist of revolving credit agreements
(collectively, the Revolver) and Tranches A, B, C and D. These Tranches are
related borrowings with varying interest rates, due dates and payment schedules.
The Senior Credit Facilities are charged interest based upon the following:
$553,821

                                       F-16
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

for Tranches A, B and the Revolver are charged interest based upon the
applicable Eurodollar rate plus 2.0% to 4.0%, or at applicable base rate plus
0.75% to 3.0%, with the interest rate spread adjusted based upon certain
financial ratios; $591,562 for Tranches C and D are charged interest at the
RTFC's current standard long-term variable rate plus 1.18%. As a member of RTFC,
the Company receives cash distributions based on RTFC earnings. During the year
ended December 31, 2002 and 2003, the Company recorded $2,879 and $3,173,
respectively, of cash distributions from the RTFC as a reduction of interest
expense.

At December 31, 2002 and 2003, the weighted average interest rate of the Senior
Credit Facilities was 6.9% and 6.2%, respectively.

On October 3, 2003, the Company amended the Amended and Restated Credit
Agreement dated August 31, 2000 (the Credit Agreement). Included in the
revisions to the Credit Agreement was a reduction of the amount available for
borrowings under the Revolver and an increase in permitted investments. In
addition, there were revisions related to the use of additional borrowings and
the maintenance of certain financial ratios. The amount of borrowing available
to the Company under the Revolving credit facility (Revolver) is generally based
upon achieving certain levels of operating performance. At December 31, 2003,
the Company had an aggregate of $150,900 in available borrowings under the
Revolver, for which the Company pays a commitment fee of 0.375% to 0.500% based
upon certain financial tests.

Borrowings under the Senior Credit Facilities are collateralized by the
operating assets of Southwest and Southwest II. These agreements limit, among
other things, additional borrowings, transactions with affiliates, capital
expenditures and the payment of dividends by those operating companies. The
agreements also require maintenance of certain financial ratios including debt
to cash flow ratios, interest coverage and fixed charge coverage.

The Company is allowed to pay cash interest on the Senior Subordinated Debt at a
rate of 10% per year unless prohibited by the terms of the Senior Credit
Facilities. The Senior Credit Facilities contain provisions requiring the
Company to achieve a pro forma fixed charge coverage equal to or greater than
one to one for that particular measurement period prior to paying cash interest
on the Senior Subordinated Debt. If the Company is prohibited from paying cash
interest, the debt accrues interest at 12.0% and the Company converts this
non-cash interest into additional note principal. Once the required pro forma
fixed charge is achieved, the interest rate drops to 10% for that particular
semi-annual interest period and the Company is allowed to make a cash interest
payment. During the years ended December 31, 2001, 2002 and 2003, the Company
converted $29,025, $32,612 and $17,788, respectively, of interest into
additional note principal. For the measurement period ending September 30, 2003,
the Company achieved the required pro forma fixed charge coverage. As a result,
the interest rate on the Senior Subordinated Debt decreased to 10.0% and the
semi-annual interest of $15,713 due December 31, 2003 was paid in cash. If the
pro forma fixed charge coverage is less than one to one during the measurement
period prior to the semi-annual interest payment date, the interest rate returns
to 12.0% and the Company is required to convert the interest into additional
note principal for that semi-annual period.

The approximate annual debt maturities for the five years subsequent to December
31, 2003 are as follows: $37,318 in 2004; $47,786 in 2005; $64,656 in 2006;
$226,596 in 2007; and $292,408 in 2008.

During the year ended December 31, 2001, 2002 and 2003, the Company capitalized
$3,372, $1,116 and $997, respectively, of interest expense related to
construction projects.

During 2000, the Company entered into two interest rate hedge contracts, an
interest rate swap and an interest rate collar agreement, to adjust the interest
rate profile of its debt obligations. In addition, the

                                       F-17
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Company's credit arrangements include provisions that require interest rate
protection (hedge agreements) for a portion of its variable rate debt. The
Company entered into interest rate hedging agreements with certain financial
institutions to reduce the financial impact of changes in interest rates on its
debt. The Company's interest rate swap and collar agreement do not qualify for
hedge accounting under SFAS No. 133, therefore, they are carried at fair market
value and are included in "Deferred credits and other liabilities" on the
Consolidated Balance Sheets. The transitional unrealized loss on the interest
rate hedging arrangements at January 1, 2001 is reflected as the "Cumulative
effect of change in accounting principle" on the Consolidated Statement of
Operations. Changes in the fair market value and settlements are recorded as
"Loss on interest rate hedging arrangements" each reporting period.

The swap agreement effectively converts a portion of the Company's variable-rate
debt to fixed-rate debt, thereby reducing the risk of incurring higher interest
costs due to rising interest rates. The interest rate collar includes a floor
and a cap. For any reset that the three month London InterBank Offered Rate
(LIBOR) is less than or equal to 5.43% (Floor Knock-in), the LIBOR that the
Company pays for that three month period is 6.76% (Cap). For any reset that the
three month LIBOR is greater than 6.76%, but less than 8.25%, the rate that the
Company pays is 6.76%.

As a further hedge against rising interest rates, the Company selected fixed
rate options available under certain of the Senior Credit Facilities. For the
year ended December 31, 2000, the Company fixed $275,000 of the Tranche C debt
for a period of five years at the rate of 9.28%. During the year ended December
31, 2002, the Company fixed $44,000 under Tranche B for a period of three years
at the rate of 8.39%. During the year ended December 31, 2003, the Company fixed
$210,000 of the Tranche C debt for three years at a rate of 6.68% and $61,111 of
the Tranche D debt for a period of four years at a rate of 6.38%.

The counterparties to the hedge agreements are major financial institutions.
These financial institutions have been accorded high ratings by major rating
agencies. While the Company may be exposed to credit losses due to
non-performance of the counterparties, the Company considers the risk to be
remote. The Company does not utilize derivative financial instruments for
trading or speculative purposes.

<Table>
<Caption>

   <S>                                                           <C>
   INTEREST RATE SWAP
     Notional amount...........................................      $100,000
     Receive rate..............................................   3 month LIBOR
     Pay rate..................................................       6.19%
     Maturity..................................................  November 9, 2004
   INTEREST RATE COLLAR
     Notional amount...........................................      $100,000
     Maturity..................................................  November 9, 2004
     Cap rate..................................................       6.76%
     Cap knock-out rate........................................       8.25%
     Floor knock-in rate.......................................       5.43%
</Table>

                                       F-18
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9.  DEFERRED CREDITS AND OTHER LIABILITIES

Deferred credits and other liabilities were composed of the following:

<Table>
<Caption>
                                                                  2002       2003
                                                                 -------    -------
   <S>                                                           <C>        <C>
   Accrued pension costs (see Note 11).........................  $10,230    $15,074
   Accrued postretirement medical and life benefit costs (see
     Note 11)..................................................   10,198     11,205
   Interest rate swap (see Note 8).............................    8,159      4,189
   Interest rate collar (see Note 8)...........................    9,195      4,678
   Deferred revenue............................................    4,591      3,558
   Deferred federal income taxes (see Note 10).................    4,882      5,354
   Deferred investment tax credit (see Note 10)................      305        259
   Other.......................................................    1,472      3,755
                                                                 -------    -------
   Total.......................................................  $49,032    $48,072
                                                                 =======    =======
</Table>

Deferred revenue represents revenues billed to customers for activating
services. This revenue is recognized over the average life of the customers
along with the costs associated with activating such services. See Note 2 for
additional information.

10.  INCOME TAXES

Southwest II has elected to be taxed as a corporation for federal income tax
purposes. Each legal operating entity owned directly or indirectly by Southwest
II is legally formed as either a limited liability company, a limited
partnership, or a corporation. However, each of these entities is treated for
federal income tax purposes either as a corporation or a disregarded entity (a
division of a corporation). Operations for all entities directly or indirectly
owned by Southwest II are included in a consolidated federal income tax return
filed by Southwest II. Since Southwest II is the only operating entity organized
as a corporation for tax purposes, the income tax expense and the deferred tax
liabilities reported in the consolidated results of operations are computed
based solely on the Southwest II operations.

The Company accounts for income taxes under SFAS No. 109, "Accounting for Income
Taxes". The Company records its net deferred income tax liability for all
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes,
computed based on provisions of the enacted tax law.

                                       F-19
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The components of the Company's net deferred tax liability are as follows at
December 31, 2002 and 2003:

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                                 ----------------
                                                                  2002      2003
                                                                 ------    ------
   <S>                                                           <C>       <C>
   Deferred tax assets:
     Capitalized costs on self constructed assets..............  $1,366    $1,474
     Reserves and accruals.....................................     313       421
     Other.....................................................   1,913       984
                                                                 ------    ------
                                                                  3,592     2,879
                                                                 ------    ------
   Deferred tax liabilities:
     Property and equipment....................................   6,823     7,466
     Other.....................................................   1,651       767
                                                                 ------    ------
                                                                  8,474     8,233
                                                                 ------    ------
     Net deferred tax liability................................  $4,882    $5,354
                                                                 ======    ======
</Table>

Income tax expense for the years ended December 31, was as follows:

<Table>
<Caption>
                                                                  2001      2002      2003
                                                                 ------    ------    ------
   <S>                                                           <C>       <C>       <C>
   Current expense.............................................  $    -    $1,556    $2,028
   Deferred expense............................................       -        93       450
                                                                 ------    ------    ------
   Total income tax expense....................................  $    -    $1,649    $2,478
                                                                 ======    ======    ======
</Table>

There was no income tax expense associated with the discontinued operations.

The differences between the federal income tax statutory rate and the Company's
effective income tax rate is as follows:

<Table>
<Caption>
                                                                 2001     2002     2003
                                                                 -----    -----    -----
   <S>                                                           <C>      <C>      <C>
   Statutory federal income tax rate...........................   34.0%    34.0%    34.0%
   Income not subject to federal income taxes..................  (34.0)   (25.3)   (29.6)
   Other--net..................................................    0.0      0.5     (0.3)
                                                                 -----    -----    -----
   Effective income tax rate...................................    0.0%     9.2%     4.1%
                                                                 =====    =====    =====
</Table>

Prior to 1988, KCC purchased assets that entitled it to an investment tax credit
as a reduction against its federal income tax liability. For financial reporting
purposes, this credit was deferred and is being amortized to income over the
useful lives of the assets acquired. Amortization of deferred amounts was
approximately $41 and $46 in 2002 and 2003, respectively.

11.  PENSION AND EMPLOYEE BENEFITS

The Company sponsors a qualified pension plan and a postretirement benefit plan
for the union employees. The pension plan is noncontributory. The Company's
postretirement health care plans are generally contributory and include a limit
on the Company's share of the cost for recent and future retirees. The Company
accrues the costs, as determined by an actuary, of the pension and the
postretirement benefits over the period from the date of hire until the date the
employee becomes fully eligible for benefits.

                                       F-20
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The following tables provide a reconciliation of the changes in the plans'
benefit obligations and fair value of plan assets for the years ended December
31, 2001, 2002 and 2003 and a statement of funded status as of December 31,
2001, 2002 and 2003:

<Table>
<Caption>
                                       PENSION BENEFITS          OTHER POSTRETIREMENT BENEFITS
                                 -----------------------------   -----------------------------
                                  2001       2002       2003      2001       2002       2003
                                 -------   --------   --------   -------   --------   --------
   <S>                           <C>       <C>        <C>        <C>       <C>        <C>
   CHANGE IN PROJECTED BENEFIT
     OBLIGATION:
   Benefit obligation at
     January 1.................  $33,095   $ 34,541   $ 45,168   $ 7,997   $  9,188   $ 12,751
   Benefit obligation assumed
     as part of the KCC
     acquisition...............        -      3,449          -         -          -          -
   Service cost................    1,676      2,363      3,027       210        349        394
   Interest cost...............    2,471      2,764      2,883       603        739        882
   Actuarial loss..............    2,583      6,058      8,601       407      2,177      1,602
   Effect of special
     termination benefits......        -        669          -         -        532          -
   Benefits paid...............   (5,284)    (4,676)    (3,697)      (29)      (234)      (243)
                                 -------   --------   --------   -------   --------   --------
   Projected benefit obligation
     at December 31............  $34,541   $ 45,168   $ 55,982   $ 9,188   $ 12,751   $ 15,386
                                 =======   ========   ========   =======   ========   ========
   CHANGE IN PLAN ASSETS:
   Fair value of plan assets at
     January 1.................  $32,273   $ 25,479   $ 21,649   $     -   $      -   $      -
   Plan assets acquired as part
     of the KCC acquisition....        -      3,505          -         -          -          -
   Actual return on plan
     assets....................   (1,510)    (2,975)     4,096         -          -          -
   Employer contributions......        -        316      2,700        29        234        243
   Benefits paid...............   (5,284)    (4,676)    (3,697)      (29)      (234)      (243)
                                 -------   --------   --------   -------   --------   --------
   Fair value of plan assets at
     December 31...............  $25,479   $ 21,649   $ 24,748   $     -   $      -          -
                                 =======   ========   ========   =======   ========   ========
   Funded status as of December
     31........................  $(9,062)  $(23,519)  $(31,234)  $(9,188)  $(12,751)  $(15,386)
   Unrecognized net actuarial
     loss......................    6,233     17,939     23,864       378      2,553      4,181
   Adjustment required to
     recognize additional
     minimum liability.........        -     (4,650)    (7,704)        -          -          -
                                 -------   --------   --------   -------   --------   --------
   Accrued benefit cost........  $(2,829)  $(10,230)  $(15,074)  $(8,810)  $(10,198)  $(11,205)



                                 =======   ========   ========   =======   ========   ========
</Table>

The accumulated benefit obligation for the pension plan was $23,499, $31,869 and
$39,813 as of December 31, 2001, 2002 and 2003, respectively.

The accrued benefit cost is reflected in "Deferred credits and other
liabilities" on the Company's Consolidated Balance Sheet (see Note 9). The
Company's investment policy is to invest 55-75% of the pension assets in equity
funds with the remainder being invested in fixed income funds and cash
equivalents. Effective January 1, 2003, the Company selected a new Trustee and
Investment Manager for the pension plan.

                                       F-21
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The following table shows the asset allocations at December 31, 2002 and 2003,
by asset category:

<Table>
<Caption>
   ASSET CATEGORY                                                2002   2003
   --------------                                                ----   ----
   <S>                                                           <C>    <C>
   Broad Market Stock Index Fund...............................    -     61%
   International Stock Index Fund..............................    -     11
   Bond Index Fund.............................................    -     28
   Domestic Equity Mutual Funds................................   45%     -
   International Equity Mutual Funds...........................   11      -
   Fixed Income Mutual Funds...................................   44      -
                                                                 ---    ---
   Total.......................................................  100%   100%
                                                                 ===    ===
</Table>

The following table provides an estimate of the benefit payments expected to be
paid during the years ended December 31:

<Table>
<Caption>
                                                                                        OTHER
                                                                                    POSTRETIREMENT
   YEAR                                                          PENSION BENEFITS      BENEFITS
   ----                                                          ----------------   --------------
   <S>                                                           <C>                <C>
   2004........................................................      $ 1,574            $  579
   2005........................................................      $ 2,246            $  703
   2006........................................................      $ 2,953            $  842
   2007........................................................      $ 3,210            $  953
   2008........................................................      $ 3,709            $1,044
   2009-2013...................................................      $28,270            $6,544
</Table>

The Company expects to contribute $4,694 to its pension plan and $579 to its
other postretirement benefits plan in 2004.

The following table provides the components of net periodic benefit cost for the
years ended December 31, 2001, 2002 and 2003:

<Table>
<Caption>
                                               PENSION BENEFITS          OTHER POSTRETIREMENT BENEFITS
                                          ---------------------------   -------------------------------
                                           2001      2002      2003      2001       2002        2003
                                          -------   -------   -------   -------   ---------   ---------
   <S>                                    <C>       <C>       <C>       <C>       <C>         <C>
   Service cost.........................  $ 1,676   $ 2,363   $ 3,027    $210      $  349      $  394
   Interest cost........................    2,471     2,764     2,883     603         739         882
   Expected return on plan assets.......   (2,724)   (2,693)   (2,159)      -           -           -
   Amortization of loss.................        -        20       738       -          31         155
   Special termination benefits.........        -       669         -       -         532           -
   Early retirement window true-up......        -         -         -       -           -        (180)
   Settlement loss......................      640         -         -       -           -           -
                                          -------   -------   -------    ----      ------      ------
   Net periodic benefit cost............  $ 2,063   $ 3,123   $ 4,489    $813      $1,651      $1,251
                                          =======   =======   =======    ====      ======      ======
</Table>

The weighted-average assumptions used in measuring the Company's benefit
obligations as of December 31, 2002 and 2003, respectively, are as follows:

<Table>
<Caption>
                                                                                       OTHER
                                                                                  POSTRETIREMENT
                                                              PENSION BENEFITS       BENEFITS
                                                              -----------------   ---------------
                                                               2002      2003      2002     2003
                                                              -------   -------   ------   ------
   <S>                                                        <C>       <C>       <C>      <C>
   Discount rate............................................   6.50%     6.05%     6.50%    6.05%
   Expected return on plan assets...........................   8.50%     8.50%        -        -
   Rate of compensation increase............................   4.50%     4.50%        -        -
</Table>

                                       F-22
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The assumed health care cost trend rate is 10.0% and 9.0% in 2003 and 2004,
respectively, and is assumed to decrease gradually to an ultimate rate of 5.0%
in the year 2008.

A one percentage point change in the assumed health care cost trend rate would
have the following effects on the Company's other postretirement benefits:

<Table>
<Caption>
                                                                 1% INCREASE   1% DECREASE
                                                                 -----------   -----------
   <S>                                                           <C>           <C>
   Effect on 2003 service and interest costs...................      $ 2          $ (3)
   Effect on postretirement benefit obligations as of December
     31, 2003..................................................      $30          $(36)
</Table>

The Company also sponsors an employee savings plan under Section 401(k) of the
Internal Revenue Code. The plan covers all employees. Under the plan, the
Company provides matching contributions based on qualified employee
contributions. Matching contributions charged to expense were $1,634, $2,026 and
$1,840 during the years ended December 31, 2001, 2002 and 2003, respectively.

12.  COMMITMENTS AND CONTINGENCIES

The Company has operating leases covering primarily buildings and land. Total
rental expense was $4,136, $4,020 and $4,578 in 2001, 2002 and 2003,
respectively. At December 31, 2003, rental commitments under noncancelable
leases are as follows:

<Table>
<Caption>
                                                                 AGGREGATE
   YEAR                                                           AMOUNTS
   ----                                                          ---------
   <S>                                                           <C>
   2004........................................................   $ 2,257
   2005........................................................     2,244
   2006........................................................     2,156
   2007........................................................     1,820
   2008........................................................     1,824
   Thereafter..................................................     2,873
                                                                  -------
   Total.......................................................   $13,174
                                                                  =======
</Table>

The Company has various commitments for capital expenditures of $35,852 at
December 31, 2003, of which $15,803 is related to the 2004 capital budget.
Capital expenditures were $107,869, $89,527 and $69,850, for the years ended
December 31, 2001, 2002 and 2003, respectively. Additionally, the Company has
unfulfilled contractual commitments for miscellaneous services at December 31,
2003 of $87,852. These commitments extend through December 31, 2006.

In the normal course of business, there are various legal proceedings
outstanding, including both commercial and regulatory litigation. In the opinion
of management, these proceedings will not have a material adverse effect on the
results of operations or financial condition of the Company.

The Company has a collective bargaining agreement with the Local 6171 and Local
7019 of the Communications Workers of America. This agreement provides for
annual or semi-annual wage increases for these employees and an annual incentive
compensation bonus depending on performance results. The current contracts will
expire on February 28, 2005 and February 14, 2006.

13.  REDEEMABLE PREFERRED INTERESTS

The Company has two classes of Redeemable Preferred Interests: Class A and Class
B. The carrying amount of the Redeemable Preferred Interests equals
approximately the amount of cash that would be

                                       F-23
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

paid under the conditions specified in the Partnership Agreement if settlement
of the Redeemable Preferred Interests had occurred at December 31, 2003 and
2002.

Information about the Redeemable Preferred Interests is as follows:

<Table>
<Caption>
                                                                     DECEMBER 31,
                                                                 --------------------
                                                                   2002        2003
                                                                 --------    --------
   <S>                                                           <C>         <C>
   Class A: 500,000,000 interests authorized, 370,231,350
     interests outstanding at December 31, 2003 and 2002.......  $370,231    $370,231
   Class B: 29,305,106 interests authorized, 28,582,606
     interests outstanding at December 31, 2003 and 2002.......         -           -
                                                                 --------    --------
        Total Redeemable Preferred Interests...................  $370,231    $370,231
                                                                 ========    ========
</Table>

In 1999, VTC authorized the issuance of 353,119,750 Class A preferred interests
and 22,505,106 Class B preferred interests. On January 1, 2002, the LLC
agreement for VTC was amended to reflect total authorized Class A preferred
interests of 500,000,000 and total authorized Class B preferred interests of
29,305,106.

The Class A and Class B preferred interests have no stated or par value.
365,733,249 of the Class A preferred interests were issued for aggregate
proceeds of $365,542 or approximately $1 per preferred interest. The balance of
4,498,101 Class A preferred interests were issued to the founders of the Company
in connection with the Company's formation in 1999. Additionally, 22,505,106
Class B preferred interests were issued to the founders of the Company in
connection with the Company's formation in 1999. No cash proceeds were received
for the issuance of the founder's interests. No cash proceeds were received by
the Company for the issuance of the Class B preferred interests.

Changes in the number of Class B interests outstanding are as follows:

<Table>
<Caption>
                                                                 YEARS ENDED DECEMBER 31,
                                                                 -------------------------
                                                                    2002          2003
                                                                 -----------   -----------
   <S>                                                           <C>           <C>
   Interests outstanding, beginning............................   22,505,106    28,582,606
   Interests issued pursuant to Valor Telecom Executive
     Incentive Plan (see Note 15)..............................    6,077,500             -
                                                                 -----------   -----------
   Total Class B preferred interests outstanding...............   28,582,606    28,582,606
                                                                 ===========   ===========
</Table>

These Class A and Class B Preferred Interests are not entitled to receive
dividends and have no voting rights. These interests are redeemable in whole or
in part at the option of the Company and all interests may be redeemed by
September 3, 2011, subject to the restrictions set forth in the Senior Credit
Agreement and the Partnership Agreement, at an amount up to the "Preferred
Appreciation Amount" plus the "Class A Preferred Capital Amount" (both defined
below). Currently, restrictions in the Senior Credit Agreement prevent any
distribution to the holders of the preferred interests in regards to redemption
or liquidation.

Upon the occurrence of a liquidation event, the entire net assets of the Company
available to be distributed among the holders of common and preferred interests,
other than those net assets attributable to Southwest II, shall be distributed
first, ratably among the holders of the Class A preferred interests, based on,
and up to the maximum amount of the "Class A Preferred Capital Amount" which is
defined in the Partnership Agreement as $1.00 per interest. The second order of
distribution provides that to the extent there are any net assets remaining
after the first order of distribution, there shall be a ratable distribution
among the holders of the Class A common interests, based on, and up to the
maximum amount of the "Class A Common Capital Amount" which is defined in the
Partnership Agreement as $1.00 per interest.

                                       F-24
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Next, to the extent there are any net assets remaining after the second order of
distribution, there shall be a ratable allocation among the holders of the Class
A preferred interests and the Class B preferred interests, based on, and up to
the maximum amount of, the "Preferred Appreciation Amount". The "Preferred
Appreciation Amount", per preferred interest holder, is defined as an
appreciation amount calculated as interest on the "Class A Preferred Capital
Amount", or $1 per interest, at a rate of 20% per year, compounded quarterly.

The sum of the "Preferred Appreciation Amount" and the "Class A Preferred
Capital Amount" is $757,855 at December 31, 2003.

14.  COMMON OWNERS' EQUITY

The outstanding Class A common interests, Class B common interests, and Class C
interests have no stated or par value. Each of the Class A common interests and
Class C interests are entitled to one vote. Dividends may be paid based on
certain restrictions related to the preferred interests. Any dividends must be
paid in equal amounts on the Class A and Class B common interests out of
proceeds associated with operations from sources other than Southwest II.
Dividends paid on the Class C interests must arise from proceeds attributable to
the Southwest II operations.

In the event of a liquidation of the Southwest operations, the holders of the
Class A common interests are entitled to $1.00 per interest, (or, if less, the
amount of the related capital contribution paid for such interest), after the
effects of distributions (other than dividends) and share ratably with the Class
B common interest holders in the remaining net assets available for
distribution.

In the event of a liquidation of the Southwest II operations, the holders of the
Class C interests are entitled to $1.00 per interest, (or, if less, the amount
of the related capital contribution paid for such interest), after the effects
of distributions (other than dividends) and share ratably in the remaining net
assets available for distribution.

                                       F-25
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

15.  STOCK OPTIONS

EQUITY INCENTIVE NON-QUALIFYING STOCK OPTIONS

In 1999, Southwest (a majority-owned subsidiary of the Company) reserved
9,000,000 Class B common interests for issuance to employees of the Company in
accordance with the Valor Telecommunications Southwest, LLC 2000 Equity
Incentive Non-Qualifying Option Agreement (the Plan). The vesting period for
these options ranges from immediate to 5 years and the options expire 10 years
after the date of grant. The weighted average remaining life of the options
outstanding at December 31, 2003 is 6.8 years. The options are granted at the
$1.00 stated price of the Class B common interests. The stated price is
equivalent to the estimated fair value of the interests.

<Table>
<Caption>
   STOCK OPTIONS                                                  NUMBER OF OPTIONS*
   -------------                                                  ------------------
   <S>                                                            <C>
   Options outstanding, January 1, 2001........................          4,120
   Options granted.............................................            264
   Forfeited options...........................................           (124)
                                                                        ------
   Options outstanding, December 31, 2001......................          4,260
   Options granted.............................................            862
   Forfeited options...........................................           (405)
                                                                        ------
   Options outstanding, December 31, 2002......................          4,717
   Options granted.............................................            465
   Forfeited options...........................................            (60)
                                                                        ------
   Options outstanding, December 31, 2003......................          5,122
                                                                        ======
   Exercisable options at December 31, 2001....................          1,538
                                                                        ======
   Exercisable options at December 31, 2002....................          2,323
                                                                        ======
   Exercisable options at December 31, 2003....................          3,383
                                                                        ======
</Table>

---------------------------
* Number of options expressed in thousands.

The fair value for each of the Company's options was estimated at the date of
grant using a Black-Scholes option pricing model and the following weighted
average assumptions for 2001, 2002 and 2003:

<Table>
<Caption>
                                                                 2001   2002   2003
                                                                 ----   ----   ----
   <S>                                                           <C>    <C>    <C>
   Dividend yield..............................................     0%     0%     0%
   Volatility factor...........................................     0      0      0
   Risk-free interest rate.....................................  5.14%  5.19%  4.05%
   Expected life in years......................................    10     10     10
</Table>

In 2000, the Company granted an Equity Incentive Non-Qualifying Stock Option to
one of its key executives in the amount of 300,000 Class A Common Interests and
1,700,000 Class A Preferred Interests of VTC. The options vested immediately and
was granted at a $1.00 stated price. The stated price is equivalent to the
estimated fair value of the interests. This option was exercisable at December
31, 2001, 2002 and 2003.

PHANTOM STOCK UNITS

The Valor Telecom Executive Incentive Plan was implemented on April 1, 2002, and
allows for awards of up to 1,200,000 Class B Common Interests and 6,800,000
Class B Preferred Interests (collectively, Phantom Stock Units) to selected
executive employees of VTC and its subsidiaries. These interests allow
                                       F-26
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

the selected executives to participate in the appreciation on a pro-rata basis
with the Class A Preferred Interests and Class A Common Interests held by the
Equity Sponsors and Individual Investors. In accordance with Financial
Accounting Interpretation No. 28, "Accounting for Stock Appreciation Rights and
Other Variable Stock Option or Award Plans", the amount by which the market
value of these Phantom Stock Units exceeds the value specified under the plan is
charged to compensation expense over the vesting period. Certain of the awards
vested 20% immediately and 20% on January 1 for each of the following 4 years.
The remaining awards vest evenly over 5 years from the date the award was
granted. Unvested units are subject to cancellation upon expiration or
termination of employment. For the years ended December 31, 2002 and 2003 the
Phantom Stock Units were deemed to have no value and thus no compensation
expense was recorded during those periods. VTC issued 1,072,500 Class B Common
and 6,077,500 Class B Preferred units to the Executive Incentive Plan in 2002.
These units were granted to Executives as follows:

<Table>
<Caption>
                                                                    PHANTOM STOCK
                                                                   NUMBER OF UNITS
                                                                     IN THOUSANDS
                                                                 --------------------
                                                                 CLASS B     CLASS B
                                                                 COMMON     PREFERRED
                                                                 -------    ---------
   <S>                                                           <C>        <C>
   Units outstanding, January 1, 2002..........................       -           -
   Units granted...............................................   1,073       6,078
   Forfeited units.............................................       -           -
                                                                  -----       -----
   Units outstanding, December 31, 2002........................   1,073       6,078
   Units granted...............................................       -           -
   Forfeited units.............................................       -           -
                                                                  -----       -----
   Units outstanding, December 31, 2003........................   1,073       6,078
                                                                  =====       =====
     Vested units at December 31, 2002.........................     180       1,020
                                                                  =====       =====
     Vested units at December 31, 2003.........................     395       2,236
                                                                  =====       =====
</Table>

16.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:

CASH AND CASH EQUIVALENTS--The carrying amount approximates fair value because
of the short maturity of these instruments.

RTFC EQUITY CERTIFICATE--It is not practicable to estimate the fair value of
this investment because there is no quoted market price

DEBT--The fair value of long-term debt was estimated based on the Company's
current incremental borrowing rate for debt of the same remaining maturities.

INTEREST RATE SWAP AND COLLAR AGREEMENT--The Company's interest rate swap and
collar agreements do not qualify for hedge accounting under SFAS No. 133,
therefore, they are carried at fair market value.

                                       F-27
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The estimated fair value of the Company's financial instruments is as follows:

<Table>
<Caption>
                                                                  CARRYING
   DECEMBER 31, 2002                                               AMOUNT      FAIR VALUE
   -----------------                                             ----------    ----------
   <S>                                                           <C>           <C>
   Financial liabilities:
   Long-term debt, including current maturities................  $1,544,285    $1,623,474
   Interest rate swap agreement................................  $    8,159    $    8,159
   Interest rate collar agreement..............................  $    9,195    $    9,195
</Table>

<Table>
<Caption>
                                                                  CARRYING
   DECEMBER 31, 2003                                               AMOUNT      FAIR VALUE
   -----------------                                             ----------    ----------
   <S>                                                           <C>           <C>
   Financial liabilities:
   Long-term debt, including current maturities................  $1,463,973    $1,522,847
   Interest rate swap agreement................................  $    4,189    $    4,189
   Interest rate collar agreement..............................  $    4,678    $    4,678
</Table>

17.  OFF BALANCE SHEET RISK AND CONCENTRATION OF CREDIT RISK

Certain financial instruments potentially subject the Company to concentrations
of credit risk. These financial instruments consist primarily of trade
receivables, cash and cash equivalents and derivatives.

The Company places its cash and temporary cash investments with high credit
quality financial institutions and limits the amount of credit exposure to any
one financial institution. The Company also periodically evaluates the credit
worthiness of the institutions with which it invests. The Company does, however,
maintain unsecured cash and cash equivalent balances in excess of federally
insured limits.

18.  RELATED PARTY TRANSACTIONS

The Company had the following transactions with related parties:

<Table>
<Caption>
                                                                   YEAR ENDED DECEMBER 31
                                                                -----------------------------
                                                                 2001       2002       2003
                                                                -------    -------    -------
   <S>                                                          <C>        <C>        <C>
   Issuance of additional note principal in lieu of cash
     interest payments to the Sponsors for Subordinated
     Debt.....................................................  $29,025    $32,612    $17,788
   Interest paid to the Sponsors for Subordinated Debt........        -          -     15,713
   Management fees paid to the Sponsors for advisory
     services.................................................    1,000      1,000      1,000
   Fees paid to investors for transaction advisory services...        -      1,300          -
   Various professional fees paid to certain Sponsors and
     Individual Investors.....................................      295        282        228
   Revenue earned from wireless affiliates....................        -        472        489
</Table>

The Company had the following balances with related parties:

<Table>
<Caption>
                                                                     DECEMBER 31
                                                                 --------------------
                                                                   2002        2003
                                                                 --------    --------
   <S>                                                           <C>         <C>
   Senior Subordinated Debt owed to the Sponsors...............  $296,469    $314,257
   Receivable from wireless affiliates for management services
     and facility leases.......................................     1,000         342
   Payable to the Sponsors for management fees.................       500         500
</Table>

Under the terms of the CGKC&H partnership agreement, the general partners have
designated the Company to act as the operating partner of CGKC&H. The agreement
provides that the Company is to be

                                       F-28
<PAGE>
                         VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

reimbursed for all reasonable and necessary expenses incurred on behalf of
CGKC&H. During 2002 and 2003, the Company was reimbursed approximately $987 and
$958, respectively, from CGKC&H for these services.

19.  RESTRUCTURING CHARGES

In December 2002, the Company eliminated 81 positions as a result of a
restructuring of the Company's workforce. The Company recorded $1,768 of expense
primarily for termination benefits for employees whose jobs were eliminated. The
Company had a subsequent restructuring of December 2003 resulting in the
elimination of 15 additional positions. The Company recorded $141 of expense for
termination benefits for these 15 employees. As of December 31, 2003,
approximately $184 of the obligation for termination benefits remains and the
Company expects this amount to be paid in 2004. The following table provides a
reconciliation of the changes in the termination benefits obligation for the
years ended December 31, 2003 and 2002:

<Table>
<Caption>
                                                              2002            2003            TOTAL
           LIABILITY FOR TERMINATION BENEFITS             RESTRUCTURING   RESTRUCTURING   RESTRUCTURING
           ----------------------------------             -------------   -------------   -------------
<S>                                                       <C>             <C>             <C>
Termination benefits recorded in 2002...................     $1,768           $ --           $1,768
Payments in 2002........................................       (297)            --             (297)
                                                             ------           ----           ------
Balance, December 31, 2002..............................      1,471             --            1,471
Termination benefits recorded in 2003...................         --            141              141
Payments in 2003........................................     (1,405)           (23)          (1,428)
                                                             ------           ----           ------
Balance, December 31, 2003..............................     $   66           $118           $  184
                                                             ======           ====           ======
</Table>

20.  GUARANTOR SUBSIDIARIES

The subordinated notes expected to be issued in connection with Valor's proposed
issuance of income deposit securities will be guaranteed by all of the Valor's
existing subsidiaries (the "guarantor subsidiaries"). Existing subsidiaries
include VTC, Southwest including its operating entities, and Southwest II
including its operating entities. Valor has no independent assets or operations.
Separate financial information has not been presented for the guarantor
subsidiaries because the guarantor subsidiaries will effectively comprise all of
Valor's assets and operations.

                                       F-29
<PAGE>

--------------------------------------------------------------------------------

                        VALOR COMMUNICATIONS GROUP, INC.

                                      IDSS

                          ---------------------------
                                   PROSPECTUS
                          ---------------------------

                                          , 2004

                               CIBC WORLD MARKETS

                              MERRILL LYNCH & CO.

                                LEHMAN BROTHERS

                         BANC OF AMERICA SECURITIES LLC

                                    JPMORGAN

--------------------------------------------------------------------------------

UNTIL           , 2004, ALL DEALERS THAT BUY, SELL OR TRADE OUR IDSS, WHETHER OR
NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS REQUIREMENT IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
<PAGE>

                         VALOR TELECOMMUNICATIONS, LLC

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

<Table>
<Caption>
                                                                  ADDITIONS
                                 ----------------------------------------------------------------------------
                                 BALANCE AT BEGINNING   CHARGED TO COSTS AND   CHARGED TO OTHER                 BALANCE AT END OF
DESCRIPTION                           OF PERIOD               EXPENSES             ACCOUNTS       DEDUCTIONS         PERIOD
-----------                      --------------------   --------------------   ----------------   -----------   -----------------
<S>                              <C>                    <C>                    <C>                <C>           <C>
YEAR ENDED DECEMBER 31, 2001
Allowance for doubtful
  accounts -- customers........      $(7,049,640)           $(11,078,719)        $(1,398,667)     $15,229,114      $(4,297,912)
Allowance for doubtful
  accounts -- carriers and
  other........................         (400,000)               (300,000)           (100,000)              --         (800,000)
                                     -----------            ------------         -----------      -----------      -----------
    Total......................      $(7,449,640)           $(11,378,719)        $(1,498,667)     $15,229,114      $(5,097,912)
                                     ===========            ============         ===========      ===========      ===========
YEAR ENDED DECEMBER 31, 2002
Allowance for doubtful
  accounts -- customers........      $(4,297,912)           $ (6,064,222)        $   (52,377)     $ 6,417,285      $(3,997,226)
Allowance for doubtful
  accounts -- carriers and
  other........................         (800,000)             (5,329,090)           (200,000)       5,536,105         (792,985)
                                     -----------            ------------         -----------      -----------      -----------
    Total......................      $(5,097,912)           $(11,393,312)        $  (252,377)     $11,953,390      $(4,790,211)
                                     ===========            ============         ===========      ===========      ===========
YEAR ENDED DECEMBER 31, 2003
Allowance for doubtful
  accounts -- customers........      $(3,997,226)           $ (3,160,384)                         $ 4,485,432      $(2,672,178)
Allowance for doubtful
  accounts -- carriers and
  other........................         (792,985)               (137,789)                 --          278,914         (651,860)
                                     -----------            ------------         -----------      -----------      -----------
    Total......................      $(4,790,211)           $ (3,298,173)        $         0      $ 4,764,346      $(3,324,038)
                                     ===========            ============         ===========      ===========      ===========
</Table>

                                       S-1
<PAGE>

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than underwriting
discounts and commissions, payable by Valor Communications Group, Inc. in
connection with the offer and sale of the securities being registered. All
amounts are estimates except the SEC registration fee and the NASD filing fee.

<Table>
   <S>                                                           <C>
   SEC registration fee........................................  $110,863
   NASD filing fee.............................................    30,500
            listing fee........................................         *
   Toronto Stock Exchange listing fee (IDSs)...................   160,500
   Toronto Stock Exchange listing fee (Common Stock)...........   160,500
   Transfer agent's fee........................................    30,000
   Trustee's fee...............................................    15,000
   Printing and engraving costs................................         *
   Legal fees and expenses.....................................         *
   Accounting fees and expenses................................         *
   Miscellaneous...............................................         *
        Total..................................................         *
</Table>

---------------------------

* To be filed by amendment.

ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

Delaware. The General Corporation Law of the State of Delaware ("DGCL")
authorizes corporations to limit or eliminate the personal liability of
directors to corporations and their stockholders for monetary damages for
breaches of directors' fiduciary duties. The certificates of incorporation of
the Delaware registrants include a provision that eliminates the personal
liability of directors for monetary damages for actions taken as a director,
except for liability for breach of duty of loyalty; for acts or omissions not in
good faith or involving intentional misconduct or knowing violation of law;
under Section 174 of the DGCL (unlawful dividends and stock repurchases); or for
transactions from which the director derived improper personal benefit.

The certificates of incorporation of the Delaware registrants provide that these
registrants must indemnify their directors and officers to the fullest extent
authorized by the DGCL and must also pay expenses incurred in defending any such
proceeding in advance of its final disposition upon delivery of an undertaking,
by or on behalf of an indemnified person, to repay all amounts so advanced if it
should be determined ultimately that such person is not entitled to be
indemnified under this section or otherwise.

The indemnification rights set forth above shall not be exclusive of any other
right which an indemnified person may have or hereafter acquire under any
statute, provision of our amended and restated certificate of incorporation, our
by laws, agreement, vote of stockholders or disinterested directors or
otherwise.

Valor Communications Group, Inc. maintains insurance to protect itself and its
directors and, officers and those of its subsidiaries against any such expense,
liability or loss, whether or not it would have the power to indemnify them
against such expense, liability or loss under applicable law.

Texas. Article 2.02-1 of the Texas Business Corporation Act (the "TBCA")
provides that a director of a Texas corporation may be indemnified against
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by him in connection with any action, suit or proceeding in which he
was, is, or is threatened to be made a named defendant by reason of his position
as director or officer, provided that

                                       II-1
<PAGE>

he conducted himself in good faith and reasonably believed that, in the case of
conduct in his official capacity as a director or officer of the corporation,
such conduct was in the corporation's best interests; and, in all other cases,
that such conduct was at least not opposed to the corporation's best interests.
If a director is found liable to the corporation or is found liable on the basis
that personal benefit was improperly received by the person, the indemnification
is limited to reasonable expenses actually incurred by the person in connection
with the proceeding and shall not be made in respect of any proceeding in which
the person shall have been found liable for willful or intentional misconduct in
the performance of his duty to the corporation. In the case of a criminal
proceeding, a director or officer may be indemnified only if he had no
reasonable cause to believe his conduct was unlawful. If a director or officer
is wholly successful, on the merits or otherwise, in connection with such a
proceeding, such indemnification is mandatory.

The TBCA further provides that a corporation may indemnify and advance expenses
to an officer, employee or agent of the corporation, and to those who are not or
were not officers, employees or agents but who are or were serving at the
request of the corporation, to the same extent that it may indemnify and advance
expenses to directors.

ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES

The registrant was formed in February 2004 and has not issued any securities.
Simultaneously with the consummation of the offering of the securities being
registered hereby, the registrant will issue an aggregate of      shares of its
Class B common stock in connection with its reorganization. This issuance will
be made in reliance upon Section 4(2) of the Securities Act of 1933, as amended
and Regulation D promulgated thereunder and will not involve any underwriters,
underwriting discounts or commissions, or any public offering. The persons and
entities who will receive such securities have represented their intention to
acquire these securities for investment only and not with a view to or for sale
in connection with any distribution thereof, and appropriate legends will be
affixed to any share certificates issued. All recipients have adequate access
through their relationship with us to information about us.

ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)  Exhibits. The following exhibits are filed as part of this Registration
Statement.

<Table>
   <C>      <S>
    1.1     Form of Underwriting Agreement.*
    3.1     Amended and Restated Certificate of Incorporation of Valor
            Communications Group, Inc.*
    3.2     Certificate of Formation of Valor Telecommunications, LLC.*
    3.3     Certificate of Formation of Valor Telecommunications of
            Texas, LP.*
    3.4     Certificate of Formation of Valor Telecommunications
            Equipment, LP.*
    3.5     Certificate of Formation of Valor Telecommunications
            Services, LP.*
    3.6     Certificate of Formation of Valor Telecommunications
            Investments, LLC.*
    3.7     Certificate of Formation of Valor Telecommunications
            Enterprises, LLC.*
    3.8     Certificate of Formation of Valor Telecommunications LD,
            LP.*
    3.9     Certificate of Formation of Southwest Enhanced Network
            Services, LP.*
    3.10    Certificate of Formation of Western Access Services, LLC.*
    3.11    Certificate of Formation of Western Access Services of
            Arizona, LLC.*
    3.12    Certificate of Formation of Western Access Services of
            Arkansas, LLC.*
    3.13    Certificate of Formation of Western Access Services of
            Colorado, LLC.*
    3.14    Certificate of Formation of Western Access Services of
            Oklahoma, LLC.*
</Table>

                                       II-2
<PAGE>

<Table>
<Caption>
   .15  3   Certificate of Formation of Western Access Services of New Mexico, LLC.*
   <C>      <S>
    3.16    Certificate of Formation of Western Access Services of Texas, LP.*
    3.17    Certificate of Formation of Valor Telecommunications Corporate Group,
            LP.*
    3.18    Certificate of Formation of Valor Telecommunications Southwest II, LP.*
    3.19    Certificate of Formation of Valor Telecommunications Enterprises II,
            LLC.*
    3.20    Certificate of Incorporation of Kerrville Communications Corporation.*
    3.21    Certificate of Formation of Kerrville Communications Management, LLC.*
    3.22    Certificate of Formation of Kerrville Communications Enterprises, LLC.*
    3.23    Certificate of Formation of Advanced Tel-Com Systems, LP.*
    3.24    Certificate of Formation of Kerrville Telephone, LP.*
    3.25    Certificate of Formation of Kerrville Cellular, LP.*
    3.26    Certificate of Formation of KCC TelCom, LP.*
    3.27    Certificate of Formation of Kerrville Cellular Management, LLC.*
    3.28    Certificate of Formation of Kerrville Cellular Holdings, LLC.*
    3.29    Certificate of Formation of Kerrville Mobile Holdings, Inc.*
    3.30    Certificate of Formation of Kerrville Wireless Holdings, LP.*
    3.31    By-Laws of Valor Communications Group, Inc.*
    3.32    Second Amended and Restated Limited Liability Agreement of Valor
            Telecommunications, LLC, dated January 31, 2002, by and among the
            members named therein.*
    3.33    Limited Partnership Operating Agreement of Valor Telecommunications of
            Texas, LP.*
    3.34    Limited Partnership Operating Agreement of Valor Telecommunications
            Equipment, LP.*
    3.35    Limited Partnership Operating Agreement of Valor Telecommunications
            Services, LP.*
    3.36    Limited Liability Company Operating Agreement of Valor
            Telecommunications Investments, LLC.*
    3.37    Limited Liability Company Operating Agreement of Valor
            Telecommunications Enterprises, LLC.*
    3.38    Limited Partnership Operating Agreement of Valor Telecommunications LD,
            LP.*
    3.39    Limited Partnership Operating Agreement of Southwest Enhanced Network
            Services, LP.*
    3.40    Limited Liability Company Operating Agreement of Western Access
            Services, LLC.*
    3.41    Limited Liability Company Operating Agreement of Western Access Services
            of Arizona, LLC.*
    3.42    Limited Liability Company Operating Agreement of Western Access Services
            of Arkansas, LLC.*
    3.43    Limited Liability Company Operating Agreement of Western Access Services
            of Colorado, LLC.*
    3.44    Limited Liability Company Operating Agreement of Western Access Services
            of Oklahoma, LLC.*
    3.45    Limited Liability Company Operating Agreement of Western Access Services
            of New Mexico, LLC*
    3.46    Limited Partnership Operating Agreement of Western Access Services of
            Texas, LP.*
</Table>

                                       II-3
<PAGE>
<Table>
   <C>      <S>
    3.47    Limited Partnership Operating Agreement of Valor
            Telecommunications Corporate Group, LP.*
    3.48    Amended and Restated Limited Liability Agreement of Valor
            Telecommunications Southwest II, LLC, dated January 31,
            2002, by and among the members named therein.*
    3.49    Limited Liability Company Operating Agreement of Valor
            Telecommunications Enterprises II, LLC.*
    3.50    By-laws of Kerrville Communications Corporation.*
    3.51    Limited Liability Company Operating Agreement of Kerrville
            Communications Management, LLC.*
    3.52    Limited Liability Company Operating Agreement of Kerrville
            Communications Enterprises, LLC.*
    3.53    Limited Partnership Operating Agreement of Advanced Tel-Com
            Systems, LP.*
    3.54    Limited Partnership Operating Agreement of Kerrville
            Telephone, LP.*
    3.55    Limited Partnership Operating Agreement of Kerrville
            Cellular, LP.*
    3.56    Limited Partnership Operating Agreement of KCC TelCom, LP.*
    3.57    Limited Liability Company Operating Agreement of Kerrville
            Cellular Management, LLC.*
    3.58    Limited Liability Company Operating Agreement of Kerrville
            Cellular Holdings, LLC.*
    3.59    Bylaws of Kerrville Mobile Holdings, Inc.*
    3.60    Limited Liability Company Operating Agreement of Kerrville
            Wireless Holdings, LP.*
    4.1     Form of Indenture, among Valor Communications Group, Inc.,
            the guarantors thereto and         , as Trustee.*
    4.2     Form of Senior Subordinated Note (included in Exhibit 4.1).*
    4.3     Form of Registration Rights Agreement.*
    4.4     Form of stock certificate for common stock.*
    4.5     Form of global IDS.*
    5.1     Opinion of Kirkland & Ellis LLP.*
    5.2     Opinion of Cynthia Ayers, Esq.*
    8.1     Opinion of Kirkland & Ellis LLP.*
   10.1     Valor Communications Group, Inc. 2004 Long-Term Incentive
            Plan.*
   10.2     Valor Communications Group, Inc. Annual Incentive
            Compensation Plan.*
   10.3     Valor Telecommunications Southwest, LLC Savings Plan.*
   10.4     Valor Telecommunications Enterprises, LLC Pension Plan.*
   10.5     Telecommunications Services Agreement, dated as of September
            30, 2000, by and between Valor Telecommunications
            Enterprises, LLC and MCI Worldcom Network Services, Inc.
            (the "Telecommunications Services Agreement").+
   10.6     Amendment No. 1 to the Telecommunications Services
            Agreement, dated as of September 4, 2001, by and between
            Valor Telecommunications Enterprises, LLC and MCI Worldcom
            Network Services, Inc.+
   10.7     Amendment No. 2 to the Telecommunications Services
            Agreement, dated as of September 18, 2001, by and between
            Valor Telecommunications Enterprises, LLC and MCI Worldcom
            Network Services, Inc.+
</Table>

                                       II-4
<PAGE>

<Table>
<Caption>
   .8  10   Amendment No. 3 to the Telecommunications Services Agreement, dated as of January 2,
            2002, by and between Valor Telecommunications Enterprises, LLC and MCI Worldcom
            Network Services, Inc.+
   <C>      <S>
   10.9     Amendment No. 4 to the Telecommunications Services Agreement, dated as of March 5,
            2002, by and between Valor Telecommunications Enterprises, LLC and MCI Worldcom
            Network Services, Inc.+
   10.10    Amendment No. 5 to the Telecommunications Services Agreement, dated as of May 28,
            2002, by and between Valor Telecommunications Enterprises, LLC and MCI Worldcom
            Network Services, Inc.+
   10.11    Amendment No. 6 to the Telecommunications Services Agreement, dated as of March 26,
            2003, by and between Valor Telecommunications Enterprises, LLC and MCI Worldcom
            Network Services, Inc.+
   10.12    Amendment No. 7 to the Telecommunications Services Agreement, dated as of May 8,
            2003, by and between Valor Telecommunications Enterprises, LLC and MCI Worldcom
            Network Services, Inc.+
   10.13    Amendment No. 8 to the Telecommunications Services Agreement, dated as of July 16,
            2003, by and between Valor Telecommunications, LLC and MCI Worldcom Network
            Services, Inc.+
   10.14    Amendment No. 9 to the Telecommunications Services Agreement, dated as of November
            4, 2003, by and between Valor Telecommunications, LLC and MCI Worldcom Network
            Services, Inc.+
   10.15    Amendment No. 10 to the Telecommunications Services Agreement, dated as of December
            16, 2003, by and between Valor Telecommunications Enterprises, LLC and MCI Worldcom
            Network Services, Inc.+
   10.16    Master Services Agreement, dated as of December 9, 1999 by and between Valor
            Telecommunications Enterprises, LLC (as successor to Valor Telecommunications South-
            west, LLC, as successor to dba Communications, LLC and Alltel Information Services,
            Inc. (the "Master Services Agreement")+
   10.17    First Amendment to Master Services Agreement, dated as of April 1, 2000, by and
            between Valor Telecommunications Enterprises, LLC (as successor to Valor
            Telecommunications Southwest, LLC, as successor to dba Communications, LLC and
            Alltel Information Services, Inc.+
   10.18    Second Amendment to the Master Services Agreement, dated as of April 1, 2000, by and
            between Valor Telecommunications Enterprises, LLC (as successor to Valor
            Telecommunications Southwest, LLC, as successor to dba Communications, LLC) and
            Alltel Information Services, Inc.+
   10.19    Third Amendment to the Master Services Agreement, dated as of July 1, 2000, by and
            between Valor Telecommunications Enterprises, LLC (as successor to Valor
            Telecommunications Southwest, LLC, as successor to dba Communications, LLC) and
            Alltel Information Services, Inc.+
   10.20    Fourth Amendment to the Master Services Agreement, dated as of July 24, 2000, by and
            between Valor Telecommunications Enterprises, LLC (as successor to Valor
            Telecommunications Southwest, LLC, as successor to dba Communications, LLC) and
            Alltel Information Services, Inc.+
   10.21    Fifth Amendment to the Master Services Agreement, dated as of January 18, 2001, by
            and between Valor Telecommunications Enterprises, LLC (as successor to Valor
            Telecommunications Southwest, LLC, as successor to dba Communications, LLC) and
            Alltel Information Services, Inc.+
</Table>

                                       II-5
<PAGE>
<Table>
   <C>      <S>
   10.22    Sixth Amendment to the Master Services Agreement, dated as
            of January 2001 to the Master Services Agreement by and
            between Valor Telecommunications Enterprises, LLC and Alltel
            Information Services, Inc.+
   10.23    Seventh Amendment, dated as of April 1, 2002 to the Master
            Services Agreement, by and between Valor Telecommunications
            Enterprises, LLC (as successor to Valor Telecommunications
            Southwest, LLC, as successor to dba Communications LLC) and
            Alltel Information Services, Inc.+
   10.24    Eighth Amendment, dated as of April 1, 2002 to the Master
            Services Agreement, dated as of December 9, 1999 by and
            between Valor Telecommunications Enterprises, LLC and Alltel
            Information Services, Inc.+
   10.25    Sprint Wholesale Services Data and Private Line Agreement,
            dated as of February 20, 2003, between Sprint Communications
            Company L.P. and Valor Telecommunications Enterprises, LLC.+
   10.26    Wholesale Solutions Switched Services Agreement, dated as of
            August 11, 2003, by and between Sprint Communications
            Company L.P. and Valor Telecommunications Enterprises, LLC.+
   10.27    First Amendment to Wholesale Solutions Switched Services
            Data and Private Line Agreement, dated as of October 3,
            2003, between Sprint Communications Company L.P. and Valor
            Telecommunications Enterprises, LLC.+
   10.28    Employment Agreement, dated as of June 18, 2000, by and
            between Valor Telecommunications, LLC and Kenneth R. Cole.
   10.29    Amendment One to Employment Agreement, dated as of January
            2, 2002, by and between Valor Telecommunications, LLC and
            Kenneth R. Cole.
   10.30    Employment Agreement, dated as of January 2, 2002, by and
            between Valor Telecommunications, LLC and John J. Mueller.
   10.31    Employment Agreement, dated as of March 20, 2000, by and
            between Valor Telecommunications, LLC and John A. Butler.
   10.32    Employment Agreement, dated as of November 13, 2000, by and
            between Valor Telecommunications, LLC and William M. Ojile,
            Jr.
   10.33    Amendment One to Employment Agreement, dated as of January
            2, 2002, by and between Valor Telecommunications, LLC and
            William M. Ojile, Jr.*
   10.34    Employment Agreement, dated as of February 28, 2000, by and
            between Valor Telecommunications, LLC and W. Grant Raney.
   10.35    Amendment One to Employment Agreement, dated as of January
            2, 2002, by and between Valor Telecommunications, LLC and W.
            Grant Raney.
   23.1     Consent and report on schedule of Deloitte & Touche LLP.
   23.2     Consent of Kirkland & Ellis LLP (included in Exhibit 5.1).*
   23.3     Consent of Kirkland & Ellis LLP (included in Exhibit 8.1).*
   24.1     Powers of Attorney (included on signature page).
   25.1     Form T-1 Statement of Eligibility under Trust Indenture Act
            of 1939, as amended, of   as Trustee.*
</Table>

---------------------------

* To be filed by amendment.

+ A request for confidential treatment was filed for portions of this document.
  Confidential portions have been omitted and filed separately with the
  Securities and Commission as required by Rule 406.

                                       II-6
<PAGE>

(b)  Financial Statement Schedules

ITEM 17.  UNDERTAKINGS

1.  The undersigned registrant hereby undertakes to provide to the underwriters
    at the closing specified in the underwriting agreements, certificates in
    such denominations and registered in such names as required by the
    underwriters to permit prompt delivery to each purchaser.

2.  Insofar as indemnification for liabilities arising under the Securities Act
    may be permitted to directors, officers, and controlling persons of the
    registrant pursuant to the foregoing provisions, or otherwise, the
    registrant has been advised that in the opinion of the SEC such
    indemnification is against public policy as expressed in the Securities Act
    and is therefore unenforceable. In the event that a claim for
    indemnification by the registrant against such liabilities, other than the
    payment by the registrant of expenses incurred or paid by a director,
    officer or controlling person of the registrant in the successful defense of
    any action, suit or proceeding, is asserted by such director, officer or
    controlling person in connection with the securities being registered, the
    registrant will, unless in the opinion of its counsel the matter has been
    settled by controlling precedent, submit to a court of appropriate
    jurisdiction the question whether such indemnification by it is against
    public policy as expressed in the Act and will be governed by the final
    adjudication of such issue.

3.  The undersigned registrant hereby undertakes that

    (1)  For purposes of determining any liability under the Securities Act, the
         information omitted from the form of prospectus filed as part of this
         registration statement in reliance upon Rule 430A and contained in a
         form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
         or (4) or 497(h) under the Securities Act shall be deemed to be part of
         this registration statement as of the time it was declared effective.

    (2)  For the purpose of determining any liability under the Securities Act,
         each post-effective amendment that contains a form of prospectus shall
         be deemed to be a new registration statement relating to the securities
         offered therein, and the offering of such securities at that time shall
         be deemed to be the initial bona fide offering thereof.

                                       II-7
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR COMMUNICATIONS GROUP, INC.

                                          By: /s/ JOHN J. MUELLER
                                            ------------------------------------
                                              Name: John J. Mueller
                                              Title:   President and Chief
                                                       Executive Officer

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John Butler and William Ojile Jr. his
or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Communications Group, Inc.) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                 /s/ JOHN BUTLER                        Executive Vice President and Chief Financial
 ------------------------------------------------        Officer (Principal Financial and Accounting
                   John Butler                                            Officer)


             /s/ ANTHONY J. DE NICOLA                               Chairman and Director
 ------------------------------------------------
               Anthony J. de Nicola


               /s/ KENNETH R. COLE                               Vice Chairman and Director
 ------------------------------------------------
                 Kenneth R. Cole
</Table>

                                       II-8
<PAGE>

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----

<S>     <C>                                           <C>

                 /s/ SANJAY SWANI                                         Director
 ------------------------------------------------
                   Sanjay Swani


                 /s/ TODD KHOURY                                          Director
 ------------------------------------------------
                   Todd Khoury
</Table>

                                       II-9
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS, LLC

                                          By: /s/ JOHN J. MUELLER
                                            ------------------------------------
                                              Name: John J. Mueller
                                              Title:   Chief Executive Officer

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications, LLC) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                           Chief Executive Officer and Manager
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                      Executive Vice President and Chief Financial
 ------------------------------------------------        Officer (Principal Financial and Accounting
                  John A. Butler                                          Officer)

               /s/ ANNE K. BINGAMAN                                        Manager
 ------------------------------------------------
                 Anne K. Bingaman

             /s/ ANTHONY J. DE NICOLA                                      Manager
 ------------------------------------------------
               Anthony J. de Nicola

                 /s/ SEAN TRAYNOR                                          Manager
 ------------------------------------------------
                   Sean Traynor

                 /s/ SANJAY SWANI                                          Manager
 ------------------------------------------------
                   Sanjay Swani

                /s/ MICHAEL SMALL                                          Manager
 ------------------------------------------------
                  Michael Small

                 /s/ TODD KHOURY                                           Manager
 ------------------------------------------------
                   Todd Khoury

                /s/ FEDERICO PENA                                          Manager
 ------------------------------------------------
                  Federico Pena
</Table>

                                      II-10
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS OF TEXAS, LP

                                          By: Valor Telecommunications
                                              Enterprises, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:   Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications of Texas, LP) to sign any or
all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
</Table>

                                      II-11
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS EQUIPMENT, LP

                                          By: Valor Telecommunications
                                              Enterprises, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:   Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications Equipment, LP) to sign any
or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
</Table>

                                      II-12
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS SERVICES, LP

                                          By: Valor Telecommunications
                                              Enterprises, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications Services, LP) to sign any or
all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
</Table>

                                      II-13
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS INVESTMENTS,
                                          LLC

                                          By: Valor Telecommunications
                                              Enterprises, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications Investments, LLC) to sign
any or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                        SIGNATURE                                           TITLE
                        ---------                                           -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
</Table>

                                      II-14
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS ENTERPRISES,
                                          LLC

                                          By: Valor Telecommunications
                                              Southwest, LLC
                                          Its: Sole Member

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications Enterprises, LLC) to sign
any or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
</Table>

                                      II-15
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS LD, LP

                                          By: Valor Telecommunications
                                          Enterprises, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications LD, LP) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
</Table>

                                      II-16
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          SOUTHWEST ENHANCED NETWORK SERVICES,
                                          LP

                                          By: Valor Telecommunications
                                          Enterprises, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Southwest Enhanced Network Services, LP) to sign any
or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
</Table>

                                      II-17
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          WESTERN ACCESS SERVICES, LLC

                                          By: Valor Telecommunications
                                          Enterprises, LLC
                                          Its: Sole Member

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Western Access Services, LLC) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
</Table>

                                      II-18
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          WESTERN ACCESS SERVICES OF ARIZONA,
                                          LLC

                                          BY: WESTERN ACCESS SERVICES, LLC
                                          ITS: SOLE MEMBER

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Western Access Services of Arizona, LLC) to sign any
or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
</Table>

                                      II-19
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          WESTERN ACCESS SERVICES OF ARKANSAS,
                                          LLC

                                          BY: WESTERN ACCESS SERVICES, LLC
                                          ITS: SOLE MEMBER

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Western Access Services of Arkansas, LLC) to sign any
or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
</Table>

                                      II-20
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          WESTERN ACCESS SERVICES OF COLORADO,
                                          LLC

                                          By: Western Access Services, LLC
                                          Its: Sole Member

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Western Access Services of Colorado, LLC) to sign any
or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
</Table>

                                      II-21
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          WESTERN ACCESS SERVICES OF OKLAHOMA,
                                          LLC

                                          By: Western Access Services, LLC
                                          Its: Sole Member

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Western Access Services of Oklahoma, LLC) to sign any
or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)

</Table>

                                      II-22
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                         WESTERN ACCESS SERVICES OF NEW MEXICO,
                                         LLC

                                         By: Western Access Services, LLC
                                         Its: Sole Member

                                         By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                             Name: William M. Ojile, Jr.
                                             Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Western Access Services of New Mexico, LLC) to sign
any or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                            and
                  John A. Butler                                          Treasurer
                                                        (Principal Financial and Accounting Officer)
</Table>

                                      II-23
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          WESTERN ACCESS SERVICES OF TEXAS, LP

                                          By: Western Access Services, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Western Access Services of Texas, LP) to sign any or
all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
</Table>

                                      II-24
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS CORPORATE
                                          GROUP, LP

                                          By: Valor Telecommunications
                                          Enterprises, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications Corporate Group, LP) to sign
any or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
</Table>

                                      II-25
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS SOUTHWEST II,
                                          LP

                                          By: /s/ JOHN J. MUELLER
                                            ------------------------------------
                                              Name: John J. Mueller
                                              Title:  Chief Executive Officer

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications Southwest II, LP) to sign
any or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
          SIGNATURE                                     TITLE
          ---------                                     -----
<S>                                  <C>



     /s/ JOHN J. MUELLER                 Chief Executive Officer and Director
------------------------------              (Principal Executive Officer)
       John J. Mueller




      /s/ JOHN A. BUTLER                              Treasurer
------------------------------       (Principal Financial and Accounting Officer)
        John A. Butler




   /s/ ANTHONY J. DE NICOLA                            Director
------------------------------
     Anthony J. de Nicola




       /s/ SANJAY SWANI                                Director
------------------------------
         Sanjay Swani




     /s/ JOHN J. MUELLER                               Director
------------------------------
       John J. Mueller




       /s/ TODD KHOURY                                 Director
------------------------------
         Todd Khoury
</Table>

                                      II-26
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                        VALOR TELECOMMUNICATIONS ENTERPRISES II,
                                        LLC

                                        By: Valor Telecommunications Southwest
                                            II, LLC
                                        Its: Sole Member

                                        By: /s/ WILLIAM M. OJILE, JR.
                                           -------------------------------------
                                            Name: William M. Ojile, Jr.
                                            Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications Enterprises II, LLC) to sign
any or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
                    SIGNATURE                                               TITLE
                    ---------                                               -----
<S>     <C>                                           <C>

               /s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller


                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
</Table>

                                      II-27
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE COMMUNICATIONS CORPORATION

                                          By: /s/ JOHN J. MUELLER
                                            ------------------------------------
                                              Name: John J. Mueller
                                              Title:  Chief Executive Officer

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Communications Corporation) to sign any or
all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
          SIGNATURE                                     TITLE
          ---------                                     -----
<S>                                  <C>



     /s/ JOHN J. MUELLER                 Chief Executive Officer and Director
------------------------------              (Principal Executive Officer)
       John J. Mueller




      /s/ JOHN A. BUTLER                        Treasurer and Director
------------------------------       (Principal Financial and Accounting Officer)
        John A. Butler
</Table>

                                      II-28
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE COMMUNICATIONS MANAGEMENT,
                                          LLC

                                          By: Kerrville Communications
                                          Corporation
                                          Its: Sole Member

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Communications Management, LLC) to sign any
or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
          SIGNATURE                                     TITLE
          ---------                                     -----
<S>                                  <C>



     /s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller




      /s/ JOHN A. BUTLER                     Executive Vice President and
------------------------------                 Chief Financial Officer
        John A. Butler               (Principal Financial and Accounting Officer)
</Table>

                                      II-29
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE COMMUNICATIONS ENTERPRISES,
                                          LLC

                                          By: Kerrville Communications
                                          Corporation
                                          Its: Sole Member

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Communications Enterprises, LLC) to sign
any or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
          SIGNATURE                                     TITLE
          ---------                                     -----
<S>                                  <C>



     /s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller




      /s/ JOHN A. BUTLER                     Executive Vice President and
------------------------------                 Chief Financial Officer
        John A. Butler               (Principal Financial and Accounting Officer)
</Table>

                                      II-30
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          ADVANCED TEL-COM SYSTEMS, LP

                                          By: Kerrville Communications
                                          Management, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Advanced Tel-Com Systems, LP) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
          SIGNATURE                                     TITLE
          ---------                                     -----
<S>                                  <C>



     /s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller




      /s/ JOHN A. BUTLER                              Treasurer
------------------------------       (Principal Financial and Accounting Officer)
        John A. Butler
</Table>

                                      II-31
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE TELEPHONE, LP

                                          By: Kerrville Communications
                                          Management, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Telephone, LP) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
          SIGNATURE                                     TITLE
          ---------                                     -----
<S>                                  <C>



     /s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller




      /s/ JOHN A. BUTLER                              Treasurer
------------------------------       (Principal Financial and Accounting Officer)
        John A. Butler
</Table>

                                      II-32
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE CELLULAR, LP

                                          By: Kerrville Communications
                                          Management, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Cellular, LP) to sign any or all amendments
(including post-effective amendments) to this registration statement and any
subsequent registration statement filed pursuant to Rule 462 (b) under the
Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
          SIGNATURE                                     TITLE
          ---------                                     -----
<S>                                  <C>



     /s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller




      /s/ JOHN A. BUTLER                     Executive Vice President and
------------------------------                 Chief Financial Officer
        John A. Butler               (Principal Financial and Accounting Officer)
</Table>

                                      II-33
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KCC TELCOM, LP

                                          By: Kerrville Communications
                                          Management, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of KCC TelCom, LP) to sign any or all amendments
(including post-effective amendments) to this registration statement and any
subsequent registration statement filed pursuant to Rule 462 (b) under the
Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
          SIGNATURE                                     TITLE
          ---------                                     -----
<S>                                  <C>



     /s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller




      /s/ JOHN A. BUTLER                              Treasurer
------------------------------       (Principal Financial and Accounting Officer)
        John A. Butler
</Table>

                                      II-34
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE CELLULAR MANAGEMENT, LLC

                                          By: Kerrville Cellular, LP
                                          Its: Sole Member

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Cellular Management, LLC) to sign any or
all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
          SIGNATURE                                     TITLE
          ---------                                     -----
<S>                                  <C>



     /s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller




      /s/ JOHN A. BUTLER                     Executive Vice President and
------------------------------                 Chief Financial Officer
        John A. Butler               (Principal Financial and Accounting Officer)
</Table>

                                      II-35
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE CELLULAR HOLDINGS, LLC

                                          By: Kerrville Cellular, LP
                                          Its: Sole Member

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Cellular Holdings, LLC) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
          SIGNATURE                                     TITLE
          ---------                                     -----
<S>                                  <C>



     /s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller




      /s/ JOHN A. BUTLER                     Executive Vice President and
------------------------------                 Chief Financial Officer
        John A. Butler               (Principal Financial and Accounting Officer)
</Table>

                                      II-36
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE MOBILE HOLDINGS, INC.

                                          By: /s/ JOHN J. MUELLER
                                            ------------------------------------
                                              Name: John J. Mueller
                                              Title:  Chief Executive Officer

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Mobile Holdings, Inc.) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
          SIGNATURE                                     TITLE
          ---------                                     -----
<S>                                  <C>



     /s/ JOHN J. MUELLER                 Chief Executive Officer and Director
------------------------------              (Principal Executive Officer)
       John J. Mueller




      /s/ JOHN A. BUTLER                        Treasurer and Director
------------------------------       (Principal Financial and Accounting Officer)
        John A. Butler
</Table>

                                      II-37
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE WIRELESS HOLDINGS, LP

                                          By: Kerrville Cellular Management, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Wireless Holdings, LP) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.

<Table>
<Caption>
          SIGNATURE                                     TITLE
          ---------                                     -----
<S>                                  <C>



     /s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller




      /s/ JOHN A. BUTLER                     Executive Vice President and
------------------------------                 Chief Financial Officer
        John A. Butler               (Principal Financial and Accounting Officer)
</Table>

                                      II-38
<PAGE>

                                 EXHIBIT INDEX

<Table>
<Caption>
EXHIBIT
  NO.                        DESCRIPTION OF EXHIBIT
-------                      ----------------------
<C>       <S>
  1.1     Form of Underwriting Agreement.*
  3.1     Amended and Restated Certificate of Incorporation of Valor
          Communications Group, Inc.*
  3.2     Certificate of Formation of Valor Telecommunications, LLC.*
  3.3     Certificate of Formation of Valor Telecommunications of
          Texas, LP.*
  3.4     Certificate of Formation of Valor Telecommunications
          Equipment, LP.*
  3.5     Certificate of Formation of Valor Telecommunications
          Services, LP.*
  3.6     Certificate of Formation of Valor Telecommunications
          Investments, LLC.*
  3.7     Certificate of Formation of Valor Telecommunications
          Enterprises, LLC.*
  3.8     Certificate of Formation of Valor Telecommunications LD,
          LP.*
  3.9     Certificate of Formation of Southwest Enhanced Network
          Services, LP.*
  3.10    Certificate of Formation of Western Access Services, LLC.*
  3.11    Certificate of Formation of Western Access Services of
          Arizona, LLC.*
  3.12    Certificate of Formation of Western Access Services of
          Arkansas, LLC.*
  3.13    Certificate of Formation of Western Access Services of
          Colorado, LLC.*
  3.14    Certificate of Formation of Western Access Services of
          Oklahoma, LLC.*
  3.15    Certificate of Formation of Western Access Services of New
          Mexico, LLC.*
  3.16    Certificate of Formation of Western Access Services of
          Texas, LP.*
  3.17    Certificate of Formation of Valor Telecommunications
          Corporate Group, LP.*
  3.18    Certificate of Formation of Valor Telecommunications
          Southwest II, LLC.*
  3.19    Certificate of Formation of Valor Telecommunications
          Enterprises II, LLC.*
  3.20    Certificate of Incorporation of Kerrville Communications
          Corporation.*
  3.21    Certificate of Formation of Kerrville Communications
          Management, LLC.*
  3.22    Certificate of Formation of Kerrville Communications
          Enterprises, LLC.*
  3.23    Certificate of Formation of Advanced Tel-Com Systems, LP.*
  3.24    Certificate of Formation of Kerrville Telephone, LP.*
  3.25    Certificate of Formation of Kerrville Cellular, LP.*
  3.26    Certificate of Formation of KCC TelCom, LP.*
  3.27    Certificate of Formation of Kerrville Cellular Management,
          LLC.*
  3.28    Certificate of Formation of Kerrville Cellular Holdings,
          LLC.*
  3.29    Certificate of Formation of Kerrville Mobile Holdings, Inc.*
  3.30    Certificate of Formation of Kerrville Wireless Holdings,
          LP.*
  3.31    By-Laws of Valor Communications Group, Inc.*
  3.32    Second Amended and Restated Limited Liability Agreement of
          Valor Telecommunications, LLC, dated January 31, 2002, by
          and among the members named therein.*
  3.33    Limited Partnership Operating Agreement of Valor
          Telecommunications of Texas, LP.*
  3.34    Limited Partnership Operating Agreement of Valor
          Telecommunications Equipment, LP.*
  3.35    Limited Partnership Operating Agreement of Valor
          Telecommunications Services, LP.*
  3.36    Limited Liability Company Operating Agreement of Valor
          Telecommunications Investments, LLC.*
  3.37    Limited Liability Company Operating Agreement of Valor
          Telecommunications Enterprises, LLC.*
  3.38    Limited Partnership Operating Agreement of Valor
          Telecommunications LD, LP.*
  3.39    Limited Partnership Operating Agreement of Southwest
          Enhanced Network Services, LP.*
</Table>
<PAGE>

<Table>
<Caption>
EXHIBIT
  NO.                        DESCRIPTION OF EXHIBIT
-------                      ----------------------
<C>       <S>
  3.40    Limited Liability Company Operating Agreement of Western
          Access Services, LLC.*
  3.41    Limited Liability Company Operating Agreement of Western
          Access Services of Arizona, LLC.*
  3.42    Limited Liability Company Operating Agreement of Western
          Access Services of Arkansas, LLC.*
  3.43    Limited Liability Company Operating Agreement of Western
          Access Services of Colorado, LLC.*
  3.44    Limited Liability Company Operating Agreement of Western
          Access Services of Oklahoma, LLC.*
  3.45    Limited Liability Company Operating Agreement of Western
          Access Services of New Mexico, LLC*
  3.46    Limited Partnership Operating Agreement of Western Access
          Services of Texas, LP.*
  3.47    Limited Partnership Operating Agreement of Valor
          Telecommunications Corporate Group, LP.*
  3.48    Amended and Restated Limited Liability Agreement of Valor
          Telecommunications Southwest II, LLC, dated January 31,
          2002, by and among the members named therein.*
  3.49    Limited Liability Company Operating Agreement of Valor
          Telecommunications Enterprises II, LLC.*
  3.50    By-laws of Kerrville Communications Corporation.*
  3.51    Limited Liability Company Operating Agreement of Kerrville
          Communications Management, LLC.*
  3.52    Limited Liability Company Operating Agreement of Kerrville
          Communications Enterprises, LLC.*
  3.53    Limited Partnership Operating Agreement of Advanced Tel-Com
          Systems, LP.*
  3.54    Limited Partnership Operating Agreement of Kerrville
          Telephone, LP.*
  3.55    Limited Partnership Operating Agreement of Kerrville
          Cellular, LP.*
  3.56    Limited Partnership Operating Agreement of KCC TelCom, LP.*
  3.57    Limited Liability Company Operating Agreement of Kerrville
          Cellular Management, LLC.*
  3.58    Limited Liability Company Operating Agreement of Kerrville
          Cellular Holdings, LLC.*
  3.59    Bylaws of Kerrville Mobile Holdings, Inc.*
  3.60    Limited Liability Company Operating Agreement of Kerrville
          Wireless Holdings, LP.*
  4.1     Form of Indenture, among Valor Communications Group, Inc.,
          the guarantors thereto and         , as Trustee.*
  4.2     Form of Senior Subordinated Note (included in Exhibit 4.1).*
  4.3     Form of Registration Rights Agreement.*
  4.4     Form of stock certificate for common stock.*
  4.5     Form of global IDS.*
  5.1     Opinion of Kirkland & Ellis LLP.*
  5.2     Opinion of Cynthia Ayers, Esq.*
  8.1     Opinion of Kirkland & Ellis LLP.*
 10.1     Valor Communications Group, Inc. 2004 Long-Term Incentive
          Plan.*
 10.2     Valor Communications Group, Inc. Annual Incentive
          Compensation Plan.*
 10.3     Valor Telecommunications Southwest, LLC Savings Plan.*
 10.4     Valor Telecommunications Enterprises, LLC Pension Plan.*
 10.5     Telecommunications Services Agreement, dated as of September
          30, 2000, by and between Valor Telecommunications
          Enterprises, LLC and MCI Worldcom Network Services, Inc.
          (the "Telecommunications Services Agreement").+
</Table>
<PAGE>

<Table>
<Caption>
EXHIBIT
  NO.                        DESCRIPTION OF EXHIBIT
-------                      ----------------------
<C>       <S>
 10.6     Amendment No. 1 to the Telecommunications Services
          Agreement, dated as of September 4, 2001, by and between
          Valor Telecommunications Enterprises, LLC and MCI Worldcom
          Network Services, Inc.+
 10.7     Amendment No. 2 to the Telecommunications Services
          Agreement, dated as of September 18, 2001, by and between
          Valor Telecommunications Enterprises, LLC and MCI Worldcom
          Network Services, Inc.+
 10.8     Amendment No. 3 to the Telecommunications Services
          Agreement, dated as of January 2, 2002, by and between Valor
          Telecommunications Enterprises, LLC and MCI Worldcom Network
          Services, Inc.+
 10.9     Amendment No. 4 to the Telecommunications Services
          Agreement, dated as of March 5, 2002, by and between Valor
          Telecommunications Enterprises, LLC and MCI Worldcom Network
          Services, Inc.+
 10.10    Amendment No. 5 to the Telecommunications Services
          Agreement, dated as of May 28, 2002, by and between Valor
          Telecommunications Enterprises, LLC and MCI Worldcom Network
          Services, Inc.+
 10.11    Amendment No. 6 to the Telecommunications Services
          Agreement, dated as of March 26, 2003, by and between Valor
          Telecommunications Enterprises, LLC and MCI Worldcom Network
          Services, Inc.+
 10.12    Amendment No. 7 to the Telecommunications Services
          Agreement, dated as of May 8, 2003, by and between Valor
          Telecommunications Enterprises, LLC and MCI Worldcom Network
          Services, Inc.+
 10.13    Amendment No. 8 to the Telecommunications Services
          Agreement, dated as of July 16, 2003, by and between Valor
          Telecommunications, LLC and MCI Worldcom Network Services,
          Inc.+
 10.14    Amendment No. 9 to the Telecommunications Services
          Agreement, dated as of November 4, 2003, by and between
          Valor Telecommunications, LLC and MCI Worldcom Network
          Services, Inc.+
 10.15    Amendment No. 10 to the Telecommunications Services
          Agreement, dated as of December 16, 2003, by and between
          Valor Telecommunications Enterprises, LLC and MCI Worldcom
          Network Services, Inc.+
 10.16    Master Services Agreement, dated as of December 9, 1999 by
          and between Valor Telecommunications Enterprises, LLC (as
          successor to Valor Telecommunications Southwest, LLC, as
          successor to dba Communications, LLC and Alltel Information
          Services, Inc. (the "Master Services Agreement")+
 10.17    First Amendment to Master Services Agreement, dated as of
          April 1, 2000, by and between Valor Telecommunications
          Enterprises, LLC (as successor to Valor Telecommunications
          Southwest, LLC, as successor to dba Communications, LLC and
          Alltel Information Services, Inc.+
 10.18    Second Amendment to the Master Services Agreement, dated as
          of April 1, 2000, by and between Valor Telecommunications
          Enterprises, LLC (as successor to Valor Telecommunications
          Southwest, LLC, as successor to dba Communications, LLC) and
          Alltel Information Services, Inc.+
 10.19    Third Amendment to the Master Services Agreement, dated as
          of July 1, 2000, by and between Valor Telecommunications
          Enterprises, LLC (as successor to Valor Telecommunications
          Southwest, LLC, as successor to dba Communications, LLC) and
          Alltel Information Services, Inc.+
 10.20    Fourth Amendment to the Master Services Agreement, dated as
          of July 24, 2000, by and between Valor Telecommunications
          Enterprises, LLC (as successor to Valor Telecommunications
          Southwest, LLC, as successor to dba Communications, LLC) and
          Alltel Information Services, Inc.+
</Table>
<PAGE>

<Table>
<Caption>
EXHIBIT
  NO.                        DESCRIPTION OF EXHIBIT
-------                      ----------------------
<C>       <S>
 10.21    Fifth Amendment to the Master Services Agreement, dated as
          of January 18, 2001, by and between Valor Telecommunications
          Enterprises, LLC (as successor to Valor Telecommunications
          Southwest, LLC, as successor to dba Communications, LLC) and
          Alltel Information Services, Inc.+
 10.22    Sixth Amendment to the Master Services Agreement, dated as
          of January 2001 to the Master Services Agreement by and
          between Valor Telecommunications Enterprises, LLC and Alltel
          Information Services, Inc.+
 10.23    Seventh Amendment, dated as of April 1, 2002 to the Master
          Services Agreement, by and between Valor Telecommunications
          Enterprises, LLC (as successor to Valor Telecommunications
          Southwest, LLC, as successor to dba Communications LLC) and
          Alltel Information Services, Inc.+
 10.24    Eighth Amendment, dated as of April 1, 2002 to the Master
          Services Agreement, dated as of December 9, 1999 by and
          between Valor Telecommunications Enterprises, LLC and Alltel
          Information Services, Inc.+
 10.25    Sprint Wholesale Services Data and Private Line Agreement,
          dated as of February 20, 2003, between Sprint Communications
          Company L.P. and Valor Telecommunications Enterprises, LLC.+
 10.26    Wholesale Solutions Switched Services Agreement, dated as of
          August 11, 2003, by and between Sprint Communications
          Company L.P. and Valor Telecommunications Enterprises, LLC.+
 10.27    First Amendment to Wholesale Solutions Switched Services
          Agreement, dated as of October 3, 2003, between Sprint
          Communications Company L.P. and Valor Telecommunications
          Enterprises, LLC.+
 10.28    Employment Agreement, dated as of June 18, 2000, by and
          between Valor Telecommunications, LLC and Kenneth R. Cole.
 10.29    Amendment One to Employment Agreement, dated as of January
          2, 2002, by and between Valor Telecommunications, LLC and
          Kenneth R. Cole.
 10.30    Employment Agreement, dated as of January 2, 2002, by and
          between Valor Telecommunications, LLC and John J. Mueller.
 10.31    Employment Agreement, dated as of March 20, 2000, by and
          between Valor Telecommunications, LLC and John A. Butler.
 10.32    Employment Agreement, dated as of November 13, 2000, by and
          between Valor Telecommunications, LLC and William M. Ojile,
          Jr.
 10.33    Amendment One to Employment Agreement, dated as of January
          2, 2002, by and between Valor Telecommunications, LLC and
          William M. Ojile, Jr.*
 10.34    Employment Agreement, dated as of February 28, 2000, by and
          between Valor Telecommunications, LLC and W. Grant Raney.
 10.35    Amendment One to Employment Agreement, dated as of January
          2, 2002, by and between Valor Telecommunications, LLC and W.
          Grant Raney.
 23.1     Consent and report on schedule of Deloitte & Touche LLP.
 23.2     Consent of Kirkland & Ellis LLP (included in Exhibit 5.1).*
 23.3     Consent of Kirkland & Ellis LLP (included in Exhibit 8.1).*
 24.1     Powers of Attorney (included on signature page).
 25.1     Form T-1 Statement of Eligibility under Trust Indenture Act
          of 1939, as amended, of as Trustee.*
</Table>

---------------------------

* To be filed by amendment.

+ A request for confidential treatment was filed for portions of this document.
  Confidential portions have been omitted and filed separately with the
  Securities and Commission as required by Rule 406.
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"file-number": "333-114298-19", "film-number": "04723449"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "ADVANCED TEL COM SYSTEMS LP", "cik": "0001282297", "irs-number": "742228603", "state-of-incorporation": "TX", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-18", "film-number": "04723448"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "KERRVILLE TELEPHONE LP", "cik": "0001282298", "irs-number": "740724580", "state-of-incorporation": "TX", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-17", "film-number": "04723447"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "KERRVILLE CELLULAR LP", "cik": "0001282299", "irs-number": "742513782", "state-of-incorporation": "TX", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-16", "film-number": "04723446"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "KCC TELCOM LP", "cik": "0001282301", "irs-number": "74295589", "state-of-incorporation": "TX", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-15", "film-number": "04723445"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "KERRVILLE CELLULAR MANAGEMENT LLC", "cik": "0001282302", "irs-number": "510411886", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-14", "film-number": "04723444"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "KERRVILLE CELLULAR HOLDINGS LLC", "cik": "0001282303", "irs-number": "510411889", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-13", "film-number": "04723443"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "KERRVILLE MOBILE HOLDINGS INC", "cik": "0001282305", "irs-number": "743008924", "state-of-incorporation": "TX", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-12", "film-number": "04723442"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "VALOR TELECOMMUNICATIONS INVESTMENTS LLC", "cik": "0001282272", "irs-number": "470902124", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-06", "film-number": "04723435"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "VALOR TELECOMMUNICATIONS ENTERPRISES LLC", "cik": "0001282273", "irs-number": "752884398", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-05", "film-number": "04723434"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "VALOR TELECOMMUNICATIONS LD LP", "cik": "0001282276", "irs-number": "752884847", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-04", "film-number": "04723433"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "SOUTHWEST ENHANCED NETWORK SERVICES LLC", "cik": "0001282277", "irs-number": "752885419", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": 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CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "WESTERN ACCESS SERVICES OF ARKANSAS LLC", "cik": "0001282284", "irs-number": "200081902", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-29", "film-number": "04723459"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "WESTERN ACCESS SERVICES OF COLORADO LLC", "cik": "0001282285", "irs-number": "200081934", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-28", "film-number": "04723458"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "WESTERN ACCESS SERVICES OF OKLAHOMA LLC", "cik": "0001282286", "irs-number": "200081944", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-27", "film-number": "04723457"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "VALOR TELECOMMUNICATIONS CORPORATE GROUP LP", "cik": "0001282290", "irs-number": "752895493", "state-of-incorporation": "TX", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-24", "film-number": "04723454"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "VALOR COMMUNICATIONS GROUP INC", "cik": "0001282266", "irs-number": "200792300", "state-of-incorporation": "TX", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298", "film-number": "04723440"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}, "former-company": {"former-conformed-name": "VALOR TELECOMMUNICATIONS INC", "date-changed": "20040301"}}, {"company-data": {"conformed-name": "VALOR TELECOMMUNICATIONS LLC", "cik": "0001282268", "irs-number": "522171586", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-10", "film-number": "04723439"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "KERRVILLE WIRELESS HOLDINGS LP", "cik": "0001282306", "irs-number": "743012850", "state-of-incorporation": "TX", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-11", "film-number": "04723441"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "VALOR TELECOMMUNICATIONS OF TEXAS LP", "cik": "0001282269", "irs-number": "522194219", "state-of-incorporation": "TX", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-09", "film-number": "04723438"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "VALOR TELECOMMUNICATIONS EQUIPMENT LP", "cik": "0001282270", "irs-number": "752884400", "state-of-incorporation": "TX", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-08", "film-number": "04723437"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}, {"company-data": {"conformed-name": "VALOR TELECOMMUNICATIONS SERVICES LP", "cik": "0001282271", "irs-number": "752884846", "state-of-incorporation": "TX", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-114298-07", "film-number": "04723436"}, "business-address": {"street1": "201 E JOHN CARPENTER FREEWAY", "street2": "SUITE 200", "city": "IRVING", "state": "TX", "zip": "75062", "phone": "9723731000"}}]
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 7, 2004

                                                     REGISTRATION NO. 333-

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------

                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                             ---------------------

                        VALOR COMMUNICATIONS GROUP, INC.
             (Exact Name of Registrant as Specified in its Charter)
                             ---------------------
DELAWARE                             4813                            20-0792300
 (State or other jurisdiction of      (Primary Standard Industrial             (I.R.S. Employer
  incorporation or organization)      Classification Code Number)           Identification Number)
201 E. JOHN CARPENTER FREEWAY, SUITE 200
                              IRVING, TEXAS 75062
                                 (972) 373-1000
  (Address, including zip code, and telephone number, including area code, of
                   Registrant's principal executive offices)

                          WILLIAM M. OJILE, JR., ESQ.
                             SENIOR VICE PRESIDENT,
                        CHIEF LEGAL OFFICER & SECRETARY
                        VALOR COMMUNICATIONS GROUP, INC.
                    201 E. JOHN CARPENTER FREEWAY, SUITE 200
                              IRVING, TEXAS 75062
                                 (972) 373-1000
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
                             ---------------------
                                   COPIES TO:
JOSHUA N. KORFF, ESQ.                             DAVID J. GOLDSCHMIDT, ESQ.
               KIRKLAND & ELLIS LLP                              RICHARD L. MUGLIA, ESQ.
                 CITIGROUP CENTER                        SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
               153 EAST 53RD STREET                                 FOUR TIMES SQUARE
             NEW YORK, NEW YORK 10022                            NEW YORK, NEW YORK 10036
                  (212) 446-4800                                      (212) 735-3000
---------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
                                                        (continued on next page)
                             ---------------------
                        CALCULATION OF REGISTRATION FEE
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
                                                               PROPOSED MAXIMUM
                    TITLE OF EACH CLASS                       AGGREGATE OFFERING       AMOUNT OF
               OF SECURITIES TO BE REGISTERED                      PRICE(1)       REGISTRATION FEE(1)
------------------------------------------------------------------------------------------------------
Income Deposit Securities (IDSs)(2).........................
------------------------------------------------------------------------------------------------------
Class A Common Stock, par value $0.01 per share(3)..........
------------------------------------------------------------------------------------------------------
    % Senior Subordinated Notes due 2014(4).................
------------------------------------------------------------------------------------------------------
Subsidiary Guarantees of % Senior Subordinated Notes due
  2014(5)...................................................
------------------------------------------------------------------------------------------------------
Total.......................................................     $875,000,000           $110,863
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of computing the amount of the registration
    fee pursuant to Rule 457(o) promulgated under the Securities Act of 1933, as
    amended.

(2) The IDSs represent         underlying shares of the Class A common stock and
    $    aggregate principal amount of underlying    % senior subordinated notes
    of Valor Communications Group, Inc. ("Valor"). Includes         IDSs subject
    to the underwriters' over-allotment option and an indeterminate number of
    IDSs of the same series which may be received by holders of IDSs in the
    future on one or more occasions in replacement of the IDSs being offered
    hereby in the event of a subsequent issuance of IDSs, upon an automatic
    exchange of portions of the senior subordinated notes for identical portions
    of such additional notes as discussed in note (4) below.

(3) Represents         shares of Valor's Class A common stock included in the
    IDSs described above.

(4) Includes $    million aggregate principal amount of Valor's    % senior
    subordinated notes included in the IDSs described above and $    million
    principal amount of senior subordinated notes of the same series that will
    be issued separately (not in the form of IDSs). Also includes an
    indeterminate principal amount of notes of the same series as the senior
    subordinated notes, which will be received by holders of senior subordinated
    notes in the future on one or more occasions in the event of a subsequent
    issuance of IDSs, upon an automatic exchange of portions of the senior
    subordinated notes for identical portions of such additional notes.

(5) Each of the subsidiary guarantors listed in the Table of Additional
    Registrants on the next page will guarantee the senior subordinated notes
    represented by the IDSs and the senior subordinated notes of the same series
    that will be issued separately from the IDSs. Pursuant to Rule 457(n) under
    the Securities Act of 1933, no separate fee for the guarantees is payable.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a),
MAY DETERMINE.
(continued from previous page)

If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.  [ ]

If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, please check the following box
and list the Securities Act of 1933 registration statement number of the earlier
effective registration statement for the same offering.  [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, check the following box and list the Securities Act
of 1933 registration statement number of the earlier effective registration
statement for the same offering.  [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act of 1933, check the following box and list the Securities Act
of 1933 registration statement number of the earlier effective registration
statement for the same offering.  [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]
TABLE OF ADDITIONAL REGISTRANT GUARANTORS
ADDRESS INCLUDING ZIP CODE,
                                               STATE OR OTHER                             TELEPHONE NUMBER
                                              JURISDICTION OF    I.R.S. EMPLOYER       INCLUDING AREA CODE OF
EXACT NAME OF REGISTRANT GUARANTOR AS         INCORPORATION OR   IDENTIFICATION        REGISTRANT GUARANTOR'S
SPECIFIED IN ITS CHARTER                        ORGANIZATION         NUMBER         PRINCIPAL EXECUTIVE OFFICES
-------------------------------------         ----------------   ---------------   ------------------------------
Valor Telecommunications, LLC...............      Delaware         52-2171586      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications of Texas, LP.......         Texas         52-2194219      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications Equipment, LP......         Texas         75-2884400      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications Services, LP.......         Texas         75-2884846      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications Investments, LLC...      Delaware         47-0902124      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications Enterprises, LLC...      Delaware         75-2884398      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications LD, LP.............      Delaware         75-2884847      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Southwest Enhanced Network Services, LP.....      Delaware         75-2885419      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Western Access Services, LLC................      Delaware         20-0081823      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Western Access Services of Arizona, LLC.....      Delaware         20-0081863      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Western Access Services of Arkansas, LLC....      Delaware         20-0081902      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
ADDRESS INCLUDING ZIP CODE,
                                               STATE OR OTHER                             TELEPHONE NUMBER
                                              JURISDICTION OF    I.R.S. EMPLOYER       INCLUDING AREA CODE OF
EXACT NAME OF REGISTRANT GUARANTOR AS         INCORPORATION OR   IDENTIFICATION        REGISTRANT GUARANTOR'S
SPECIFIED IN ITS CHARTER                        ORGANIZATION         NUMBER         PRINCIPAL EXECUTIVE OFFICES
-------------------------------------         ----------------   ---------------   ------------------------------
Western Access Services of Colorado, LLC....      Delaware         20-0081934      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Western Access Services of Oklahoma, LLC....      Delaware         20-0081944      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Western Access Services of New Mexico,
  LLC.......................................      Delaware         20-0081922      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Western Access Services of Texas, LP........      Delaware         20-0081952      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications Corporate Group,
  LP........................................         Texas         75-2895493      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications Southwest II,
  LLC.......................................      Delaware         75-2950066      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Valor Telecommunications Enterprises II,
  LLC.......................................      Delaware         75-2950064      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Kerrville Communications Corporation........         Texas         74-2197091      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Kerrville Communications Management, LLC....      Delaware         30-0135974      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Kerrville Communications Enterprises, LLC...      Delaware         32-0047694      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Advanced Tel-Com Systems, LP................         Texas         74-2228603      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Kerrville Telephone, LP.....................         Texas         74-0724580      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
ADDRESS INCLUDING ZIP CODE,
                                               STATE OR OTHER                             TELEPHONE NUMBER
                                              JURISDICTION OF    I.R.S. EMPLOYER       INCLUDING AREA CODE OF
EXACT NAME OF REGISTRANT GUARANTOR AS         INCORPORATION OR   IDENTIFICATION        REGISTRANT GUARANTOR'S
SPECIFIED IN ITS CHARTER                        ORGANIZATION         NUMBER         PRINCIPAL EXECUTIVE OFFICES
-------------------------------------         ----------------   ---------------   ------------------------------
Kerrville Cellular, LP......................         Texas         74-2513782      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
KCC TelCom, LP..............................         Texas         74-2955898      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Kerrville Cellular Management, LLC..........      Delaware         51-0411886      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Kerrville Cellular Holdings, LLC............      Delaware         51-0411889      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Kerrville Mobile Holdings, Inc..............         Texas         74-3008924      201 E. John Carpenter Freeway,
                                                                                   Suite 200
                                                                                   Irving, TX 75062
                                                                                   (972) 373-1000
Kerrville Wireless Holdings, LP.............         Texas         74-3012850      201 E. John Carpenter Freeway,
                                                                                   Suite 200 Irving, TX 75062
                                                                                   (972) 373-1000
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED WITHOUT
NOTICE. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

                   SUBJECT TO COMPLETION, DATED APRIL 7, 2004

                        INCOME DEPOSIT SECURITIES (IDSS)
              $               % SENIOR SUBORDINATED NOTES DUE 2014
                        VALOR COMMUNICATIONS GROUP, INC.

We are selling          IDSs in the United States and Canada representing
         shares of our Class A common stock and $    million aggregate principal
amount of our   % senior subordinated notes due 2014. Each IDS initially
represents:
  - one share of our Class A common stock; and
  - a   % senior subordinated note with a $         principal amount.
We are also selling $      aggregate principal amount of our    % senior
subordinated notes separately (not in the form of IDSs). The completion of the
offering of separate senior subordinated notes is a condition to our sale of
IDSs. In addition, as part of our reorganization described elsewhere in this
prospectus, we are issuing          IDSs representing          shares of our
Class A common stock and $    million aggregate principal amount of our   %
senior subordinated notes to our existing equity holders, including management,
in exchange for the interests they hold in our subsidiaries, see "Detailed
Transaction Steps" on page 86.
This is the initial public offering of our IDSs and senior subordinated notes.
We anticipate that the public offering price of the IDSs will be between
$         and $         per IDS and the public offering price of the senior
subordinated notes will be    % of their stated principal amount.
Holders of IDSs will have the right to separate the IDSs into the shares of our
Class A common stock and senior subordinated notes represented thereby at any
time after the earlier of 45 days from the closing of this offering or the
occurrence of a change of control. Similarly, except as described below, any
holder of shares of our Class A common stock and senior subordinated notes may,
at any time, combine the applicable number of shares of Class A common stock and
principal amount of senior subordinated notes to form IDSs. Separation of all of
the IDSs will occur automatically upon the continuance of a payment default on
the senior subordinated notes for 90 days, upon the occurrence of any redemption
of the senior subordinated notes or upon the maturity of the senior subordinated
notes. Following any such automatic separation, shares of Class A common stock
and senior subordinated notes may no longer be combined to form IDSs.
Our senior subordinated notes mature on          , 2014 subject to our right to
extend their maturity for two additional successive five-year terms under
specified circumstances. We will be permitted to defer interest payments on our
senior subordinated notes subject to the limitations described in "Description
of Senior Subordinated Notes--Terms of the Notes--Interest Deferral" on page 98.
Deferred interest on our senior subordinated notes will bear interest quarterly
at a rate equal to the stated annual rate of interest on the notes divided by
four. Our obligations under the senior subordinated notes will be guaranteed by
each of our direct and indirect wholly-owned domestic subsidiaries.
UPON A SUBSEQUENT ISSUANCE BY US OF IDSS OR SENIOR SUBORDINATED NOTES OF THE
SAME SERIES (NOT IN THE FORM OF IDSS), A PORTION OF YOUR SENIOR SUBORDINATED
NOTES MAY BE AUTOMATICALLY EXCHANGED FOR AN IDENTICAL PRINCIPAL AMOUNT OF THE
SENIOR SUBORDINATED NOTES ISSUED IN SUCH SUBSEQUENT ISSUANCE, AND IN THAT EVENT
YOUR IDSS WILL BE REPLACED WITH NEW IDSS. IN ADDITION TO THE SENIOR SUBORDINATED
NOTES OFFERED HEREBY, THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A
PART ALSO REGISTERS THE SENIOR SUBORDINATED NOTES AND NEW IDSS TO BE ISSUED UPON
ANY SUCH SUBSEQUENT ISSUANCE. FOR MORE INFORMATION REGARDING THESE AUTOMATIC
EXCHANGES AND THE EFFECT THEY MAY HAVE ON YOUR INVESTMENT, SEE "DESCRIPTION OF
SENIOR SUBORDINATED NOTES--COVENANTS RELATING TO IDSS--PROCEDURES RELATING TO
SUBSEQUENT ISSUANCE" ON PAGE 103 AND "MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES--UNITED STATES HOLDERS--SENIOR SUBORDINATED NOTES--ADDITIONAL
ISSUANCES" ON PAGE 140.
We will apply to list the IDSs on the            under the trading symbol "  ."
We will apply to list the IDSs on the Toronto Stock Exchange under the trading
symbol "  " and our shares of Class A common stock under the symbol "  ."
INVESTING IN OUR IDSS (INCLUDING THE SHARES OF OUR CLASS A COMMON STOCK AND
SENIOR SUBORDINATED NOTES REPRESENTED THEREBY) AND IN OUR SENIOR SUBORDINATED
NOTES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 21.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PER
                                                          IDS        TOTAL      PER NOTE      TOTAL
                                                        -------   -----------   --------   -----------
Public offering price(1)..............................  $         $                   %    $
Underwriting discount.................................  $         $                   %    $
Proceeds to Valor Communications Group, Inc. (before
  expenses)(2)........................................  $         $                   %    $
---------------------------

(1) The offering price in Canada is payable in Canadian dollars and is the
    approximate equivalent of the U.S. dollar offering price based on the noon
    buying rate on the date of this prospectus as quoted by the Federal Reserve
    Bank of New York.
(2) Approximately $    million of these proceeds will be paid to our existing
    equity holders. The table above does not reflect         IDSs being issued
    to our existing equity holders in exchange for their interests in our
    subsidiaries.

Certain holders of IDSs have granted the underwriters an option to purchase up
to          additional IDSs to cover over-allotments.
The underwriters expect to deliver the IDSs and the senior subordinated notes in
book-entry form only through the facilities of The Depository Trust Company to
purchasers on or about          , 2004.

                        Joint Book-Running Lead Managers
CIBC WORLD MARKETS              MERRILL LYNCH & CO.              LEHMAN BROTHERS
              BANC OF AMERICA SECURITIES LLC              JPMORGAN

                                          , 2004
NOTICE TO PURCHASERS OF SEPARATE SENIOR SUBORDINATED NOTES AND
                      ACKNOWLEDGEMENT OF PURCHASER INTENT
     None of the separate senior subordinated notes purchased in connection with
this offering may be purchased, directly or indirectly, by persons who are also
(1) purchasing IDSs in this offering or (2) otherwise receiving IDSs or shares
of Class B common stock in connection with the reorganization. ACCORDINGLY, EACH
INVESTOR PURCHASING THE SEPARATE SENIOR SUBORDINATED NOTES IN THIS OFFERING MUST
NOT PURCHASE IDSS IN THIS OFFERING AND MUST NOT CONCURRENTLY ENTER INTO ANY PLAN
OR PRE-ARRANGEMENT WHEREBY IT WOULD ACQUIRE ANY IDSS OR OUR COMPANY EQUITY (AS
DEFINED BELOW) OR TRANSFER THE SEPARATE SENIOR SUBORDINATED NOTES TO ANY HOLDER
OF IDSS OR OUR COMPANY EQUITY. IN ADDITION, EACH PERSON RECEIVING IDSS OR SHARES
OF CLASS B COMMON STOCK IN CONNECTION WITH THE REORGANIZATION MUST NOT PURCHASE
SEPARATE SENIOR SUBORDINATED NOTES IN THIS OFFERING.
     EACH INVESTOR IN THIS OFFERING ASSUMES SOLE RESPONSIBILITY FOR ENSURING
THAT IT COMPLIES WITH THE RESTRICTIONS ABOVE. NEITHER WE NOR THE UNDERWRITERS
WILL ASSUME ANY RESPONSIBILITY TO ENSURE THAT ANY INVESTOR COMPLIES WITH THESE
RESTRICTIONS. If you are unsure whether the restrictions above would prohibit
you from purchasing the separate senior subordinated notes or our IDSs in this
offering, you should consult your own legal advisor with regard to the
application of these restrictions to your individual circumstances.
     Furthermore, each person purchasing separate senior subordinated notes in
this offering, by acquiring the separate senior subordinated notes, thereby
represents to us and the underwriters that:
     (a) neither such purchaser nor any entity, investment fund or account over
         which such purchaser exercises investment control is purchasing IDSs in
         this offering;
     (b) neither such purchaser nor any entity, investment fund or account over
         which such purchaser exercises investment control owns, or has the
         contractual right to acquire, our equity securities (including
         securities which are convertible, exchangeable or exercisable into or
         for our equity or our equity-linked securities, which we refer to
         collectively as our Company equity); and
     (c) such purchaser is not party to any plan or pre-arrangement whereby it
         would (1) acquire any IDSs or our Company equity or (2) transfer the
         separate senior subordinated notes to any holder of IDSs or our Company
         equity.
     For purposes of these representations, the "purchaser" shall be deemed to
be (1) the person who initially purchases the separate senior subordinated notes
from the underwriters in this offering and (2) the person(s), if any, pursuant
to whose instructions such purchase was made.
TABLE OF CONTENTS
Summary.....................................................    1
Risk Factors................................................   21
Cautionary Statement Regarding Forward-Looking Statements...   34
Use of Proceeds.............................................   35
Dividend Policy.............................................   36
Capitalization..............................................   38
Dilution....................................................   39
Selected Historical Financial Information...................   40
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................   42
Business....................................................   60
Regulation..................................................   69
Management..................................................   75
Principal Stockholders......................................   83
Related Party Transactions..................................   84
Detailed Transaction Steps..................................   86
Description of Certain Indebtedness.........................   87
Description of IDSs.........................................   88
Description of Capital Stock................................   93
Description of Senior Subordinated Notes....................   97
IDSs Eligible For Future Sale...............................  135
Material United States Federal Income Tax Consequences......  136
Certain ERISA Considerations................................  145
Underwriting................................................  147
Legal Matters...............................................  151
Experts.....................................................  152
Where Can You Find More Information.........................  152
Index to Financial Statements...............................  F-1
i
SUMMARY

The following is a summary of the principal features of this offering of IDSs
and senior subordinated notes and should be read together with the more detailed
information and financial data and statements contained elsewhere in this
prospectus.

Throughout this prospectus, we refer to Valor Communications Group, Inc., a
Delaware corporation, as "Valor," and, together with its consolidated
operations, as "we," "our," and "us," unless otherwise indicated. Valor is a
holding company and has no direct operations. Valor's principal assets are the
direct and indirect equity interests of its subsidiaries, all of which will be
pledged to the creditors under the new credit facility, as described more fully
below.

                                  OUR COMPANY

OVERVIEW

We are one of the largest providers of telecommunications services in rural
communities in the southwestern United States and the seventh largest
independent local telephone company in the country. We operate approximately
550,000 telephone access lines in primarily rural areas of Texas, Oklahoma, New
Mexico and Arkansas. We believe that in many of our markets we are the only
service provider that offers customers an integrated package of local and long
distance voice, high-speed data and Internet access, and enhanced services such
as voicemail and caller identification. For the year ended December 31, 2003, we
generated revenues of $497.3 million.

We formed our company in 2000 in connection with the acquisition of select
telephone assets from GTE Southwest Corporation, which is now part of Verizon,
and have since acquired the local telephone company serving Kerrville, Texas.
The rural telephone businesses that we own have been operating in the markets we
serve for over 75 years. Since our inception, we have invested substantial
resources to improve and expand our network infrastructure to provide high
quality telecommunications services and superior customer care. This capital
investment, in combination with a focused selling effort, has contributed to an
increase in our revenue of $72.4 million, or 17.0%, from 2001 to 2003. We
believe that we are well positioned for future revenue and cash flow growth
through both expanded service offerings and acquisitions.

We operate our business through telephone company subsidiaries that qualify as
rural local exchange carriers, or RLECs, under the Telecommunications Act of
1996. Like many RLECs, our business is characterized by stable operating
results, revenue and cash flow and a relatively favorable regulatory
environment. We have historically experienced less competition than regional
Bell operating companies because of the low customer density and high
residential component of our customer base. Since our customer base is located
in areas that are generally less densely populated than areas served by other
RLECs, we believe that we are more insulated from competitive pressures than
many other local telecommunications providers.

OUR STRENGTHS

Ability to Generate Consistent Cash Flows. We have increased our operating cash
flow in each year since our inception. We have accomplished this by growing
revenues through providing additional services to our customers, reducing
expenses by improving operating efficiencies and negotiating favorable terms
with our suppliers and contractors, and optimizing our capital expenditures. In
addition, RLECs in general have been able to attain predictable and stable cash
flow from operations due to a steady demand for telecommunications services in
rural areas and public policies that support universal, affordable local
telephone service.

Leading Market Position. In the markets we serve, we are the leading provider of
telecommunications services. We generally face less competition from wireless
providers, cable television operators and other local exchange carriers than
other industry

                                        1
participants because competitive entry into our markets is less attractive due
to the low population density and primarily residential customer base. We
reinforce our market position by providing reliable customer service, offering a
full range of voice and data services and maintaining a strong local presence in
the communities we serve.

Scalable, State-of-the-Art Network Infrastructure. We invested more than $300
million since our inception in 2000 to improve and expand our network
infrastructure. These initiatives have enabled us to provide additional services
to our customers and improve the overall quality of our network, as demonstrated
by our surpassing all applicable statewide regulatory service quality measures
in 2003. We believe that our prior capital investment in our network, combined
with our focus on the quality of our service, leaves us well positioned for
future cash flow growth.

Wide Array of Integrated Services. We believe that we are the only
telecommunications service provider in many of the markets we serve that has the
ability to provide an integrated package of local, long distance, high-speed
data and Internet access as well as a variety of enhanced services such as
voicemail and caller identification. By offering a bundled package of services,
we have improved our long distance and enhanced services penetration, resulting
in increased revenue and higher margins.

Experienced and Proven Management Team. We have a highly experienced senior
management team that has an average of over 20 years of experience in the local
telecommunications industry. Our senior executives have a solid track record of
managing the expansion of public telecommunications companies through both
internal growth and integration of acquisitions. Upon completion of this
offering, our management team will hold a significant investment in IDSs.

BUSINESS STRATEGY

Increase Penetration of Higher Margin Services. We intend to capitalize on our
ability to offer higher margin enhanced voice and data services as a bundled
package. We have been aggressively marketing enhanced services, and we have
witnessed an increasing demand for data services, including broadband services.
We believe that a significant opportunity exists for us to continue to increase
our revenue per customer by cross-selling enhanced voice and data services as
part of a bundled package.

Provide Superior Service and Customer Care. We seek to build long-term customer
relationships by offering a wide range of telecommunications services and
consistent customer support. We currently provide personalized customer care
through three call centers that support our business and residential customers.
We have automated many of our customer service functions and expanded our
customers' ability to interact with our company 24 hours a day, 365 days a year.

Improve Operating Efficiency and Profitability. We strive for greater
efficiencies and improved profit margins by consolidating corporate functions,
negotiating favorable terms with our suppliers and contractors and focusing
capital expenditures on projects that exceed our internal rate of return
thresholds. Our investment in customer service and focus on automation has
substantially reduced the number of customer service calls that we receive since
2001, with a resulting reduction in related cash operating costs. These
initiatives have led to increases in our profitability.

Pursue Selective Strategic Acquisitions. Our management team has a solid track
record of evaluating, acquiring and successfully integrating RLEC assets. We
believe that our network infrastructure and labor force can support significant
growth through strategic acquisitions. We believe that there are numerous
opportunities to acquire telecommunications assets that are accretive.

                                        2
NEW CREDIT FACILITY

Concurrently with the closing of this offering, we will enter into a $     new
senior secured credit facility with a syndicate of financial institutions,
including Banc of America Securities LLC and CIBC World Markets Corp., as joint
lead arrangers and joint book-managers. CIBC is also acting as a joint
book-running lead manager of this offering. Throughout this prospectus, we refer
to this credit facility as the "new credit facility." We expect that the new
credit facility will be comprised of a senior secured revolving credit facility
in a total principal amount of up to $     million, which we refer to as the
"new revolver," and a senior secured term loan facility in an aggregate
principal amount of $     million, which we refer to as the "new term loan." We
expect that the new revolving credit facility and the new term loan will each
have an approximately five-year maturity with no amortization of principal prior
to maturity. The closing of this offering is conditioned upon the closing of the
new credit facility. See "Description of Certain Indebtedness--New Credit
Facility."

                               OUR REORGANIZATION

All the equity interests in Valor Telecommunications, LLC, or VTC, Valor
Telecommunications Southwest, LLC, or VTS, and Valor Telecommunications
Southwest II, LLC, or VTS II, are currently held by affiliates of Welsh, Carson
Anderson & Stowe, affiliates of Vestar Capital Partners, and affiliates of
Citicorp Venture Capital, to whom we refer to collectively as our "equity
sponsors," our management and employees, and a group of individuals. We refer to
these persons and entities collectively throughout this prospectus as our
"existing equity holders."

As discussed in "Detailed Transactions Steps" on page 86, immediately prior to
and in connection with this offering we will consummate a reorganization
pursuant to which our existing equity holders will contribute all their equity
interests in VTC, VTS and VTS II to Valor in exchange for           IDSs,
          shares of Class B common stock and $     in cash in the aggregate.
Following our reorganization, each of VTC, VTS and VTS II will be either a
direct or an indirect wholly-owned subsidiary of Valor. In addition, following
our reorganization our management will collectively hold an aggregate of
IDSs and will be eligible to receive an aggregate of        over time under an
incentive compensation plan.

                                USE OF PROCEEDS

We estimate that we will receive net proceeds from this offering of
approximately $     million after deducting underwriting discounts and
commissions and other estimated offering expenses payable by us. We will use
these net proceeds, together with $     million of borrowings under our new
credit facility as follows:

   --  $     million to repay all outstanding amounts owed under our existing
       senior credit facilities; and

   --  $     million to repurchase all our outstanding 10% senior subordinated
       notes held primarily by our equity sponsors.

All remaining proceeds will be paid to the existing equity holders as part of
the consideration for their contribution to us of their equity interests in our
subsidiaries.

Of the           IDSs offered by this prospectus,           IDSs in the
aggregate, having an aggregate implied value of $     million based on an
assumed initial public offering price of $     , will be issued to our existing
equity holders as part of the consideration for their contribution to us of
their equity interests in our subsidiaries. This amount is not included in our
net proceeds from this offering described above.

If the underwriters exercise their over-allotment option in full, the
underwriters will purchase an aggregate of           IDSs from our existing
equity holders for resale to the public. We will not receive any of the proceeds
from the sale of IDSs by our existing equity holders.

                                        3
OUR CORPORATE STRUCTURE AFTER THIS OFFERING

The following chart reflects our capital structure immediately after the
offering:

                                  [FLOW CHART]

---------------
(1) Certain Valor Operating Entities and Kerville Operating Entities will also
    be borrowers under our new credit facility. We, Valor Telecommunications,
    LLC and certain of our operating subsidiaries will guarantee the obligations
    of these borrowers under the new credit facility.

We incorporated in Delaware in March 2004. Our principal executive offices are
located at 201 E. John Carpenter Freeway, Suite 200, Irving, Texas 75062 and our
telephone number is (972) 373-1000. Our website address is www.valortelecom.com.
Information included or referred to on our website is not a part of this
prospectus.
                                        4
THE OFFERING

We are offering           IDSs at an assumed initial public offering price of
$     per IDS, which represents the midpoint of the range set forth on the cover
page of this prospectus. We are also offering $          aggregate principal
amount of our      % senior subordinated notes separately (not in the form of
IDSs). Our sale of IDSs will be conditioned upon the consummation of our
separate offering of senior subordinated notes. In addition, no purchaser,
including our existing equity investors, or any affiliate of such purchaser, is
entitled to purchase both IDSs and senior subordinated notes in the offering. In
addition, as part of our reorganization described elsewhere in this prospectus,
we are issuing           IDSs to our existing equity holders, including
management, in exchange for the interests they hold in our subsidiaries, see
"Detailed Transaction Steps" on page 86.

SUMMARY OF THE IDSS

  What are IDSs?

IDSs are securities comprised of Class A common stock and senior subordinated
notes.

Each IDS initially represents:

   --  one share of our Class A common stock; and

   --  a   % senior subordinated note with a $     principal amount.

The ratio of Class A common stock to principal amount of senior subordinated
notes represented by an IDS is subject to change in the event of a stock split,
recombination or reclassification of our Class A common stock. For example, if
we effect a two-for-one stock split, from and after the effective date of the
stock split, each IDS will represent two shares of Class A common stock and the
same principal amount of senior subordinated notes as it previously represented.
Likewise, if we effect a recombination or reclassification of our Class A common
stock, each IDS will thereafter represent the appropriate number of shares of
Class A common stock on a recombined or reclassified basis, as applicable, and
the same principal amount of senior subordinated notes as it previously
represented.

  What payments can I expect to receive as a holder of IDSs?

Assuming we make our scheduled interest payments on the senior subordinated
notes and pay dividends in the amount contemplated by our anticipated dividend
policy, you will receive in the aggregate approximately $     per year in
interest on the senior subordinated notes and dividends on the Class A common
stock represented by each IDS. We expect to make interest and dividend payments
on the last day of each fiscal quarter to holders of record on the twentieth
day, or, if such day is not a business day, the last business day immediately
preceding such twentieth day, of the last month of such quarter.

You will be entitled to receive quarterly interest payments at an annual rate of
  % of the aggregate principal amount of senior subordinated notes represented
by your IDSs or approximately $     per IDS per year, subject to our right under
certain circumstances specified in the indenture governing the senior
subordinated notes to defer interest payments on our senior subordinated notes.
For a detailed description of these circumstances, see "Description of Senior
Subordinated Notes--Interest Deferral."

You will also receive quarterly dividends on the shares of our Class A common
stock represented by your IDSs, if and to the extent dividends are declared by
our board of directors and permitted by applicable law and the terms of the new
credit facility, the indenture governing our senior subordinated notes and any
of our other then outstanding indebtedness. Specifically, the indenture
governing our senior subordinated notes restricts our ability to declare and pay
dividends on our common stock as described under "Dividend Policy." In addition,
the new credit facility restricts our ability to declare and pay dividends on
our common stock as described under "Dividend Policy" and "Description of
Certain Indebtedness--New Credit Facility." Upon the closing of this offering,
our board of directors is expected to adopt a dividend

                                        5
policy which contemplates that, subject to applicable law and the terms of our
then existing indebtedness, initial annual dividends will be approximately
$     per share of our Class A common stock. However, our board of directors
may, in its discretion, modify or repeal this dividend policy. We cannot assure
you that we will pay dividends at this level in the future or at all.

  Will my rights as a holder of IDSs be any different than the rights of a
  beneficial owner of separately held Class A common stock and senior
  subordinated notes?

No. As a holder of IDSs you are the beneficial owner of the Class A common stock
and senior subordinated notes represented by your IDSs. As such, through your
broker or other financial institution and The Depository Trust Company, or DTC,
you will have exactly the same rights, privileges and preferences, including
voting rights, rights to receive distributions, rights and preferences in the
event of a default under the indenture governing our senior subordinated notes,
ranking upon bankruptcy and rights to receive communications and notices as a
beneficial owner of separately held Class A common stock and senior subordinated
notes, as applicable, would have through its broker or other financial
institution and DTC.

  Will the IDSs be listed on an exchange?

We will apply to list the IDSs for trading on the           under the trading
symbol "  ." We will apply to list the IDSs on the Toronto Stock Exchange under
the trading symbol "  " and our shares of Class A common stock under the symbol
"  ."

  Will the terms of the notes represented by IDSs be the same as the notes sold
  separately (not in the form of IDSs)?

Yes. The terms of the notes sold separately (not in the form of IDSs) will be
identical in all respects to the notes represented by IDSs and will be part of
the same series of notes issued under the same indenture. Accordingly, holders
of notes sold separately and holders of notes represented by IDSs will vote
together as a single class, in proportion to the aggregate principal amount of
notes they hold, on all matters on which they were eligible to vote under the
indenture.

  Will the shares of our Class A common stock and senior subordinated notes
  represented by the IDSs be separately listed on an exchange?

We will apply to list the shares of our Class A common stock on the Toronto
Stock Exchange under the trading symbol   . We cannot assure you that our Class
A common stock will trade on the Toronto Stock Exchange or any other exchange or
that our senior subordinated notes will trade separately from the IDSs on any
exchange. We currently do not expect an active trading market for our Class A
common stock or senior subordinated notes to develop. However, we will use
reasonable efforts to list our Class A common stock for separate trading on the
          if a sufficient number of shares of our Class A common stock are held
separately to meet the minimum requirements for separate trading on the
          for at least 30 consecutive trading days. The shares of Class A common
stock and senior subordinated notes offered hereby will be freely tradable
without restriction or further registration under the Securities Act of 1933,
unless they are held by "affiliates" as that term is defined in Rule 144 under
the Securities Act.

  In what form will IDSs and the shares of our Class A common stock and senior
  subordinated notes represented by the IDSs be issued?

The IDSs and the shares of our Class A common stock and senior subordinated
notes represented by the IDSs will be issued in book-entry form only. This means
that you will not be a registered holder of IDSs or the securities represented
by the IDSs and you will not receive a certificate for your IDSs or the
securities represented by your IDSs. You must rely on your broker or other
financial institution that will maintain your book-entry position to receive the
benefits and exercise the rights of a holder of IDSs.

                                        6
Can I separate my IDSs into shares of Class A common stock and senior
  subordinated notes or recombine shares of Class A common stock and senior
  subordinated notes to form IDSs?

Yes. Holders of IDSs, whether purchased in this offering or in a subsequent
offering of IDSs of the same series, may, at any time after the earlier of 45
days from the date of the closing of this offering or the occurrence of a change
of control, through their broker or other financial institution, separate the
IDSs into the shares of our Class A common stock and senior subordinated notes
represented thereby. Any holder of shares of our Class A common stock and senior
subordinated notes may, at any time, through his or her broker or other
financial institution, combine the applicable number of shares of Class A common
stock and senior subordinated notes to form IDSs unless the IDSs have previously
been automatically separated as a result of the continuance of a payment default
on the senior subordinated notes for 90 days, or the redemption or maturity of
any senior subordinated notes. Separation and recombination of IDSs may involve
transaction fees charged by your broker and/or financial intermediary. See
"Description of IDSs--Book-Entry Settlement and Clearance--Separation and
Combination."

  Will my IDSs automatically separate into shares of Class A common stock and
  senior subordinated notes upon the occurrence of certain events?

Yes. Separation of all of the IDSs will occur automatically upon the continuance
of a payment default on the senior subordinated notes for 90 days, upon the
occurrence of any redemption, whether in whole or in part, of the senior
subordinated notes or upon the maturity of the senior subordinated notes.
Following any such automatic separation, shares of Class A common stock and
senior subordinated notes may be no longer be combined to form IDSs.

  What will happen if we issue additional IDSs of the same series in the future?

We may conduct future financings by selling additional IDSs of the same series,
which will have terms that are identical to those of the IDSs being sold in this
offering and will represent the same proportion of Class A common stock and
senior subordinated notes as is represented by the then outstanding IDSs. In
addition, we may in the future issue IDSs in exchange for shares of Class B
common stock, see "Related Party Transactions--Equity Sponsors--Investor Rights
Agreement." Although the senior subordinated notes represented by such IDSs will
have terms that are identical (except for the issuance date) to the senior
subordinated notes being sold in this offering and will be part of the same
series of senior subordinated notes for all purposes under the indenture, it is
possible that the new senior subordinated notes will be sold or issued with
original issue discount, or OID, for United States federal income tax purposes.
If such senior subordinated notes are issued with OID, all IDSs of the same
series (including the IDSs being offered hereby) and all senior subordinated
notes, whether held directly or in the form of IDSs, will be automatically
exchanged for IDSs and senior subordinated notes, respectively, with new CUSIP
numbers. As a result of such exchanges, the OID associated with the sale of the
new senior subordinated notes effectively will be spread among all holders of
senior subordinated notes on a pro rata basis, which may adversely affect your
tax treatment.

  What will be the United States federal income tax consequences of an
  investment in the IDSs?

The United States federal income tax consequences of the purchase, ownership and
disposition of IDSs or senior subordinated notes in this offering are not
entirely clear.

Treatment of Purchase of IDSs.  The purchase of IDSs in this offering should be
treated for United States federal tax purposes as the purchase of shares of our
Class A common stock and senior subordinated notes, rather than as the purchase
of a single integrated security, and, by purchasing IDSs, you will agree to such
treatment. You must allocate the purchase price of the IDSs between those shares
of Class A common stock and senior subordinated notes in proportion to their
respective initial fair market values, which will establish your initial tax
basis in each component of the IDSs. The value attributed to the shares of Class
A common stock and senior subordinated notes represented by the IDSs have been

                                        7
established based on the fair market value of such shares of Class A common
stock and senior subordinated notes. We will report the initial fair market
value of each share of Class A common stock as $     and the initial fair market
value of each $     principal amount of senior subordinated notes as $     , and
by purchasing IDSs, you will agree to such allocation.

Treatment of Senior Subordinated Notes.  The senior subordinated notes should be
treated as debt for United States federal income tax purposes. If the senior
subordinated notes were treated as equity rather than as debt for United States
federal income tax purposes, then the stated interest on the senior subordinated
notes could be treated as a dividend, and interest on the senior subordinated
notes would not be deductible by us for United States federal income tax
purposes, which could significantly reduce our future cash flow. In addition,
payments on the senior subordinated notes to foreign holders would be subject to
United States federal withholding tax at rates up to 30%. Payments to foreign
holders would not be grossed-up on account of any such taxes.

  What will be the United States federal income tax consequences of a subsequent
  issuance of senior subordinated notes?

The United States federal income tax consequences to you of the subsequent
issuance of senior subordinated notes with OID (or any issuance of senior
subordinated notes thereafter) are not entirely clear.

Exchange of Senior Subordinated Notes.  The indenture governing the senior
subordinated notes will provide that, in the event that there is a subsequent
issuance of senior subordinated notes with a new CUSIP number having terms that
are otherwise identical (other than the issuance date) in all material respects
to the senior subordinated notes represented by the IDSs, including an issuance
of senior subordinated notes upon an exchange of shares of Class B common stock,
each holder of IDSs or separately held senior subordinated notes, as the case
may be, agrees that a portion of such holder's senior subordinated notes will be
exchanged for a portion of the senior subordinated notes acquired by the holders
of such subsequently issued senior subordinated notes. Consequently, immediately
following such subsequent issuance, each holder of subsequently issued senior
subordinated notes, held either as part of IDSs or separately, and each holder
of existing senior subordinated notes, held either as part of IDSs or
separately, will own an inseparable unit composed of a proportionate percentage
of both the old senior subordinated notes and the newly issued senior
subordinated notes. The aggregate principal amount of senior subordinated notes
owned by each holder will not change as a result of such subsequent issuance and
exchange. Because a subsequent issuance will affect the senior subordinated
notes in the same manner, regardless of whether these senior subordinated notes
are held as part of IDSs or separately, the combination of senior subordinated
notes and shares of Class A common stock to form IDSs, or the separation of
IDSs, should not affect your tax treatment.

It is unclear whether the exchange of senior subordinated notes for subsequently
issued senior subordinated notes will result in a taxable exchange for United
States federal income tax purposes, and it is possible that the Internal Revenue
Service, or IRS, might successfully assert that such an exchange should be
treated as a taxable exchange. In such case, a holder would recognize any gain
realized on such exchange, but a loss realized might be disallowed. If the
exchange of senior subordinated notes is treated as a taxable exchange, then
your initial tax basis in the senior subordinated notes deemed to have been
received in the exchange would be the fair market value of such senior
subordinated notes on the date of the deemed exchange (adjusted to reflect any
disallowed loss), and your holding period for such senior subordinated notes
would begin on the day after the deemed exchange.

Reporting of OID.  Regardless of whether the exchange of senior subordinated
notes is treated as a taxable event, such exchange could result in holders
having to include OID in taxable income prior to the receipt of cash. Following
any subsequent issuance of senior subordinated notes with OID (or any issuance
of senior subordinated notes thereafter) and resulting exchange, we (and our
agents) will report any OID on the subsequently issued senior subordinated notes
ratably among all holders of IDSs and separately held senior subordinated notes,
and each holder of IDSs and separately held senior subordinated notes will, by
                                        8
purchasing IDSs or senior subordinated notes, agree to report OID in a manner
consistent with this approach. However, we cannot assure you that the IRS will
not assert that any OID should be reported only by the persons that initially
acquired such subsequently issued senior subordinated notes (and their
transferees) and they may challenge a holder's reporting of OID on its tax
returns.

Because there is no statutory, judicial or administrative authority directly
addressing the tax treatment of the IDSs or instruments similar to the IDSs, we
urge you to consult your own tax advisor concerning the tax consequences of an
investment in the IDSs. For additional information, see "Material United States
Federal Income Tax Consequences."

                                        9
SUMMARY OF THE CAPITAL STOCK

Issuer.....................  Valor Communications Group, Inc.

Common stock...............  We have      shares of authorized Class A common
                             stock, par value $0.01 per share,      shares of
                             authorized Class B common stock, par value $0.01
                             per share, and      shares of authorized Class C
                             common stock, par value $0.01 per share. Class A
                             common stock, Class B common stock and Class C
                             common stock are identical in all respects, except
                             that only Class A common stock is eligible to be
                             included in IDSs and each class carries different
                             dividend rights, as more fully described in
                             "Dividend Policy" and "Description of Capital
                             Stock--Common Stock--Dividends." In addition, we
                             have entered into an agreement with our equity
                             sponsors that provides that following the second
                             anniversary of the consummation of this offering,
                             at the option of our equity sponsors, upon any
                             subsequent sale of any shares of Class B common
                             stock, we will automatically exchange with the
                             purchasers of such shares, one IDS for each share
                             of Class B common stock, subject to compliance with
                             law and applicable agreements more fully described
                             in "Related Party Transactions--Equity
                             Sponsors--Investor Rights Agreement." Furthermore,
                             our bylaws provide that we may only issue
                             additional shares of Class A common stock and IDSs
                             pursuant to a registration statement that has been
                             declared effective by the Securities and Exchange
                             Commission. Unless the context otherwise requires,
                             references to our "common stock" throughout this
                             prospectus refer to our Class A common stock, Class
                             B common stock and Class C common stock.

Shares of Class A common
stock represented by IDSs
being offered to the
public:

  by Valor.................            shares.

  by our existing equity
holders....................            shares if the underwriters'
                             over-allotment option is exercised in full (which
                             shares shall be offered from the shares of Class A
                             common stock represented by IDSs that we are
                             issuing to our existing equity holders in this
                             offering).

Shares of Class A common
stock represented by IDSs
being issued to our
existing equity holders....            shares.

Shares of common stock to
be outstanding following
the offering...............            shares of Class A common stock and
                             shares of Class B common stock. No shares of Class
                             C common stock will be outstanding following the
                             consummation of this offering.

Voting rights..............  Each outstanding share of our common stock will
                             carry one vote per share and all classes of common
                             stock will vote as a single class on all matters
                             presented to the stockholders for a vote.

Dividends..................  You will receive dividends on the shares of our
                             common stock if and to the extent dividends are
                             declared by our board of directors and permitted by
                             applicable law and the terms of our then
                             outstanding indebtedness. Specifically, the senior
                             subordinated notes indenture and the new credit
                             facility both restrict our ability to declare and
                             pay dividends on our common stock, as described in
                             detail under

                                        10
"Dividend Policy." Upon the closing of this
                             offering, our board of directors is expected to
                             adopt a dividend policy which contemplates that,
                             subject to applicable law and the terms of our then
                             existing indebtedness, initial annual dividends
                             will be approximately $     per share of our Class
                             A common stock. Our amended and restated
                             certificate of incorporation contains dividend
                             provisions with respect to our Class B common stock
                             that are intended to replicate the yield on our IDS
                             units. Any time a dividend is paid to holders of
                             Class A common stock, holders of Class B common
                             stock will be paid a dividend equal to the amount
                             per share paid to holders of Class A common stock.
                             In addition to any such dividend, shares of our
                             Class B common stock accrue dividends at a rate of
                                  % per annum on a deemed issuance price of
                             $          per share, as more fully described in
                             "Description of Capital Stock -- Common
                             Stock -- Dividends." Following the consummation of
                             this offering, no shares of Class C common stock
                             will be outstanding and we do not anticipate that
                             we will issue any shares of Class C common stock or
                             declare dividends thereon in the near future. Our
                             board of directors may, in its discretion, modify
                             or repeal this dividend policy. We cannot assure
                             that we will pay dividends at this level or at all
                             in the future.

Dividend payment dates.....  If declared, dividends on our Class A common stock
                             and Class B common stock will be paid quarterly on
                             the last day of each fiscal quarter to holders of
                             record on the twentieth day, or, if such day is not
                             a business day, the business day immediately
                             preceding such twentieth day, of the last month of
                             such quarter. To the extent not previously paid,
                             the      % dividend that accrues on shares of Class
                             B common stock will be paid at such time when such
                             shares of Class B common stock are exchanged for
                             IDSs.

Listing....................  We will apply to list the IDSs on the
                                                     under the trading symbol
                             "       ." We will apply to list the IDSs on the
                             Toronto Stock Exchange under the trading symbol
                             "       " and our shares of Class A common stock
                             under the symbol "       ." We cannot assure you
                             that our Class A common stock will trade separately
                             from the IDSs on the Toronto Stock Exchange or any
                             other exchange and we currently do not expect an
                             active trading market for our Class A common stock
                             to develop. However, we will use reasonable efforts
                             to list our Class A common stock for separate
                             trading on the                         if a
                             sufficient number of shares of our Class A common
                             stock are held separately to meet the minimum
                             requirements for separate trading on the
                                                     for at least 30 consecutive
                             trading days. Our Class A common stock will be
                             freely tradable without restriction or further
                             registration under the Securities Act, unless held
                             by "affiliates" as that term is defined in Rule 144
                             under the Securities Act.

                                        11
SUMMARY OF THE SENIOR SUBORDINATED NOTES

Issuer.....................  Valor Communications Group, Inc.

Senior subordinated notes
represented by IDSs being
offered to the public:

  by Valor.................  $     million aggregate principal amount of      %
                             senior subordinated notes.

  by our existing equity
holders....................  $     million aggregate principal amount of      %
                             senior subordinated notes if the underwriters'
                             over-allotment option to purchase IDSs is exercised
                             in full (which notes shall be offered from the
                             notes represented by IDSs that we are issuing to
                             our existing equity holders in this offering).

Senior subordinated notes
represented by IDSs being
issued to our existing
equity holders.............  $     million aggregate principal amount of      %
                             senior subordinated notes.

Senior subordinated notes
being offered to the public
separately (and not in the
form of IDSs)..............  $     million aggregate principal amount of      %
                             senior subordinated notes.

Senior subordinated notes
to be outstanding following
the offering...............  $     million aggregate principal amount of      %
                             senior subordinated notes.

Interest rate..............       % per year.

Interest payment dates.....  Interest will be paid quarterly in arrears on the
                             last day of each quarter, commencing           ,
                             2004, to holders of record on the twentieth day,
                             or, if such day is not a business day, the last
                             business day immediately preceding such twentieth
                             day, of the last month of such quarter.

Interest deferral..........  Prior to           , 2009, we may, subject to
                             certain restrictions, defer interest payments on
                             our senior subordinated notes on one or more
                             occasions for up to an aggregate period of eight
                             quarters. In addition, after           , 2009 but
                             before           , 2014, and during the term of
                             each additional five-year term of the senior
                             subordinated notes, if any, we may, subject to
                             certain restrictions, defer interest payments on
                             our senior subordinated notes on two occasions for
                             up to an aggregate period of two quarters; provided
                             that at the end of any interest deferral period
                             following           , 2009, we may not defer
                             interest unless and until all deferred interest is
                             paid in full.

                             During any interest deferral period and so long as
                             any deferred interest or interest on deferred
                             interest remains outstanding, we will not be
                             permitted to declare or pay dividends on the common
                             stock.

                             For a detailed description of the interest deferral
                             provisions of the indenture, see "Description of
                             Senior Subordinated Notes--Interest Deferral."

                                        12
In the event that interest payments on the senior
                             subordinated notes are deferred, you would be
                             required to continue to include the yield on the
                             senior subordinated notes in your income for United
                             States federal income tax purposes as it accrues,
                             even if you do not receive any cash interest
                             payments.

Maturity date..............  The senior subordinated notes will mature on
                                       , 2014. We may extend the maturity of the
                             senior subordinated notes for two additional
                             successive five-year terms if the following
                             conditions are satisfied:

                                --  during the twelve month period ending on the
                                    last day of the most recent fiscal quarter
                                    ending at least 45 days before the end of
                                    the then-current term, our leverage ratio as
                                    calculated in accordance with the indenture
                                    is less than           to 1.0;

                                --  no event of default, including certain
                                    events of bankruptcy, insolvency or
                                    reorganization of us or our subsidiaries,
                                    under the indenture has occurred and is
                                    continuing;

                                --  no event of default has occurred and is
                                    continuing with respect to any of our other
                                    indebtedness having a principal amount of
                                    $     million or more outstanding or would
                                    occur as a result of the extension; and

                                --  there are no overdue payments of interest on
                                    our senior subordinated notes or any of our
                                    other outstanding indebtedness.

Optional redemption........  We may, at our option, redeem the senior
                             subordinated notes on the terms set forth in the
                             indenture governing the senior subordinated notes.
                             If the senior subordinated notes are redeemed in
                             whole or in part, the senior subordinated notes and
                             Class A common stock represented by each IDS will
                             be automatically separated. See "Description of
                             Senior Subordinated Notes -- Optional Redemption."

Change of control..........  Upon the occurrence of a change of control, as
                             defined under "Description of Senior Subordinated
                             Notes--Change of Control," each holder of senior
                             subordinated notes will have the right to require
                             us to repurchase that holder's senior subordinated
                             notes at a price equal to 101% of the principal
                             amount of the senior subordinated notes being
                             repurchased, plus any accrued but unpaid interest
                             to but not including the repurchase date. If senior
                             subordinated notes are held in the form of IDSs, in
                             order to exercise that right, a holder of IDSs must
                             separate its IDSs into the shares of Class A common
                             stock and senior subordinated notes represented
                             thereby and hold the senior subordinated notes
                             separately.

Guarantees of senior
subordinated notes.........  The senior subordinated notes will be fully and
                             unconditionally guaranteed, on an unsecured senior
                             subordinated basis, by each of our direct and
                             indirect wholly-owned domestic subsidiaries
                             existing on the closing of this offering and each
                             of our future wholly-owned domestic restricted
                             subsidiaries that has total assets of more than
                             $500,000. The guarantees will be subordinated to
                             the guarantees issued by the subsidiary guarantors
                             under the new credit facility.

                                        13
Subsequent issuances may
affect tax treatment.......  The indenture governing the senior subordinated
                             notes will provide that in the event we issue
                             additional senior subordinated notes with a new
                             CUSIP number having terms that are otherwise
                             identical to the senior subordinated notes (except
                             for the issuance date), including any issuance of
                             IDSs in exchange for shares of Class B common
                             stock, each holder of IDSs or separately held
                             senior subordinated notes, as the case may be,
                             agrees that a portion of such holder's senior
                             subordinated notes, whether held as part of IDSs or
                             separately, will be exchanged for a portion of the
                             senior subordinated notes acquired by the holders
                             of such subsequently issued senior subordinated
                             notes, and our records of any record holders of
                             senior subordinated notes will be revised to
                             reflect such exchanges. Consequently, following
                             each such subsequent issuance and exchange, each
                             holder of IDSs or separately held senior
                             subordinated notes, as the case may be, will own
                             senior subordinated notes of each separate issuance
                             in the same proportion as each other holder.
                             However, the aggregate principal amount of senior
                             subordinated notes owned by each holder will not
                             change as a result of such subsequent issuance and
                             exchange. Any subsequent issuance of senior
                             subordinated notes by us may affect the tax
                             treatment of the IDSs and senior subordinated
                             notes. See "Material United States Federal Income
                             Tax Consequences--United States Holders--Senior
                             Subordinated Notes--Additional Issuances."

Ranking of senior
subordinated notes and
guarantees.................  Valor is a holding company and derives all of its
                             operating income and cash flow from its
                             subsidiaries. The senior subordinated notes will be
                             our and any guarantor's unsecured senior
                             subordinated indebtedness, will be subordinated in
                             right of payment to all our and any guarantor's
                             existing and future senior indebtedness, including
                             our borrowings and all guarantees of the subsidiary
                             guarantors under the new credit facility. The
                             senior subordinated notes and guarantees will rank
                             pari passu in right of payment with all of our and
                             any guarantor's existing and future senior
                             subordinated indebtedness. The senior subordinated
                             notes will also be effectively subordinated to any
                             of our and any guarantor's secured indebtedness to
                             the extent of the value of the assets securing the
                             indebtedness.

                             The indenture governing the senior subordinated
                             notes will permit Valor and the subsidiary
                             guarantors to incur additional indebtedness,
                             including senior indebtedness, subject to specified
                             limitations. On a pro forma basis as of December
                             31, 2003:

                                --  Valor would have had no senior or pari passu
                                    indebtedness outstanding except for its
                                    guarantee under the new credit facility, as
                                    described below; and

                                --  VTC would have had $     million aggregate
                                    principal amount of senior secured
                                    indebtedness outstanding under the new
                                    credit facility plus approximately $
                                    million of letters of credit, which would
                                    have been guaranteed on a senior secured
                                    basis by the subsidiary guarantors, and
                                    approximately $     million of capital
                                    leases.

                                        14
Restrictive covenants......  The indenture governing the senior subordinated
                             notes will contain covenants with respect to us and
                             our restricted subsidiaries that will restrict:

                                --  the incurrence of additional indebtedness
                                    and the issuance of preferred stock and
                                    certain redeemable capital stock;

                                --  the payment of dividends on, and redemption
                                    of, capital stock;

                                --  a number of other restricted payments,
                                    including investments;

                                --  specified sales of assets;

                                --  specified transactions with affiliates;

                                --  the creation of a number of liens; and

                                --  consolidations, mergers and transfers of all
                                    or substantially all of our assets.

                             The indenture will also prohibit certain
                             restrictions on distributions from our restricted
                             subsidiaries. There will be no restriction in the
                             indenture, however, on our ability to incur
                             indebtedness in connection with the issuance of
                             additional IDSs so long as the ratio of the
                             aggregate principal amount of the additional senior
                             subordinated notes to the number of the additional
                             shares of Class A common stock will not exceed the
                             equivalent ratio represented by the then existing
                             IDSs. In addition, all the limitations and
                             prohibitions described above are subject to a
                             number of other important qualifications and
                             exceptions described under "Description of Senior
                             Subordinated Notes--Certain Covenants."

Listing....................  We do not anticipate that our senior subordinated
                             notes will be listed separately on any exchange.

                                        15
RISK FACTORS

You should carefully consider the information under the heading "Risk Factors"
and all other information in this prospectus before investing in the IDSs
(including the shares of our Class A common stock and senior subordinated notes
represented by the IDSs) or in our senior subordinated notes.

                   GENERAL INFORMATION ABOUT THIS PROSPECTUS

Throughout this prospectus, unless otherwise noted, we have assumed:

   --  that our reorganization will be consummated;

   --  no exercise of the underwriters' over-allotment option;

   --  a   % annual interest rate on the senior subordinated notes, which is
       subject to change depending on market conditions prior to the pricing
       date;

   --  an initial public offering price of $     per IDS, the midpoint of the
       range set forth on the cover page of this prospectus, comprised of $
       allocated to one share of Class A common stock and $     allocated to the
       $     senior subordinated note included in each IDS, which equals 100% of
       the principal amount thereof; and

   --  an initial public offering price of the senior subordinated notes that
       are being offered separately and not in the form of IDSs, of      % of
       their stated principal amount.

Unless the context otherwise requires, references in this prospectus to the
"offering" refer collectively to the offering of:

   --  an aggregate of      IDSs to the public;

   --  an aggregate of      IDSs to our existing equity holders; and

   --  $     aggregate principal amount of senior subordinated notes to the
       public separately (not in the form of IDSs).

Furthermore, unless the context otherwise requires, references in this
prospectus to "senior subordinated notes" refer to both senior subordinated
notes underlying IDSs as well as senior subordinated notes issued separately
(not in the form of IDSs).

                                        16
SUMMARY CONSOLIDATED FINANCIAL INFORMATION

Valor is a holding company and has no direct operations. Valor was formed for
the sole purpose of reorganizing our corporate structure and consummating this
offering. Valor's principle assets are the direct and indirect equity interests
of its subsidiaries. As a result, we have not provided separate historical
financial results for Valor and present only the historical consolidated
financial results of Valor Telecommunications, LLC. The following table sets
forth our summary consolidated financial information derived from our audited
consolidated financial statements for each of the years ended December 31, 2001
through December 31, 2003.

The information in the table below is only a summary and should be read together
with our audited consolidated financial statements for the years ended December
31, 2001, 2002 and 2003 and the related notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," all as included
elsewhere in this prospectus.
YEAR ENDED DECEMBER 31,
                                                           ----------------------------------
                                                             2001        2002(1)       2003
                                                           ---------    ---------    --------
                                                                 (Dollars in thousands)
STATEMENT OF OPERATIONS DATA:
   Operating revenues....................................  $ 424,916    $ 479,883    $497,334
   Operating income......................................    103,298      159,251     182,273
   Net (loss) income(2)..................................    (53,355)      16,302      58,233
   CASH FLOW DATA FROM CONTINUING OPERATIONS:
   Net cash provided by operating activities.............  $ 100,301    $ 150,383    $166,065
   Net cash used in investing activities.................   (106,614)    (216,773)    (66,299)
   Net cash provided by (used in) financing activities...      8,117       71,015     (99,465)
   OTHER DATA:
   Capital expenditures..................................  $ 107,869    $  89,527    $ 69,850
   Acquisition of Kerrville Communications
     Corporation(3)......................................  $       -    $ 128,135    $      -
   Depreciation and amortization(4)......................  $ 110,843    $  73,273    $ 81,638
   Adjusted EBITDA(5)....................................  $ 215,141    $ 240,595    $262,707
   Ratio of earnings to fixed charges(6).................          -         1.1x        1.5x
   Total access lines(7).................................    551,599      571,308     556,745
DECEMBER 31, 2003
                                                       -------------------------------------------
                                                                                      PRO FORMA
                                                         ACTUAL      ADJUSTMENTS    AS ADJUSTED(8)
                                                       ----------    -----------    --------------
                                                                 (Dollars in thousands)
BALANCE SHEET DATA:
   Cash and cash equivalents.........................  $    1,414        $               $
   Net property, plant and equipment.................  $  769,570        $               $
   Total assets......................................  $2,039,043        $               $
   Long-term debt (including current maturities).....  $1,463,973        $               $
   Redeemable preferred interests....................  $  370,231        $               $
   Total common owners' equity.......................  $   49,862        $               $
---------------------------
(1)  We acquired all the outstanding common stock, preferred stock and common
     stock equivalents of Kerrville Communications Corporation ("KCC") on
     January 31, 2002 and have included the assets, liabilities and results of
     operations of KCC from that date.
(2)  Net (loss) income reported on the table above is after the effect of
     minority interest of $(3,595), $615 and $3,568 in 2001, 2002 and 2003,
     respectively, relating to individual investors' interests in our
     subsidiaries.
(3)  Reflects the purchase price for our acquisition of KCC, net of cash
     acquired.

                                        17
(4)  In accordance with Statement of Financial Accounting Standards ("SFAS") No.
     142, "Goodwill and Other Intangible Assets", effective January 1, 2002, we
     discontinued the amortization of goodwill. Amortization expense associated
     with goodwill was $53,900 for the year ended December 31, 2001.
(5)  Adjusted EBITDA, as defined in the indenture governing our senior
     subordinated notes, is calculated as net (loss) income, as adjusted for the
     following items:

     - Income tax expense;
     - Interest expense;
     - Depreciation and amortization;
     - Minority interest;
     - Loss on interest rate hedging arrangements;
     - Earnings from unconsolidated cellular partnerships;
     - Other income and expense, net;
     - Loss on discontinued operations;
     - Cumulative effect of change in accounting principle;
     - Management fees paid to equity sponsors; and
     - Other non-recurring items, as defined in the indenture.

     We consider Adjusted EBITDA an important indicator to investors in IDSs
     because it provides information related to our ability to provide cash
     flows to service debt, pay dividends and fund capital expenditures. We
     present this discussion of Adjusted EBITDA because covenants in the
     indenture governing our senior subordinated notes contain ratios based on
     this measure. As such, the summary historical financial information
     presented above includes our historical Adjusted EBITDA. For example, our
     ability to incur additional debt and make restricted payments requires a
     ratio of total leverage to Adjusted EBITDA of     to     , except that we
     may incur certain debt and make certain restricted payments without regard
     to the ratio, including our ability to incur an unlimited amount of
     indebtedness in connection with the issuance of additional IDSs so long as
     the ratio of the aggregate principal amount of the additional subordinated
     notes to the number of the additional shares of our common stock will not
     exceed the equivalent ratio represented by the then existing IDSs. Adjusted
     EBITDA is not a measure in accordance with GAAP, and should not be
     considered a substitute for, operating income (loss), net income (loss),
     and other measures of financial performance reported in accordance with
     GAAP. In addition, Adjusted EBITDA should not be used as a substitute for
     the Company's various cash flow measures (e.g., operating, investing and
     financing cash flows), which are discussed in "Management's Discussion and
     Analysis of Financial Condition and Results of Operations."
YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
CALCULATION OF ADJUSTED EBITDA:
   Net (loss) income.......................................  $(53,355)   $ 16,302    $ 58,233
   Adjustments:
     Income tax expense(a).................................         -       1,649       2,478
     Interest expense......................................   133,156     127,365     119,185
     Depreciation and amortization.........................   110,843      73,273      81,638
     Minority interest.....................................    (3,595)        615       3,568
     Loss on interest rate hedging arrangements............    14,292      12,348       2,113
     Earnings from unconsolidated cellular partnerships....         -      (2,757)     (3,258)
     Other income and expense, net.........................      (358)        268          62
     Loss (income) on discontinued operations..............     8,443       3,461        (108)
     Cumulative effect of change in accounting principle...     4,715           -           -
     Management fees paid to equity sponsors...............     1,000       1,000       1,000
                                                             --------    --------    --------
   Total adjustments.......................................   268,496     217,222     206,678
                                                             --------    --------    --------
   Other non-recurring items, as defined in the indenture:
     Termination benefits associated with workforce
        reduction..........................................         -       1,768           -
     MCI bankruptcy........................................         -       4,998      (3,386)
     Transaction fees for acquisitions not consummated.....         -         305       1,182
                                                             --------    --------    --------
   Total other non-recurring items, as defined in the
     indenture.............................................         -       7,071      (2,204)
                                                             --------    --------    --------
   ADJUSTED EBITDA.........................................  $215,141    $240,595    $262,707
                                                             ========    ========    ========
(a)    Relates to the federal income tax expense of Valor
                Telecommunications Southwest II, LLC, the holding company of the
                operating entities relating to our KCC business, which has
                elected to be taxed as a corporation.

                                        18
YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001      2002(1)       2003
                                                             --------    --------    --------
                                                                  (DOLLARS IN THOUSANDS)
RECONCILIATION OF NET CASH PROVIDED BY OPERATING
     ACTIVITIES TO ADJUSTED EBITDA:
   Net cash provided by operating activities...............  $100,301    $150,383    $166,065
   Adjustments:
     Interest expense......................................   133,156     127,365     119,185
     Amortization of debt issuance costs...................    (5,735)     (6,801)     (8,105)
     Non-cash interest expense.............................   (29,025)    (32,612)    (17,788)
     Provision for doubtful accounts receivable............   (11,378)    (11,393)     (3,298)
     Changes in working capital............................    29,923      (3,291)        (33)
     Other, net............................................    (2,743)      7,049       5,795
     Income tax expense....................................         -       1,649       2,478
     Deferred income taxes.................................         -         (93)       (450)
     Other income and expense, net.........................      (358)        268          62
     Management fees paid to equity sponsors...............     1,000       1,000       1,000
   Other non-recurring items, as defined in the indenture:
     Termination benefits associated with workforce
        reduction..........................................         -       1,768           -
     MCI bankruptcy........................................         -       4,998      (3,386)
     Transaction fees for acquisitions not consummated.....         -         305       1,182
                                                             --------    --------    --------
   ADJUSTED EBITDA.........................................  $215,141    $240,595    $262,707
                                                             ========    ========    ========
---------------------------
(6)  For purposes of determining the ratio of earnings to fixed charges,
     earnings are defined as pretax income from continuing operations before
     adjustment for minority interest, less earnings from unconsolidated
     cellular partnerships and interest capitalized plus fixed charges,
     amortization of capitalized interest and distributed income from
     unconsolidated cellular partnerships. Fixed charges include interest costs,
     both expensed and capitalized, on all indebtedness, amortization of
     deferred financing costs and one-third of the rental expense on operating
     leases, representing the portion of rental expense we consider to be
     attributable to interest. In 2001, earnings were insufficient to cover
     fixed charges by $47.0 million.
(7)  We calculate our access lines in service by counting the number of working
     communication facilities that provide local service that terminate in a
     central office or to a customers premise. Non-revenue producing lines
     provisioned for company official use and for test purposes are included in
     our total access line counts. There were 11,305, 11,258 and 11,703
     non-revenue producing lines included in our total access line count at
     December 31, 2001, 2002 and 2003 which represented 2.1%, 2.0% and 2.0% of
     our total access line counts, respectively.
(8)  The pro forma as adjusted balance sheet data have been prepared assuming
     the closing of this offering, the repurchase of 100% of our senior
     subordinated notes and completion of the bank refinancing, including
     payment of related fees and expenses. The pro forma as adjusted balance
     sheet data give effect to those transactions as if they had occurred on
     December 31, 2003. As described in "Risk Factors" and further described in
     "Material United States Federal Income Tax Consequences," we plan to
     account for the issuance of the IDSs as representing shares of common stock
     and senior subordinated notes. We will deduct the interest expense on the
     senior subordinated notes from taxable income for income tax purposes and
     report the full benefit of the income tax deduction in our consolidated
     financial statements. We cannot assure you that the Internal Revenue
     Service will not seek to challenge the treatment of these senior
     subordinated notes as debt and the amount of interest expense deducted. If
     the Internal Revenue Service were to challenge this treatment successfully,
     we would have to provide an additional liability for the previously
     recorded benefit for the interest deductions.

                                        19
INTEREST AND DIVIDEND PAYMENTS TO IDS HOLDERS

The table below shows certain information relating to our available cash for the
year ended December 31, 2003 on a pro forma basis to give effect to this
offering, including the use of proceeds from this offering, our reorganization,
and to give effect to our new credit facility. For purposes of this
presentation, we have assumed that our reorganization has been consummated.

The information in the table below assumes that these transactions occurred on
January 1, 2003.
PRO FORMA
                                                                 --------------
                                                                   YEAR ENDED
                                                                  DECEMBER 31,
                                                                      2003
                                                                 --------------
                                                                 (In Thousands)
Adjusted EBITDA (actual)(1).................................     $262,707
   Deductions:
     Capital expenditures(2)...................................       69,850
     Interest expense on new credit facility(3)................
     Interest expense on senior subordinated notes(4)..........
     State and federal income tax expense(5)...................        2,478
     Estimated additional public company administrative
        expense(6).............................................        2,500
                                                                    --------
     Increase in available cash before dividend payments.......     $
                                                                    --------
   Dividends on shares of common stock.........................
                                                                    --------
     Net change in available cash..............................     $
                                                                    ========
---------------------------

(1) Adjusted EBITDA excludes (a) $  in compensation expense associated with
    management's exchange of all of their outstanding stock options and phantom
    stock units for   IDSs; (b) $  in expense from the writeoff of deferred
    financing costs associated with the existing indebtedness; (c) $  in expense
    from the excess of the fair value of the IDSs, Class B common stock and cash
    received over the carrying amount of the redeemable preferred interests
    contributed by our existing equity holders to Valor as part of our
    reorganization; and (d) $  in expenses associated with our reorganization,
    redemption of existing indebtedness and other professional fees.

(2) Represents our capital expenditures for the year ended December 31, 2003. We
    estimate that we will have capital expenditure requirements of approximately
    $68.8 million in each of 2004 and 2005.

(3) Assumes interest at current rates, estimated as     % average interest, on
    $    million outstanding borrowings under the new term loan and a     %
    commitment fee on the average unused balance of         million under the
    new revolver.

(4) Assumes     % interest on $    million of senior subordinated notes
    represented by the IDSs and $    million of senior subordinated notes issued
    separately (not in the form of IDSs).

(5) Represents our income tax expense for the year ended December 31, 2003. This
    does not reflect the impact of our reorganization and we expect that our
    income tax expense will be $    in 2004.

(6) Consists of estimated incremental accounting and audit fees, director and
    officer liability insurance, expenses relating to the annual stockholders
    meeting, printing expenses, investor relations expenses, additional filing
    fees, additional trustee fees, registrar and transfer agent expenses,
    directors fees, additional legal fees, listing fees and miscellaneous fees.

Under the dividend policy we expect to establish upon consummation of this
offering with respect to shares of Class A common stock underlying IDSs, the pro
forma use of the available cash before additional public company administrative
expenses, and dividend payments shown in the above table is as follows:

Dividend payments are discretionary. See "Dividend Policy."

Interest payments on the senior subordinated notes may be deferred for up to
eight quarters in the aggregate prior to           , 2009 and may be deferred at
our option for not more than two quarters between           , 2009 and
          , 2014, or any additional five-year term.

Based on the foregoing, aggregate payments to IDS holders and holders of
separate senior subordinated notes for the year ended December 31, 2003 would
have been as follows:
AGGREGATE   PER IDS    PER NOTE
                                                               ---------   --------   --------
                                                                       (In Thousands)
Interest on senior subordinated notes.....................  $           $          $
   Dividends on shares of Class A common stock represented by
     IDSs....................................................
                                                               --------    --------   --------
        Total................................................  $           $          $
                                                               ========    ========   ========
20
RISK FACTORS

Before you invest in the IDSs (including the shares of our Class A common stock
and our senior subordinated notes represented by the IDSs) or the senior
subordinated notes, you should carefully consider the various risks of the
investment, including those described below, together with all of the other
information included in this prospectus. If any of these risks actually occur,
our business, financial condition or operating results could be adversely
affected. In that case, the trading price of the IDSs and the senior
subordinated notes could decline and you could lose all or part of your
investment.

RISKS RELATING TO THE IDSS, THE SHARES OF CLASS A COMMON STOCK AND SENIOR
SUBORDINATED NOTES REPRESENTED BY THE IDSS, THE SENIOR SUBORDINATED NOTES
OFFERED SEPARATELY (NOT IN THE FORM OF IDSS), AND OUR NEW CREDIT FACILITY

WE HAVE SUBSTANTIAL INDEBTEDNESS THAT COULD RESTRICT OUR ABILITY TO PAY INTEREST
AND PRINCIPAL ON THE SENIOR SUBORDINATED NOTES AND TO PAY DIVIDENDS WITH RESPECT
TO SHARES OF OUR CLASS A COMMON STOCK REPRESENTED BY THE IDSS AND IMPACT OUR
FINANCING OPTIONS AND LIQUIDITY POSITION.

Our ability to make distributions, pay dividends or make other payments will be
subject to applicable law and contractual restrictions contained in the
instruments governing our indebtedness, including the new credit facility which
we guarantee on a senior secured basis. The degree to which we are leveraged on
a consolidated basis could have important consequences to the holders of the
IDSs and of separate senior subordinated notes, including:

   --  our ability to obtain additional financing in the future for working
       capital, capital expenditures or acquisitions may be limited;

   --  we may be unable to refinance our indebtedness on terms acceptable to us
       or at all;

   --  a significant portion of our cash flow from operations is likely to be
       dedicated to the payment of the principal of and interest on our
       indebtedness, thereby reducing funds available for other corporate
       purposes; and

   --  our substantial indebtedness may make us more vulnerable to economic
       downturns and limit our ability to withstand competitive pressures.

Although our new credit facility will contain total leverage, senior leverage
and interest coverage covenants that will restrict our ability to incur debt as
described under "Description of Certain Indebtedness--New Credit Facility," the
indenture governing the senior subordinated notes allows us to issue an
unlimited amount of senior subordinated notes so long as we issue additional
shares of Class A common stock in the appropriate proportionate amounts to
represent additional IDSs.

WE MAY AMEND THE TERMS OF OUR NEW CREDIT FACILITY OR WE MAY ENTER INTO NEW
AGREEMENTS THAT GOVERN OUR SENIOR INDEBTEDNESS AND THE AMENDED OR NEW TERMS MAY
SIGNIFICANTLY AFFECT OUR ABILITY TO PAY INTEREST ON OUR SENIOR SUBORDINATED
NOTES AND DIVIDENDS ON SHARES OF OUR COMMON STOCK.

Our new credit facility contains significant restrictions on our ability to pay
interest on the senior subordinated notes and dividends on shares of common
stock based on meeting our interest coverage ratio and senior leverage ratio and
compliance with other conditions (including timely delivery of applicable
financial statements). As a result of general economic conditions, conditions in
the lending markets, the results of our business or for any other reason, we may
elect or be required to amend or refinance our new credit facility, at or prior
to maturity, or enter into additional agreements for senior indebtedness.
Regardless of any protection you have in the indenture governing the senior
subordinated notes, any such amendment, refinancing or additional indebtedness
may contain covenants that could limit in a significant manner our ability to
make interest payments and pay dividends to you.

                                        21
WE ARE SUBJECT TO RESTRICTIVE DEBT COVENANTS THAT LIMIT OUR BUSINESS FLEXIBILITY
BY IMPOSING OPERATING AND FINANCIAL RESTRICTIONS ON OUR OPERATIONS.

The agreements governing our indebtedness impose significant operating and
financial restrictions on us. These restrictions prohibit or limit, among other
things:

   --  the incurrence of additional indebtedness and the issuance of preferred
       stock and certain redeemable capital stock;

   --  a number of other restricted payments, including investments and
       acquisitions;

   --  specified sales of assets;

   --  specified transactions with affiliates;

   --  the creation of a number of liens;

   --  consolidations, mergers and transfers of all or substantially all of our
       assets; and

   --  our ability to change the nature of our business.

The terms of the new credit facility include other and more restrictive
covenants and prohibit us from prepaying our other indebtedness, including the
senior subordinated notes, while indebtedness under the new credit facility is
outstanding. The new credit facility also requires us to maintain certain
specified financial ratios and satisfy financial condition tests, including,
without limitation, a maximum total leverage ratio, maximum senior leverage
ratio and a minimum interest coverage ratio. Our ability to comply with the
ratios or tests may be affected by events beyond our control, including
prevailing economic, financial and industry conditions.

A breach of any of these covenants, ratios or tests could result in a default
under the new credit facility and/or the indenture. Events of default under the
new credit facility would prohibit us from making payments on the senior
subordinated notes in cash, including payment of interest when due. In addition,
upon the occurrence of an event of default under the new credit facility, the
lenders could elect to declare all amounts outstanding under the new credit
facility, together with accrued interest, to be immediately due and payable. If
we were unable to repay those amounts, the lenders could proceed against the
security granted to them to secure that indebtedness. If the lenders accelerate
the payment of the indebtedness, our assets may not be sufficient to repay in
full this indebtedness and our other indebtedness, including the senior
subordinated notes.

WE ARE A HOLDING COMPANY AND RELY ON DIVIDENDS AND OTHER PAYMENTS, ADVANCES AND
TRANSFERS OF FUNDS FROM OUR SUBSIDIARIES TO MEET OUR DEBT SERVICE AND OTHER
OBLIGATIONS.

We are a holding company and conduct all of our operations through our
subsidiaries. We currently have no significant assets other than equity
interests in our subsidiaries which will be pledged to the creditors under the
new credit facility which we guarantee. As a result, we will rely on dividends
and other payments or distributions from our subsidiaries to meet our debt
service obligations and enable us to pay dividends. The ability of our
subsidiaries to pay dividends or make other payments or distributions to us will
depend on their respective operating results and may be restricted by, among
other things, the laws of their jurisdiction of organization (which may limit
the amount of funds available for the payment of dividends), agreements of those
subsidiaries, the terms of the new credit facility and the covenants of any
future outstanding indebtedness we or our subsidiaries incur.

SUBJECT TO RESTRICTIONS SET FORTH IN THE INDENTURE, WE MAY DEFER THE PAYMENT OF
INTEREST TO YOU FOR A SIGNIFICANT PERIOD OF TIME.

Prior to           , 2009, we may, subject to restrictions set forth in the
indenture, defer interest payments on our senior subordinated notes on one or
more occasions for up to an aggregate period of eight quarters.

                                        22
In addition, after           , 2009 but before           , 2014, and during any
additional five-year term of the senior subordinated notes, if any, we may,
subject to certain restrictions, defer interest payments on our senior
subordinated notes on two occasions for up to an aggregate period of two
consecutive quarters. Deferred interest will bear interest at the same rate as
the senior subordinated notes. For any interest deferred during the first five
years, we are not obligated to pay any deferred interest until           , so
you may be owed a substantial amount of deferred interest that will not be due
and payable until such date. For any interest deferred after           , we are
not obligated to pay all of the deferred interest until           so you may be
owed a substantial amount of deferred interest that will not be due and payable
until such date.

YOU MAY NOT RECEIVE THE LEVEL OF DIVIDENDS PROVIDED FOR IN THE DIVIDEND POLICY
OUR BOARD OF DIRECTORS IS EXPECTED TO ADOPT UPON THE CLOSING OF THIS OFFERING OR
ANY DIVIDENDS AT ALL.

Our board of directors may, in its discretion, amend or repeal the dividend
policy it is expected to adopt upon the closing of this offering. Our board of
directors may decrease the level of dividends provided for in this dividend
policy or entirely discontinue the payment of dividends. Future dividends with
respect to shares of our capital stock, if any, will depend on, among other
things, our results of operations, cash requirements, financial condition,
contractual restrictions, business opportunities, provisions of applicable law
and other factors that our board of directors may deem relevant. The indenture
governing our senior subordinated notes and the new credit facility contain
significant restrictions on our ability to make dividend payments, including, if
we defer interest on the senior subordinated notes under the indenture,
restrictions on the payment of dividends until we have paid all deferred
interest.

In addition, our after-tax cash flow available for dividend and interest
payments would be reduced if the senior subordinated notes were treated as
equity rather than as debt for United States federal income tax purposes. In
that event, the stated interest on the senior subordinated notes could be
treated as a dividend and interest on the senior subordinated notes would not be
deductible by us for United States federal income tax purposes. Our inability to
deduct interest on the senior subordinated notes could materially increase our
taxable income and, thus, our United States federal and applicable state income
tax liability.

YOU WILL BE IMMEDIATELY DILUTED BY $     PER SHARE OF CLASS A COMMON STOCK IF
YOU PURCHASE IDSS IN THIS OFFERING.

If you purchase IDSs in this offering, based on the book value of the assets and
liabilities reflected on our balance sheet, you will experience an immediate
dilution of $     per share of Class A common stock represented by the IDSs
which exceeds the entire price allocated to each share of Class A common stock
represented by the IDSs in this offering because there will be a net tangible
book deficit for each share of Class A common stock outstanding immediately
after this offering. Our net tangible book value as of December 31, 2003, after
giving effect to this offering, was approximately $     million, or $     per
share of Class A common stock.

OUR INTEREST EXPENSE MAY INCREASE SIGNIFICANTLY AND COULD CAUSE OUR NET INCOME
AND DISTRIBUTABLE CASH TO DECLINE SIGNIFICANTLY.

The new credit facility will be subject to periodic renewal or must otherwise be
refinanced. We may not be able to renew or refinance the new credit facility, or
if renewed or refinanced, the renewal or refinancing may occur on less favorable
terms. Borrowings under the revolving facility will be made at a floating rate
of interest. In the event of an increase in the base reference interest rates,
our interest expense will increase and could have a material adverse effect on
our ability to make cash dividend payments to our shareholders. Our ability to
continue to expand our business will, to a large extent, be dependent upon our
ability to borrow funds under our new credit facility and to obtain other third
party financing, including through the sale of IDSs or other securities. We
cannot assure you that such financing will be available to us on favorable terms
or at all.

                                        23
WE MAY NOT GENERATE SUFFICIENT FUNDS FROM OPERATIONS TO PAY OUR INDEBTEDNESS AT
MATURITY OR UPON THE EXERCISE BY HOLDERS OF THEIR RIGHTS UPON A CHANGE OF
CONTROL.

A significant portion of our cash flow from operations will be dedicated to
servicing our debt requirements and making capital expenditures to maintain the
quality of our physical plant. In addition, we currently expect to distribute a
significant portion of any remaining cash earnings to our stockholders in the
form of quarterly dividends. Moreover, prior to the maturity of our senior
subordinated notes, we will not be required to make any payments of principal on
our senior subordinated notes. We may not generate sufficient funds from
operations to repay the principal amount of our indebtedness at maturity or in
case you exercise your right to require us to purchase your notes upon a change
of control. We may, therefore, need to refinance our debt or raise additional
capital. These alternatives may not be available to us when needed or on
satisfactory terms due to prevailing market conditions, a decline in our
business or restrictions contained in our senior debt obligations.

OUR NEW CREDIT FACILITY AND THE INDENTURE GOVERNING OUR SENIOR SUBORDINATED
NOTES PERMIT US TO PAY A SIGNIFICANT PORTION OF OUR FREE CASH FLOW TO
STOCKHOLDERS IN THE FORM OF DIVIDENDS.

Although our new credit facility and the indenture governing our senior
subordinated notes have some limitations on our payment of dividends, they
permit us to pay a significant portion of our free cash flow to stockholders in
the form of dividends. Following completion of this offering, we intend to pay
quarterly dividends. Specifically, the indenture governing our senior
subordinated notes permits us to pay up to the quarterly base dividend level in
any fiscal quarter, which equals   % of our excess cash (which is Adjusted
EBITDA, as defined in the indenture, minus the sum of cash interest expense,
cash income tax expense and capital expenditures) for the 12 fiscal month period
divided by four, as more fully described in "Description of Senior Subordinated
Notes--Certain Covenants." In addition, if the actual dividends paid in any
fiscal quarter are less than the quarterly base dividend level, the indenture
permits us to use the difference between the aggregate amounts of dividends
actually paid and the quarterly base dividend level for such quarter for the
payment of dividends at a later date. The new credit facility permits us to use
up to   % of the distributable cash, as defined in the new credit facility, plus
certain other amounts under certain limited circumstances, to fund dividends on
our shares of common stock. Any amounts paid by us in the form of dividends will
not be available in the future to satisfy our obligations under the senior
subordinated notes.

THE REALIZABLE VALUE OF OUR ASSETS UPON LIQUIDATION MAY BE INSUFFICIENT TO
SATISFY CLAIMS.

At December 31, 2003, our assets included goodwill of $1,057 million and
deferred financing costs of $54 million. Combined, these items represent
approximately 54.5% of our total consolidated assets. The value of these assets
will continue to depend significantly upon the success of our business as a
going concern and the growth in cash flows. As a result, in the event of a
default under our new credit facility or on our senior subordinated notes or any
bankruptcy or dissolution of our company, the realizable value of these assets
may be substantially lower and may be insufficient to satisfy the claims of our
creditors.

DEFERRAL OF INTEREST PAYMENTS WOULD HAVE ADVERSE TAX CONSEQUENCES FOR YOU AND
MAY ADVERSELY AFFECT THE TRADING PRICE OF THE SENIOR SUBORDINATED NOTES.

If we defer interest payments on the senior subordinated notes, you will be
required to recognize interest income for United States federal income tax
purposes in respect of the senior subordinated notes before you receive any cash
payment of this interest. In addition, we will not pay you this cash if you sell
the IDSs or the senior subordinated notes, as the case may be, before the end of
any deferral period or before the record date relating to interest payments that
are to be paid.

The IDSs or the senior subordinated notes may trade at a price that does not
fully reflect the value of accrued but unpaid interest on the senior
subordinated notes if we defer interest payments. In addition, the requirement
that we defer payments of interest on the senior subordinated notes under
certain

                                        24
circumstances may mean that the market price for the IDSs or the senior
subordinated notes may be more volatile than other securities that do not have
this requirement.

BECAUSE OF THE SUBORDINATED NATURE OF THE NOTES, HOLDERS OF OUR SENIOR
SUBORDINATED NOTES MAY NOT BE ENTITLED TO BE PAID IN FULL, IF AT ALL, IN A
BANKRUPTCY, LIQUIDATION OR REORGANIZATION OR SIMILAR PROCEEDING.

As a result of the subordinated nature of our notes and related guarantees, upon
any distribution to our creditors or the creditors of the subsidiary guarantors
in bankruptcy, liquidation or reorganization or similar proceeding relating to
us or the subsidiary guarantors or our or their property, the holders of our
senior indebtedness and senior indebtedness of the subsidiary guarantors will be
entitled to be paid in full in cash before any payment may be made with respect
to our senior subordinated notes or the subsidiary guarantees.

In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to us or the subsidiary guarantors, holders of our senior
subordinated notes will participate with all other holders of unsecured
indebtedness of ours or the subsidiary guarantors that are similarly
subordinated in the assets remaining after we and the subsidiary guarantors have
paid all senior indebtedness. In any of these cases, we and the subsidiary
guarantors may not have sufficient funds to pay all of our creditors. Holders of
our senior subordinated notes may, therefore, receive less, ratably, than the
holders of our senior indebtedness.

On a pro forma basis as of December 31, 2003, our senior subordinated notes and
the associated subsidiary guarantees would have ranked junior, on a consolidated
basis, to $     million of outstanding senior secured indebtedness plus
approximately $100,000 of letters of credit and the subsidiary guarantees would
have ranked junior to no senior unsecured debt and pari passu with approximately
$     million of outstanding indebtedness of ours and the subsidiary guarantors.
In addition, as of December 31, 2003, on a pro forma basis, we would have had
the ability to borrow up to an additional amount of $     million under the new
credit facility (less amounts reserved for letters of credit), which would have
ranked senior in right of payment to our senior subordinated notes.

Holders of our senior subordinated notes will be structurally subordinated to
the debt of our non-guarantor subsidiaries. Our partially owned domestic
subsidiaries will not be guarantors of our senior subordinated notes. As a
result, no payments are required to be made to us from the assets of these
subsidiaries.

In the event of a bankruptcy, liquidation or reorganization or similar
proceeding of any of the non-guarantor subsidiaries, holders of their
indebtedness, including their trade creditors, would generally be entitled to
payment of their claims from the assets of those subsidiaries before any assets
are made available for distribution to us for payment to you.

IN THE EVENT OF BANKRUPTCY OR INSOLVENCY, THE NOTES COULD BE EQUITABLY
SUBORDINATED OR RECHARACTERIZED AS EQUITY.

In the event of bankruptcy or insolvency, a party in interest may seek to
subordinate the notes under principles of equitable subordination or to
recharacterize the subordinated notes as equity. While we believe that any such
attempt should fail, there can be no assurance as to the outcome of such
proceedings. In the event a court subordinates the notes or recharacterizes them
as equity, we cannot assure you that you would recover any amounts owed on the
notes and you may be required to return any payments made to you on account of
the notes, potentially for up to six years prior to our bankruptcy. In addition,
should the court recharacterize the notes as equity you may not be able to
enforce the guaranties.

                                        25
THE GUARANTEES OF THE SENIOR SUBORDINATED NOTES BY OUR SUBSIDIARIES MAY BE
UNENFORCEABLE.

Under federal bankruptcy law and comparable provisions of state fraudulent
transfer laws, a guarantee could be voided, or claims in respect of a guarantee
could be subordinated to all other debt of the guarantor, if, among other
things, the guarantor, at the time that it assumed the guarantee:

   --  issued the guarantee to delay, hinder or defraud present or future
       creditors;

   --  received less than reasonably equivalent value or fair consideration for
       issuing the guarantee and, at the time it issued the guarantee;

   --  was insolvent or rendered insolvent by reason of issuing the guarantee
       and the application of the proceeds of the guarantee;

   --  was engaged or about to engage in a business or a transaction for which
       the guarantor's remaining assets available to carry on its business
       constituted unreasonably small capital;

   --  intended to incur, or believed that it would incur, debts beyond its
       ability to pay the debts as they mature; or

   --  was a defendant in an action for money damages, or had a judgment for
       money damages docketed against it if, in either case, after final
       judgment, the judgment is unsatisfied.

In addition, any payment by the guarantor under its guarantee could be voided
and required to be returned to the guarantor or to a fund for the benefit of the
creditors of the guarantor or the guarantee could be subordinated to other debt
of the guarantor. What constitutes insolvency for the purposes of fraudulent
transfer laws varies depending upon the law applied in any proceeding to
determine if a fraudulent transfer has occurred. Generally, however, a person
would be considered insolvent if, at the time it incurred the debt:

   --  the sum of its debts, including contingent liabilities, was greater than
       the fair saleable value of its assets;

   --  the present fair saleable value of its assets was less than the amount
       that would be required to pay its probable liability on its existing
       debts, including contingent liabilities, as they become absolute and
       mature; or

   --  it could not pay its debts as they become due.

We believe that immediately after the issuance of the senior subordinated notes
and the guarantees, we and each of the guarantors will be solvent, have
sufficient capital to carry on our respective businesses and be able to pay our
respective debts as they mature. We cannot be sure, however, as to what standard
a court would apply in making these determinations or that a court would reach
the same conclusions with regard to these issues. Regardless of the standard
that the court uses, we cannot be sure that the issuance by the subsidiary
guarantors of the subsidiary guarantees would not be voided or the subsidiary
guarantees would not be subordinated to their other debt.

The guarantee of our senior subordinated notes by any subsidiary guarantor could
be subject to the claim that since the guarantee was incurred for the benefit of
Valor and only indirectly for the benefit of the subsidiary guarantor, the
obligations of the subsidiary guarantor were incurred for less than fair
consideration. If such a claim were successful and it was proven that the
subsidiary guarantor was insolvent at the time the guarantee was issued, a court
could void the obligations of the subsidiary guarantor under the guarantee or
subordinate these obligations to the subsidiary guarantor's other debt or take
action detrimental to holders of the subordinated notes. If the guarantee of any
subsidiary guarantor were voided, our senior subordinated notes would be
effectively subordinated to the indebtedness and other credit obligations of
that subsidiary guarantor.

                                        26
THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF IDSS AND SENIOR SUBORDINATED NOTES ARE UNCLEAR.

No statutory, judicial or administrative authority directly addresses the
treatment of the IDSs or the senior subordinated notes, or instruments similar
to the IDSs or the senior subordinated notes, for United States federal income
tax purposes. As a result, the United States federal income tax consequences of
the purchase, ownership and disposition of IDSs and senior subordinated notes
are unclear. We believe that an IDS should be treated as a unit representing a
share of common stock and senior subordinated notes, and that the senior
subordinated notes should be classified as debt for United States federal income
tax purposes. However, the IRS or the courts may take the position that the IDSs
are a single security classified as equity, or that the senior subordinated
notes are properly classified as equity for United States federal income tax
purposes, which could adversely affect the amount, timing and character of
income, gain or loss in respect of your investment in IDSs or senior
subordinated notes, and materially increase our taxable income and, thus, our
United States federal and applicable state income tax liability. This would
reduce our after-tax cash flow and materially and adversely impact our ability
to make interest and dividend payments on the senior subordinated notes and the
common stock. Foreign holders could be subject to withholding or estate taxes
with regard to the senior subordinated notes in the same manner as they will be
with regard to the common stock. Payments to foreign holders would not be
grossed-up for any such taxes. For discussion of these tax-related risks, see
"Material United States Federal Income Tax Consequences."

THE ALLOCATION OF THE PURCHASE PRICE OF THE IDSS MAY NOT BE RESPECTED.

The purchase price of each IDS must be allocated for tax purposes between the
share of common stock and senior subordinated notes comprising the IDS in
proportion to their respective fair market values at the time of purchase. If
our allocation is not respected (because, for example, the separately issued
senior subordinated notes are sold to the public for a price that differs
materially from our allocation), then it is possible that the senior
subordinated notes will be treated as having been issued with original issue
discount, or OID (if the allocation to the senior subordinated notes were
determined to be too high), or amortizable bond premium (if the allocation to
the senior subordinated notes were determined to be too low). You generally
would be required to include OID in income in advance of the receipt of cash
attributable to that income and would be able to elect to amortize bond premium
over the term of the senior subordinated notes.

THE IRS MAY NOT VIEW THE INTEREST RATE ON THE SENIOR SUBORDINATED NOTES AS AN
ARM'S LENGTH RATE.

We plan to deduct the interest expense on the senior subordinated notes from
taxable income for income tax purposes and to report the full benefit of the
income tax deductions in our consolidated financial statements. If the IRS were
to determine that the interest rate on the senior subordinated notes did not
represent an arm's length rate, then any excess of the amount paid on the senior
subordinated notes over the arm's length rate would not be deductible and could
be recharacterized as a dividend payment instead of an interest payment. In
addition, the reclassification of interest payments as dividend payments may
give rise to an event of default under our new credit facility. In such case,
our taxable income and thus, our United States federal income tax liability
could be materially increased and we would have to provide an additional
liability in our consolidated financial statements for the previously recorded
benefit for the interest deductions. In addition, foreign holders could be
subject to withholding taxes with regard to the recharacterized amounts in the
same manner as they will be with regard to dividends paid on the common stock.
If the interest rate on the senior subordinated notes were determined to be less
than an arm's length rate, the senior subordinated notes could be treated as
issued with OID, which you would be required to include in income over the term
of the senior subordinated notes in advance of the receipt of cash attributable
to that income.

                                        27
BECAUSE OF THE DEFERRAL OF INTEREST PROVISIONS, THE SENIOR SUBORDINATED NOTES
MAY BE TREATED AS ISSUED WITH OID.

Under applicable Treasury regulations, a "remote" contingency that stated
interest will not be timely paid is disregarded in determining whether a debt
instrument is issued with OID. Although there is no authority directly on point,
based on our financial forecasts, we believe that the likelihood of deferral of
interest payments on the senior subordinated notes is remote within the meaning
of the Treasury regulations. Based on the foregoing, although the matter is not
free from doubt because of the lack of direct authority, the senior subordinated
notes should not be considered to be issued with OID at the time of their
original issuance. If deferral of any payment of interest were determined not to
be "remote," then the senior subordinated notes would be treated as issued with
OID at the time of issuance. In such case, all stated interest on the senior
subordinated notes would be treated as OID, with the consequence that all
holders would be required to include the yield on the senior subordinated notes
in income as it accrued on a constant yield basis, possibly in advance of their
receipt of the associated cash and regardless of their method of tax accounting.

SUBSEQUENT ISSUANCES OF SENIOR SUBORDINATED NOTES MAY CAUSE YOU TO RECOGNIZE
TAXABLE GAIN AND/OR ORIGINAL ISSUE DISCOUNT AND MAY REDUCE YOUR RECOVERY IN THE
EVENT OF BANKRUPTCY.

The United States federal income tax consequences to you of the subsequent
issuance of senior subordinated notes with OID (or any issuance of senior
subordinated notes thereafter) are unclear. In the future, we may issue senior
subordinated notes underlying IDSs in exchange for shares of our Class B common
stock. The indenture governing the senior subordinated notes and the agreements
with DTC will provide that, in the event that there is a subsequent issuance of
senior subordinated notes having terms substantially identical to the senior
subordinated notes offered hereby, each holder of senior subordinated notes or
IDSs, as the case may be, agrees that a portion of such holder's senior
subordinated notes will be automatically exchanged for a portion of the senior
subordinated notes acquired by the holders of such subsequently issued senior
subordinated notes.

The aggregate stated principal amount of senior subordinated notes owned by you
and each other holder will not change as a result of such subsequent issuance
and exchange. However, under applicable law, it is possible that the holders of
subsequently issued senior subordinated notes (to the extent issued with OID)
will not be entitled to a claim for the portion of their principal amount that
represents unaccrued OID in the event of an acceleration of the senior
subordinated notes or a bankruptcy proceeding occurring prior to the maturity of
the senior subordinated notes. Whether the receipt of subsequently issued senior
subordinated notes in exchange for previously issued senior subordinated notes
in this automatic exchange constitutes a taxable exchange for United States
federal income tax purposes depends on whether the subsequently issued senior
subordinated notes are viewed as differing materially from the senior
subordinated notes exchanged. Due to a lack of applicable guidance, it is
unclear whether the subsequently issued senior subordinated notes would be
viewed as differing materially from the previously issued senior subordinated
notes for this purpose. Consequently, it is unclear whether an exchange of
senior subordinated notes for subsequently issued senior subordinated notes
results in a taxable exchange for United States federal income tax purposes, and
it is possible that the IRS might successfully assert that such an exchange
should be treated as a taxable exchange. In such case, you would recognize any
gain realized on the exchange, but a loss realized might be disallowed.

Regardless of whether the exchange is treated as a taxable event, such exchange
may result in an increase in the amount of OID, if any, that you are required to
accrue with respect to senior subordinated notes. Following any subsequent
issuance of senior subordinated notes with OID (or any issuance of senior
subordinated notes thereafter) and resulting exchange, we (and our agents) will
report any OID on any subsequently issued senior subordinated notes ratably
among all holders of senior subordinated notes and IDSs, and each holder of
senior subordinated notes and IDSs will, by purchasing senior subordinated notes
or IDSs, as the case may be, agree to report OID in a manner consistent with
this approach. Consequently, you may be required to report OID as a result of a
subsequent issuance (even though you

                                        28
purchased senior subordinated notes having no OID). This will generally result
in you reporting more interest income over the term of the senior subordinated
notes than you would have reported had no such subsequent issuance and exchange
occurred. However, the IRS may assert that any OID should be reported only to
the persons that initially acquired such subsequently issued senior subordinated
notes (and their transferees). In such case, the IRS might further assert that,
unless a holder can establish that it is not such a person (or a transferee
thereof), all of the senior subordinated notes held by such holder will have
OID. Any of these assertions by the IRS could create significant uncertainties
in the pricing of IDSs and senior subordinated notes and could adversely affect
the market for IDSs and senior subordinated notes.

IF WE SUBSEQUENTLY ISSUE SENIOR SUBORDINATED NOTES WITH SIGNIFICANT OID, THEN WE
MAY BE UNABLE TO DEDUCT ALL THE INTEREST ON THE SENIOR SUBORDINATED NOTES.

It is possible that the senior subordinated notes that we issue in a subsequent
issuance will be issued at a discount to their face value and, accordingly, may
have "significant OID" and thus be classified as "applicable high yield discount
obligations." If any such senior subordinated notes were so treated, then a
portion of the OID on such notes could be nondeductible by us and the remainder
would be deductible only when paid. This treatment would have the effect of
increasing our taxable income and may adversely affect our cash flow available
for interest payments and distributions to our shareholders.

BEFORE THIS OFFERING, THERE HAS NOT BEEN A PUBLIC MARKET FOR OUR IDSS, SHARES OF
OUR CLASS A COMMON STOCK OR SENIOR SUBORDINATED NOTES. THE PRICE OF THE IDSS MAY
FLUCTUATE SUBSTANTIALLY, WHICH COULD NEGATIVELY AFFECT IDS HOLDERS.

None of the IDSs, the shares of our Class A common stock or the senior
subordinated notes has a public market history. In addition, there has not been
an established market in the United States or in Canada for securities similar
to the IDSs. We cannot assure you that an active trading market for the IDSs
will develop in the future, and we currently do not expect that an active
trading market for the shares of our Class A common stock will develop until the
senior subordinated notes are redeemed or mature. If the senior subordinated
notes represented by your IDSs are redeemed or mature, the IDSs will
automatically separate and you will then hold the shares of our Class A common
stock. We do not intend to list our senior subordinated notes on any securities
exchange.

The initial public offering price of the IDSs has been determined by
negotiations among us, the existing equity holders and the representatives of
the underwriters and may not be indicative of the market price of the IDSs after
the offering. Factors such as quarterly variations in our financial results,
announcements by us or others, developments affecting us, our clients and our
suppliers, general interest rate levels and general market volatility could
cause the market price of the IDSs to fluctuate significantly.

FUTURE SALES OR THE POSSIBILITY OF FUTURE SALES OF A SUBSTANTIAL AMOUNT OF IDSS,
SHARES OF OUR COMMON STOCK OR OUR SENIOR SUBORDINATED NOTES MAY DEPRESS THE
PRICE OF THE IDSS AND THE SHARES OF OUR COMMON STOCK AND OUR SENIOR SUBORDINATED
NOTES.

Future sales or the availability for sale of substantial amounts of IDSs or
shares of our common stock or a significant principal amount of our senior
subordinated notes in the public market could adversely affect the prevailing
market price of the IDSs and the shares of our common stock and senior
subordinated notes and could impair our ability to raise capital through future
sales of our securities.

We may issue shares of our common stock and senior subordinated notes, which may
be in the form of IDSs, or other securities from time to time as consideration
for future acquisitions and investments. In the event any such acquisition or
investment is significant, the number of shares of our common stock and the
aggregate principal amount of senior subordinated notes, which may be in the
form of IDSs, or the number or aggregate principal amount, as the case may be,
of other securities that we may issue may in turn be significant. In addition,
we may also grant registration rights covering those IDSs, shares of our

                                        29
common stock, senior subordinated notes or other securities in connection with
any such acquisitions and investments.

REGULATORY RISKS

REGULATORY DEVELOPMENTS REGARDING THE TEXAS AND FEDERAL UNIVERSAL SERVICE FUND
COULD CURTAIL OUR PROFITABILITY.

We receive Texas and federal Universal Service Fund, or USF, revenues to support
the high cost of providing affordable telecommunications services in rural
markets. Such support payments represented 24.1% of our revenues for the year
ended December 31, 2003, of which $103.1 million, or 20.7% of our revenues, was
received from the Texas USF. In addition, we are required to make contributions
to the Texas USF and federal USF each year. Current regulations allow us to
recover these costs by including a surcharge on our customers' bills. We incur
no incremental costs associated with the support payments we receive or the
contributions we are required to make, and therefore if we were unable to
receive support, if such support was reduced, or if we are unable to recover the
amounts we contribute to the Texas USF and federal USF from our customers, our
earnings would be directly and adversely affected.

Our receipt of USF support and the manner in which we may recover our costs of
contributing to the Texas USF and federal USF is governed by rules established
by the Public Utility Commission of Texas, or TPUC, and the Federal
Communications Commission, or FCC, respectively. The rules governing USF could
be altered or amended as a result of regulatory, legislative or judicial action
and impact the amount of USF support that we receive and our ability to recover
our USF contributions by assessing surcharges on our customers' bills. It is not
possible to predict at this time whether state or federal regulators or
legislatures will order modification to those rules or statutes, or the ultimate
impact any such modification might have on us.

Since the payments we receive from the Texas USF constitute a significant
portion of our revenues, reductions in the amount of USF support that we receive
from Texas could have a material impact on our revenues and earnings. The
enabling statute for the Texas USF will become subject to review and renewal in
late 2005. In addition, the Texas USF rules provide that the TPUC must open an
investigation within 90 days after any changes are made to the federal USF.
Therefore, changes to the federal USF may prompt similar or conforming changes
to the Texas USF. The outcome of any of these legislative or regulatory changes
could affect the amount of Texas USF support that we receive, and could have an
adverse effect on our business, revenue or profitability.

FCC regulations can also affect the amount of USF support that we receive. We
received $16.7 million, or 3.4% of our revenues, from the federal USF for the
year ended December 31, 2003. Presently, there are many issues before the FCC
that could affect the amount of federal USF that we collect. If the FCC resolves
any of these issues in a way that reduces the amount of federal USF support that
we collect, our revenue and profitability could be adversely impacted.

REDUCTIONS IN THE AMOUNT OF NETWORK ACCESS REVENUE THAT WE RECEIVE COULD
NEGATIVELY IMPACT OUR RESULTS OF OPERATIONS.

In the year ended December 31, 2003, we derived $132.0 million, or 26.6% of our
revenues from network access charges. Our network access revenue consists of (1)
usage sensitive fees we charge to long distance companies for access to our
network in connection with the completion of interstate and intrastate long
distance calls, (2) fees charged for use of dedicated circuits and (3) end user
fees, which are monthly flat-rate charges assessed on access lines. Federal and
state regulatory commissions set these access charges, and they could change the
amount of the charges or the manner in which they are charged at any time. Also,
as people in our markets decide to use Internet, wireless or cable television
providers for their local or long distance calling needs, rather than using our
wireline network, the reduction in the number of access lines or minutes of use
over our network could reduce the amount of access revenue we collect. As

                                        30
penetration rates for these technologies increase in rural markets, our revenues
could decline. In addition, if our customers take advantage of favorable calling
plans offered by wireless carriers for their long distance calling needs, it
could reduce the number of long distance calls made over our network, thereby
decreasing our access revenue. Furthermore, disputes are pending as to whether
providers of Voice over Internet Protocol, or VoIP services, which allow
customers to make voice calls over the Internet or using Internet Protocol, are
subject to FCC or state regulations that would require them to pay network
access charges. With the emergence of VoIP technology, the FCC and state
commissions are considering the status of VoIP and other Internet services and
there can be no assurance that the FCC and state regulators will require such
providers to pay access charges. Any reduction in the amount of access revenue
that we receive could negatively impact our revenues and profitability.

REGULATORY CHANGES COULD IMPACT THE NUMBER OF AND TYPE OF COMPETITORS WE FACE
WHICH COULD IMPACT OUR RESULTS OF OPERATIONS.

Changes in regulations that open our markets to more competitors offering
substitute services could impact our profitability because of increases in the
costs of attracting and retaining customers and decreases in revenues due to
lost customers and the need to offer competitive prices. We face competition
from current and potential market entrants, including:

   --  domestic and international long distance providers seeking to enter,
       reenter or expand entry into the local telecommunications marketplace;

   --  other domestic and international competitive telecommunications
       providers, wireless carriers, resellers, cable television companies and
       electric utilities; and

   --  providers of broadband and Internet services.

Regulatory requirements designed to facilitate the introduction of competition,
the applicability of different regulatory requirements among our competitors and
us, or decisions by legislators or regulators to exempt certain providers or
technologies from the same level of regulation that we face, could adversely
impact our market position and our ability to offer competitive alternatives. In
November 2003, the FCC ordered us to adopt wireline-to-wireless local number
portability. This may help wireless carriers compete against us because if
customers switch from traditional local telephone service to wireless service,
they now have the ability to transfer their local telephone number to their
wireless provider. In addition, federal and state regulators and courts are
addressing many aspects of our obligations to provide unbundled network elements
and discounted wholesale rates to competitors. The introduction of new
competitors or the better positioning of existing competitors due to regulatory
changes could cause us to lose customers and impede our ability to attract new
customers.

NEW REGULATIONS AND CHANGES IN EXISTING REGULATIONS MAY FORCE US TO INCUR
SIGNIFICANT EXPENSES.

Our business also may be impacted by legislation and regulation imposing new or
greater obligations related to assisting law enforcement, bolstering homeland
security, minimizing environmental impacts, or addressing other issues that
impact our business. For example, existing provisions of the Communications
Assistance for Law Enforcement Act, or CALEA, and FCC regulations implementing
CALEA require telecommunications carriers to ensure that their equipment,
facilities, and services are able to facilitate authorized electronic
surveillance. We cannot predict whether and when the FCC might modify its CALEA
rules or any other rules or what compliance with new rules might cost.
Similarly, we cannot predict whether or when federal or state legislators or
regulators might impose new security, environmental or other obligations on our
business.

For a more thorough discussion of the regulation of our company and how that
regulation may affect our business, see "Regulation."

                                        31
RISKS RELATING TO OUR BUSINESS

WE MAY CONTINUE TO LOSE ACCESS LINES.

Our business generates revenue by delivering voice and data services over access
lines. We have experienced net access line loss over the past few years, and
during the year ended December 31, 2003, the number of access lines we serve
declined by 2.6% due to challenging economic conditions and increased
competition. We may continue to experience net access line loss in our markets
for an unforeseen period of time. Our inability to retain access lines could
adversely affect our revenue and earnings.

RAPID AND SIGNIFICANT CHANGES IN TECHNOLOGY IN THE TELECOMMUNICATIONS INDUSTRY
COULD ADVERSELY AFFECT OUR ABILITY TO COMPETE EFFECTIVELY IN THE MARKETS IN
WHICH WE OPERATE.

The rapid introduction and development of enhanced or alternative services that
are more cost effective, more efficient or more technologically advanced than
the services we offer is a significant source of potential competition in the
telecommunications industry. Technological developments may reduce the
competitiveness of our networks, make our service offerings less attractive or
require expensive and time-consuming capital improvements. If we fail to adapt
successfully to technological changes or fail to obtain timely access to
important new technologies, we could lose customers and have difficulty
attracting new customers or selling new services to our existing customers.

We cannot predict the impact of technological changes on our competitive
position, profitability or industry. Wireless and cable technologies that have
emerged in recent years provide certain advantages over traditional wireline
voice and data services. The mobility afforded by wireless voice services and
its competitive pricing appeal to many customers. The ability of cable
television providers to offer voice, video and data services as an integrated
package provides an attractive alternative to traditional voice services from
local exchange carriers. In addition, as the emerging VoIP services develop,
some customers may be able to bypass network access charges. Increased
penetration rates for these technologies in our markets could cause our revenues
to decline.

THE COMPETITIVE NATURE OF THE TELECOMMUNICATIONS INDUSTRY COULD ADVERSELY AFFECT
OUR REVENUES, RESULTS OF OPERATIONS AND PROFITABILITY.

The telecommunications industry is very competitive. Increased competition could
lead to price reductions, declining sales volumes, loss of market share, higher
marketing costs and reduced operating margins. Significant and potentially
larger competitors could enter our markets at any time, including local service
providers, cable television companies and wireless telecommunications providers.

For a more thorough discussion of the competition that may affect our business,
see "Business--Competition."

WEAK ECONOMIC CONDITIONS MAY DECREASE DEMAND FOR OUR SERVICES.

We are sensitive to economic conditions and downturns in the economy. Downturns
in the economies in the markets we serve could cause our existing customers to
reduce their purchases of our basic and enhanced services and make it difficult
for us to obtain new customers.

WE DEPEND ON A FEW KEY VENDORS AND SUPPLIERS TO CONDUCT OUR BUSINESS.

We rely on vendors and suppliers to support many of our administrative functions
and to enable us to provide long distance services. For example, we currently
outsource much of our operational support services to ALLTEL, including our
billing and customer care services. Transitioning these support services to
another provider could take a significant period of time and involve substantial
costs. In addition, we

                                        32
have resale agreements with MCI and Sprint to provide our long distance
transmission services. Replacing these resale agreements could be difficult as
there are a limited number of national long distance providers. Any disruptions
in our relationship with these third party providers could have an adverse
effect on our business and operations.

RECENT DIFFICULTIES IN THE TELECOMMUNICATIONS INDUSTRY COULD NEGATIVELY IMPACT
OUR REVENUES AND RESULTS OF OPERATIONS.

We originate and terminate long distance phone calls on our networks for other
interexchange carriers, some of which are our largest customers in terms of
revenues. In the year ended December 31, 2003, we generated 17.5% of our total
revenues from originating and terminating phone calls for interexchange
carriers. Several of these interexchange carriers have declared bankruptcy
during the past two years or are experiencing substantial financial
difficulties. MCI WorldCom (now MCI), which declared bankruptcy in 2002, is one
of the major interexchange carriers with which we conduct business. We recorded
a net $1.6 million charge due to MCI's failure to pay amounts owed to us.
Further bankruptcies or disruptions in the businesses of these interexchange
carriers could have an adverse effect on our financial results and cash flows.

OUR EQUITY SPONSORS OWN A SUBSTANTIAL INTEREST IN OUR VOTING SECURITIES AND
THEIR INTERESTS MAY DIVERGE FROM THE INTERESTS OF THE HOLDERS OF THE IDSS.

Following the consummation of this offering, affiliates of Welsh, Carson,
Anderson & Stowe, or WCAS, affiliates of Vestar Capital Partners, or Vestar, and
affiliates of Citicorp Venture Capital, or CVC, will beneficially own    %,    %
and    %, respectively, of our outstanding shares of Class A common stock as
part of the IDSs, and    %,    % and    %, respectively, of our outstanding
shares of Class B common stock. As a result, WCAS, Vestar and CVC collectively
exercise substantial influence over matters requiring stockholder approval,
including decisions about our capital structure. In addition, WCAS has two
designees and Vestar has one designee serving on our board of directors. The
interests of our equity sponsors may conflict with your interests as a holder of
the IDSs.

OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS AND SEVERAL
OTHER FACTORS COULD LIMIT ANOTHER PARTY'S ABILITY TO ACQUIRE US AND DEPRIVE OUR
INVESTORS OF THE OPPORTUNITY TO OBTAIN A TAKEOVER PREMIUM FOR THEIR SECURITIES.

A number of provisions in our amended and restated certificate of incorporation
and by-laws will make it difficult for another company to acquire us and for you
to receive any related takeover premium on our securities. For example, our
amended and restated certificate of incorporation provides that stockholders may
not act by written consent and that only our board of directors may call a
special meeting. In addition, stockholders are required to provide us with
advance notice if they wish to nominate any persons for election to our board of
directors or if they intend to propose any matters for consideration at an
annual stockholders meeting. Our amended and restated certificate of
incorporation authorizes the issuance of preferred stock without stockholder
approval and upon such terms as the board of directors may determine. The rights
of the holders of shares of our common stock will be subject to, and may be
adversely affected by, the rights of holders of any class or series of preferred
stock that may be issued in the future.

                                        33
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements under "Summary," "Risk Factors," "Management's Discussion
and Analysis of Financial Condition and Results of Operations," "Business,"
"Regulation" and elsewhere in this prospectus may include forward-looking
statements which reflect our current views with respect to future events and
financial performance. Statements which include the words "may," "will,"
"should," "could," "would," "predicts," "potential," "continue," "future,"
"estimates," "expect," "intend," "plan," "believe," "project," "anticipate" and
similar statements of a future or forward-looking nature identify
forward-looking statements for purposes of the federal securities laws or
otherwise.

All forward-looking statements address matters that involve risks and
uncertainties. Accordingly, there are or will be important factors that could
cause actual results to differ materially from those indicated in these
statements. We believe that these factors include the following:

   --  our high degree of leverage and significant debt service obligations;

   --  our ability to amend our new credit facility in ways that restrict our
       right to pay dividends on our common stock and interest on our senior
       subordinated notes;

   --  any adverse changes in government regulation;

   --  the risk that we may not be able to retain existing customers or obtain
       new customers;

   --  the risk of technological innovations outpacing our ability to adapt or
       replace our equipment to offer comparable services;

   --  the risk of increased competition in the markets we serve; and

   --  the risk of weaker economic conditions within the United States.

We undertake no obligation to publicly update or review any forward-looking
statement, whether as a result of new information, future developments or
otherwise.

                                        34
USE OF PROCEEDS

The table below sets forth our estimate of the sources and uses of funds
required to effect the transactions contemplated hereby. See "Detailed
Transaction Steps." The estimated sources and uses are based on an assumed
initial public offering price of $     per IDS and      % of the stated
principal amount of the senior subordinated notes being sold separately (not in
the form of IDSs). Actual amounts will vary from the amounts shown below.
SOURCES                                       USES
   -------                                       ----
New credit facility(1)...........   $         Repayment of existing
                                                   indebtedness(2)................   $
   IDSs sold hereby.................             Fees and expenses(3).............
   Senior subordinated notes sold                Proceeds to existing equity
     separately hereby..............             holders(4)
     Total sources of funds.........  $            Total uses of funds............  $
                                                                                    ========
                                      ========
(1)  Represents a $        term loan. No amounts will be drawn on the new
     revolver in connection with the contemplated transactions.

(2)  Includes $    million of outstanding principal and unpaid interest on our
     existing credit facilities and $    million aggregate principal amount of
     our outstanding senior subordinated notes due August 31, 2010 and accrued
     and unpaid interest thereunder. In connection with the repayment of
     existing indebtedness, we will be required to write-off approximately $
     in deferred financing costs.

(3)  Includes an estimated $    million payable to the underwriters of our IDS
     offering, approximately $    million payable to the lenders under our new
     credit facility, approximately $    million in the aggregate payable to
     affiliates of Welsh, Carson, Anderson & Stowe and affiliates of Vestar
     Capital Partners for transaction fees in respect of our reorganization and
     this offering, and approximately $    million in other professional fees
     and expenses associated with our redemption of existing indebtedness.

(4)  The proceeds to our existing equity holders shown on the table above does
     not include IDSs that we are issuing to them in this offering in connection
     with our reorganization. These IDSs have an aggregate value of $    million
     based on an assumed initial public offering price of $    . In addition, if
     the underwriters' over-allotment option is exercised in full, existing
     equity holders will offer an aggregate of         IDSs to the public and
     will receive all proceeds from the sale thereof, less any underwriters'
     discount and commissions.

As indicated in the table above, we expect to repay all amounts outstanding
under both the revolving facility and term loan facility under our existing
senior credit facility for Valor Telecommunications Southwest, LLC and our
existing senior credit facility for Valor Telecommunications Southwest II, LLC.
The term loans under both the Valor Telecommunications Southwest, LLC and Valor
Telecommunications Southwest II, LLC senior credit facilities are comprised of
tranches that have maturity dates ranging from June 30, 2007 through October 31,
2013. Amounts outstanding under the revolvers under the Valor Telecommunications
Southwest, LLC and the Valor Telecommunications Southwest II, LLC senior credit
facilities will mature on June 30, 2007 and July 31, 2010, respectively. As of
December 31, 2003, amounts outstanding under the revolver and the term loan bore
interest at a weighted average annual rate of 6.2%.

We also expect to use the net proceeds of this offering to repay all amounts
payable pursuant to our outstanding senior subordinated notes. These
subordinated notes have a stated interest rate of 10.0% per annum. The maturity
date of these subordinated notes is August 31, 2010.

                                        35
DIVIDEND POLICY

Upon the closing of this offering, our board of directors is expected to adopt a
dividend policy with respect to our shares of Class A common stock pursuant to
which, in the event and to the extent we have any available cash for
distribution to the holders of shares of our Class A common stock as of the
twentieth day, or the business day immediately preceding such twentieth day, of
the last month of any calendar quarter, and subject to applicable law, as
described below, and the terms of the new credit facility, the indenture
governing our senior subordinated notes and any other then outstanding
indebtedness of ours, our board of directors will declare cash dividends on our
Class A common stock. The initial dividend rate is expected to be equal to
$     per share of Class A common stock per annum, subject to adjustment. We
will pay those dividends on or about the last day of each quarter.

Our amended and restated certificate of incorporation contains dividend
provisions with respect to our shares of Class B common stock which are intended
to replicate the yield on our IDS units. Any time a dividend is paid to holders
of Class A common stock, holders of Class B common stock will be paid a dividend
equal to the amount per share paid to holders of Class A common stock. In
addition to any such dividend, shares of our Class B common stock will accrue
dividends at a rate of      % per annum on the deemed issuance price of $
per share; provided that during the continuation of any event of default under
the indenture governing the senior subordinated notes, dividends will accrue at
a rate of      % per annum. Such dividends will accrue, and to the extent not
paid, accumulate, whether or not declared and whether or not we have funds
legally available for the payment of dividends. Such dividends will be paid, if
declared by the board, on the last day of each fiscal quarter, or, to the extent
not previously paid, at such time as such shares of Class B common stock are
exchanged for IDSs; provided, that such dividends may only be paid to the extent
allowable under applicable law, the terms of our new credit facility and the
indenture governing our senior subordinated notes.

Upon the closing of the offering no shares of our Class C common stock will be
outstanding and we do not anticipate that we will issue shares of Class C common
stock or declare dividends thereon in the near future.

If we have any remaining cash after the payment of dividends as contemplated
above, our board of directors will, in its sole discretion, decide to use that
cash to fund capital expenditures or acquisitions, repay indebtedness, pay
additional dividends in equal amounts per share to holders of the shares of
Class A and Class B common stock or for general corporate purposes.

If we do not have enough available cash in any quarter to pay the amount of
dividends to the holders of the shares of Class A and Class B common stock as
contemplated above, we will first pay any unpaid dividends that have been
accruing on the shares of Class B common stock and then pay any additional
amounts in equal amounts per share to holders of the shares of Class A and Class
B common stock.

The indenture governing our senior subordinated notes restricts our ability to
declare and pay dividends on our common stock as follows:

   --  we may not pay dividends if such payment will exceed the quarterly base
       dividend level in any fiscal quarter; provided that if such payment is
       less than the quarterly base dividend level in any fiscal quarter,   % of
       the difference between the aggregate amount of dividends actually paid
       and the quarterly base dividend level for such quarter will be available
       for the payment of dividends at a later date. The quarterly base dividend
       level for any given fiscal quarter shall equal   % of our excess cash (as
       defined below) for the 12 month period ending on the last day of our then
       most recently ended fiscal quarter for which internal financial
       statements are available at the time such dividend is declared and paid
       divided by four (4). "Excess cash" shall mean with respect to any period,
       Adjusted EBITDA, as defined in the indenture, minus the sum of (i) cash
       interest expense, (ii) capital expenditures and (iii) cash income tax
       expense, in each case, for such period;

   --  we may not pay any dividends if not permitted under any of our senior
       indebtedness;

   --  we may not pay any dividends while interest on the senior subordinated
       notes is being deferred or, after the end of any interest deferral, so
       long as any deferred interest has not been paid in full; and

                                        36
--  we may not pay any dividends if a default or event of default under the
       indenture has occurred and is continuing.

The new credit facility restricts our ability to declare and pay dividends on
our common stock if and for so long as we do not meet the interest coverage
ratio and senior leverage ratio tests specified in the new credit facility. If
we fail to achieve any of these ratios for any quarter but resume compliance in
a subsequent quarter and satisfy the other conditions specified in the new
credit facility (including timely delivery of applicable financial statements),
we may resume the payment of dividends. The new credit facility permits us to
use up to 100% of the distributable cash, as defined in the new credit facility
to fund dividends on our shares of common stock.

Our board of directors may, in its discretion, amend or repeal this dividend
policy. Our board of directors may decrease the level of dividends provided for
in this dividend policy or discontinue entirely the payment of dividends. We
have not paid dividends in the past.

Future dividends with respect to shares of our capital stock, if any, will
depend on, among other things, our results of operations, cash requirements,
financial condition, contractual restrictions, provisions of applicable law and
other factors that our board of directors may deem relevant. Under Delaware law,
our board of directors may declare dividends only to the extent of our "surplus"
(which is defined as total assets at fair market value minus total liabilities,
minus statutory capital), or if there is no surplus, out of our net profits for
the then current and/or immediately preceding fiscal years.

                                        37
CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization
as of December 31, 2003:

   --  on an actual basis; and

   --  on a pro forma as adjusted basis as if this offering, including the use
       of proceeds from this offering, the repayment of all outstanding
       borrowings under our existing credit facilities and our reorganization
       had occurred on that date and that we had entered into the new credit
       facility on that date.
AS OF DECEMBER 31, 2003
                                                            --------------------------------------
                                                                                        PRO FORMA
                                                              ACTUAL     ADJUSTMENTS   AS ADJUSTED
                                                            ----------   -----------   -----------
                                                                        (In thousands)
Cash and cash equivalents..............................  $    1,414
                                                            ==========
   Long-term debt, including current portion
     Current maturities of long-term debt(1)..............      37,318
     Existing credit facilities (long-term portion)(1)....   1,108,065
     Existing senior subordinated notes...................     314,257
     Capital leases.......................................       4,333
     New credit facility..................................           -
        % senior subordinated notes.......................           -
                                                            ----------
        Total long-term debt..............................   1,463,973
                                                            ----------
   Redeemable preferred interests(2)......................     370,231
   Class B common stock, $0.01 par value per share(3).....          --
                                                            ----------
   Stockholders' equity
     Class A common interests, no par or stated value.....      64,633
     Class B common interests, no par or stated value.....           -
     Class C interests, no par or stated value............      46,000
     Class A common stock, $0.01 par value per share......           -
     Class B common stock, $0.01 par value per share......           -
     Class C common stock, $0.01 par value per share......           -
     Additional paid-in capital...........................           -
     Accumulated deficit(4)...............................     (53,366)
     Accumulated other comprehensive loss.................      (7,371)
     Treasury stock.......................................         (34)
                                                            ----------
        Total common owners' equity.......................      49,862
                                                            ----------
          Total capitalization............................  $1,885,480
                                                            ==========
---------------------------
(1) In connection with the repayment of existing indebtedness, we will be
    required to write-off approximately $      in deferred financing costs.

(2) As a result of our existing equity holders' contribution of their redeemable
    preferred interests in VTC, VTS and VTS II to Valor, we will record an
    expense of approximately $      resulting from the excess of the fair value
    of the IDSs, Class B common stock and cash received over the carrying amount
    of the redeemable preferred interests.

(3) Each share of Class B common stock is convertible into one IDS (as may be
    adjusted for stock splits, dividends, combinations or reclassifications)
    following the second anniversary of the consummation of this offering, at
    the option of the holder of such shares. Accordingly, the portion of the
    Class B common stock convertible into senior subordinated debt has been
    classified as mezzanine equity.

(4) In connection with the reorganization, management will receive         IDSs
    in exchange for their outstanding stock options and phantom stock units
    resulting in compensation expense to us of approximately $        .

                                        38
DILUTION

Dilution is the amount by which the portion of the offering price paid by the
purchasers of the IDSs to be sold in the offering that is allocated to our
shares of Class A common stock represented by the IDSs exceeds the net tangible
book value or deficiency per share of our Class A common stock after the
offering. Net tangible book value or deficiency per share of our Class A common
stock is determined at any date by subtracting our total liabilities from our
total assets less our intangible assets and dividing the difference by the
number of shares of Class A common stock deemed to be outstanding at that date.

Our net tangible book value as of December 31, 2003 was approximately $
million, or $     per share of Class A common stock. After giving effect to our
receipt and intended use of approximately $     million of estimated net
proceeds (after deducting estimated underwriting discounts and commissions and
offering expenses) from our sale of IDSs and separate senior subordinated notes
in this offering based on an assumed initial public offering price of $     per
IDS (the midpoint of the range set forth on the cover page of this prospectus)
and      % of the stated principal amount of the senior subordinated notes being
sold separately, our pro forma as adjusted net tangible book value as of
December 31, 2003 would have been approximately $     million, or $     per
share of Class A common stock. This represents an immediate increase in net
tangible book value of $     per share of our Class A common stock to existing
stockholders and an immediate dilution of $     per share of our Class A common
stock to new investors purchasing IDSs in this offering.

The following table illustrates this substantial and immediate dilution to new
investors:
PER SHARE OF
                                                                 COMMON STOCK
                                                                 ------------
Portion of the assumed initial public price of $     per IDS
     allocated to one share of Class A common stock............    $
   Net tangible book value per share as of December 31, 2003...
   Increase per share attributable to cash payments made by
     investors in this offering................................
                                                                   --------
   Pro forma as adjusted net tangible book value after this
     offering..................................................    $
                                                                   --------
   Dilution in net tangible book value per share to new
     investors.................................................    $
                                                                   ========
The following table sets forth on a pro forma basis as of December 31, 2003,
assuming no exercise of the over-allotment option:

   --  the total number of shares of our Class A common stock to be owned by the
       existing equity holders and to be owned by the new investors, as
       represented by the IDSs to be sold in this offering;

   --  the total consideration to be paid by the existing equity holders and to
       be paid by the new investors purchasing IDSs in this offering; and

   --  the average price per share of Class A common stock to be paid by
       existing equity holders (cash and stock) and to be paid by new investors
       purchasing IDSs in this offering:
AVERAGE
                                              SHARES OF CLASS A                           PRICE PER
                                                 COMMON STOCK                             SHARE OF
                                                  PURCHASED        TOTAL CONSIDERATION     CLASS A
                                              ------------------   --------------------    COMMON
                                               NUMBER    PERCENT    AMOUNT     PERCENT      STOCK
                                              --------   -------   ---------   --------   ---------
Existing equity holders..................                   %   $                 %    $
   New investors............................                   %                     %
                                              --------    -----    --------     -----
     Total..................................              100.0%   $            100.0%
                                              ========    =====    ========     =====
39
SELECTED HISTORICAL FINANCIAL INFORMATION

Valor is a holding company and has no direct operations. Valor was formed for
the sole purpose of reorganizing our corporate structure and consummating this
offering. Valor's principle assets are the direct and indirect equity interests
of its subsidiaries. As a result, we have not provided separate historical
financial results for Valor and present only the historical consolidated
financial results of Valor Telecommunications, LLC. The selected historical
consolidated financial information set forth below as of and for the period
ended December 31, 2000, as well as the selected historical consolidated
financial information as of and for the year ended December 31, 2001, 2002 and
2003, have been derived from our audited consolidated financial statements. In
addition, as described in more detail in "Business," we acquired, at the time of
our formation, select telephone assets from GTE Southwest Corporation. We refer
to these properties as the "Acquired Businesses" and we believe the Acquired
Businesses to be the predecessor of our company, prior to formation in 2000.
This is because the Acquired Businesses, with the exception of our Kerrville
business that was acquired by us in 2002, effectively include nearly all the
businesses currently operated by us, and do not include any businesses that have
been discontinued or sold. Accordingly, the selected historical financial
information below includes the combined accounts of the Acquired Businesses as
of and for the year ended December 31, 1999, as well as the combined accounts as
of and for the period ended August 31, 2000. The combined accounts do not
include any purchase accounting adjustments that occurred as a result of our
acquisition of the Acquired Businesses in 2000.

The information in the following table should be read together with our audited
consolidated financial statements for the years ended December 31, 2001, 2002
and 2003 and the related notes and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," all as included elsewhere in
this prospectus.
PREDECESSOR COMPANY(1)
                                      ---------------------------
                                                        PERIOD         PERIOD
                                       YEAR ENDED       ENDED          ENDED             YEAR ENDED DECEMBER 31,
                                      DECEMBER 31,    AUGUST 31,    DECEMBER 31,   ------------------------------------
                                          1999           2000         2000(2)         2001       2002(3)        2003
                                      ------------   ------------   ------------   ----------   ----------   ----------
                                        (DOLLARS IN THOUSANDS,
                                      EXCEPT PER OWNER UNIT DATA)   (DOLLARS IN THOUSANDS, EXCEPT PER OWNER UNIT DATA)
STATEMENT OF OPERATIONS DATA:
   Operating revenues...............    $367,724       $260,933     $   148,784    $  424,916   $  479,883   $  497,334
   Operating expenses...............     282,719        178,948         164,172       321,618      320,632      315,061
   Operating income (loss)..........      85,005         81,985         (15,388)      103,298      159,251      182,273
   EARNINGS PER OWNERS' UNIT:
   Basic and diluted (loss) income
     from continuing operations:(4)
     Class A and B common
       interests....................         n/a            n/a     $     (1.05)   $    (0.58)  $     0.22   $     0.73
     Class C interests..............         n/a            n/a     $        --    $       --   $     0.09   $     0.15
   Basic and diluted net (loss)
     income:
     Class A and B common
       interests....................         n/a            n/a     $     (1.05)   $    (0.77)  $     0.17   $     0.73
     Class C interests..............         n/a            n/a     $        --    $       --   $     0.09   $     0.15
   CASH FLOW DATA:
   Net cash provided by operating
     activities.....................    $154,279       $119,557     $    16,197    $  100,301   $  150,383   $  166,065
   Net cash used in investing
     activities.....................    $(85,109)      $(56,018)    $(1,821,699)   $ (106,614)  $ (216,773)  $  (66,299)
   Net cash provided by (used in)
     financing activities...........    $(69,170)      $(63,539)    $ 1,811,613    $    8,117   $   71,015   $  (99,465)
40
PREDECESSOR COMPANY(1)
                                ---------------------------
                                                  PERIOD         PERIOD
                                 YEAR ENDED       ENDED          ENDED             YEAR ENDED DECEMBER 31,
                                DECEMBER 31,    AUGUST 31,    DECEMBER 31,   ------------------------------------
                                    1999           2000         2000(2)         2001       2002(3)        2003
                                ------------   ------------   ------------   ----------   ----------   ----------
                                  (DOLLARS IN THOUSANDS)                    (DOLLARS IN THOUSANDS)
OTHER DATA:
   Capital expenditures.......    $ 85,109       $ 56,018     $    36,918    $  107,869   $   89,527   $   69,850
   Acquisition of Kerrville
     Communications
     Corporation(5)...........           -              -               -             -   $  128,135            -
   Depreciation and
     amortization(6)..........    $ 97,111       $ 64,103     $    40,327    $  110,843   $   73,273   $   81,638
   BALANCE SHEET DATA:
   Total assets...............    $573,681       $567,073     $ 1,935,695    $1,913,057   $2,062,404   $2,039,043
   Long-term debt (including
     current maturities)......    $      -       $      -     $ 1,440,643    $1,469,420   $1,544,285   $1,463,973
   Redeemable preferred
     interests................    $      -       $      -     $   370,231    $  370,231   $  370,231   $  370,231
---------------------------

(1) The selected historical financial information presented for the Predecessor
    Company above was derived from unaudited financial statements prepared on a
    carve-out basis by GTE Southwest Corporation (the "Carve-Out Financial
    Statements"). This information reflects the results of operations and
    financial position of the Acquired Businesses for the year ended December
    31, 1999 and for the period beginning January 1, 2000 through our
    acquisition date of these businesses. We acquired GTE's business in Oklahoma
    on July 1, 2000 and GTE's businesses in Texas, New Mexico and Arkansas on
    September 1, 2000.

(2) Our consolidated financial statements for the period ended December 31, 2000
    include the results of operations for the businesses we acquired from GTE in
    Texas, Oklahoma, New Mexico and Arkansas beginning on the date of
    acquisition, as well as certain start-up costs that we incurred prior to
    commencing operations.

(3) We acquired all the outstanding common stock, preferred stock and common
    stock equivalents of Kerrville Communications Corporation ("KCC") on January
    31, 2002 and have included the assets, liabilities and results of operations
    of KCC from that date.

(4) Per unit data is not applicable with respect to periods covered by our
    Predecessor's Carve-Out Financial Statements.

(5) Reflects the purchase price for our acquisition of KCC, net of cash
    acquired. Excludes $1,724,119 we paid to purchase predecessor businesses in
    2000.

(6) In accordance with Statement of Financial Accounting Standards ("SFAS") No.
    142, "Goodwill and Other Intangible Assets", effective January 1, 2002, we
    discontinued the amortization of goodwill. Amortization expense associated
    with goodwill was $20,529 for the period ended December 31, 2000 and $53,900
    for the year ended December 31, 2001.

                                        41
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and accompanying notes which appear elsewhere in this prospectus. It
contains forward-looking statements that involve risks and uncertainties. Please
see "Cautionary Statement Regarding Forward-Looking Statements" for more
information. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of various factors, including
those discussed below and elsewhere in this prospectus, particularly under the
headings "Risk Factors" and "Cautionary Statement Regarding Forward-Looking
Statements."

OVERVIEW

We are one of the largest providers of telecommunications services in rural
communities in the southwestern United States and the seventh largest
independent telephone company in the country. We operate approximately 550,000
telephone access lines in primarily rural areas of Texas, Oklahoma, New Mexico
and Arkansas. We believe that in many of our markets we are the only service
provider that offers customers an integrated package of local and long distance
voice, high-speed data and Internet access as well as a variety of enhanced
services such as voicemail and caller identification. For the year ended
December 31, 2003, we generated revenues of $497.3 million.

We formed our company in connection with the acquisition in 2000 of select
telephone assets from GTE Southwest Corporation, which is now part of Verizon.
Our formation was orchestrated by our equity sponsors Welsh, Carson, Anderson &
Stowe, or WCAS, Vestar Capital Partners and Citicorp Venture Capital, Anne K.
Bingaman and our management. Ms. Bingaman, along with Bob Mathew and Michael
Page, formed a predecessor to our company and later joined with our equity
sponsors, led by WCAS, to negotiate and finance the acquisition of the telephone
assets from GTE. Ms. Bingaman, Mr. Mathew, Mr. Page and WCAS were assisted in
these efforts by twelve prominent business persons from the Southwestern United
States who have local, statewide and national public service experience and
decades of successful private business experience. They are Toney Anaya, Ernesto
M. Chavarria, John C. Corella, William E. Garcia, Edward J. Lujan, Manuel Lujan,
Jr., Ronald E. Montoya, M. Ann Padilla, Andrew Ramirez, Henry M. Rivera, Edward
L. Romero and J. Ben Trujillo. Ms. Bingaman served as our Chairman since 1999
and was our first Chief Executive Officer. Once the negotiation of the terms of
the acquisition from GTE was completed, Ms. Bingaman and WCAS recruited our
management team, including Kenneth R. Cole, our first chief operating officer.
Together, these groups and individuals were instrumental in helping us complete
the transactions with GTE and successfully launch our initial operations.

The rural telephone businesses that we own have been operating in the markets we
serve for over 75 years. Since our inception, we have acquired the local
telephone company serving Kerrville, Texas and we have invested substantial
resources to improve and expand our network infrastructure to provide high
quality telecommunications services and superior customer care. We believe that
we are well positioned for future revenue and cash flow growth through both
expanded service offerings and acquisitions.

Access lines are an important element of our business. Historically, rural local
telephone companies, or RLECs, experienced consistent growth in access lines
because of positive demographic trends, insulated rural local economies and
little competition. Recently, however, many RLECs have experienced a loss of
access lines due to challenging economic conditions, increased competition from
wireless providers, competitive local exchange carriers, or CLECs, and in some
cases, cable television operators. We have not been immune to these conditions.
We have experienced modest net losses in access lines due primarily to poor
economic conditions and increased competition. Access line losses may also
increase if cable television operators begin to offer telephony service in our
markets.

Despite our net losses of access lines, we have generated growth in our revenues
each year since our inception in 2000. We have accomplished this by providing
our customers with services not previously available in most of our markets such
as enhanced voice services and data services, including digital subscriber
lines, or DSL, and through acquisitions. We are continuing to add access lines
through plant

                                        42
improvements, bundling services, win-back programs, increased community
involvement and a variety of other programs.

We are subject to regulation primarily by federal and state government agencies.
At the federal level, the Federal Communications Commission, or FCC, has
jurisdiction over interstate and international telecommunications services.
State telecommunications regulators exercise jurisdiction over intrastate
telecommunications services. We operate under price cap regulation at the
federal level and at the state level in Texas and New Mexico. We are regulated
on a rate of return basis in Oklahoma and Arkansas. For a more extensive
discussion of regulatory matters, see "Risk Factors--Regulatory Matters" and
"Regulation."

REORGANIZATION

Immediately prior to and in connection with the consummation of this offering,
we will reorganize our corporate structure. Our existing equity holders
currently own equity interests in Valor Telecommunications, LLC, or VTC, Valor
Telecommunications Southwest, LLC, or VTS, and Valor Telecommunications
Southwest II, LLC, or VTS II. As part of this reorganization, our existing
equity holders will contribute their equity interests in VTC, VTS and VTS II to
us in exchange for           IDSs,           shares of Class B common stock and
$     in cash from the proceeds of this offering. As a result of this
reorganization, each of VTC, VTS and VTS II will be either a direct or indirect
wholly-owned subsidiary of Valor Communications Group, Inc. See "Detailed
Transaction Steps" on page 86.

REGULATORY MATTERS

We operate in a regulated industry, and the majority of our revenues comes from
the provision of regulated telecommunications services, including state and
federal support for the provision of telephone services in high-cost rural
areas. To further the public policy of providing universal and comparable
telecommunications services throughout the United States, state and federal
regulatory bodies have historically given support to RLECs to offset the high
costs of providing telecommunications services in rural areas. Operating in this
regulated industry means that we are also generally subject to certification,
service quality, rate regulation, tariff filing and other ongoing regulatory
requirements by state and federal regulators.

State Regulation. We operate in Texas, Oklahoma, New Mexico and Arkansas and
each state has its own regulatory framework for intrastate services.

In Texas, most of our operations are subject to price caps on our basic
telecommunications services, while we maintain pricing flexibility on some
non-basic services. While the Texas regulatory structure under which we operate
will become subject to review and renewal in late 2005, we do not expect a
material change in the benefits we have under current regulation. In addition,
we currently have a petition pending in Texas that requests the implementation
of a surcharge for expanded local calling that would compensate us for our costs
and lost revenues associated with replacing long distance routes between
selected towns with flat rated local service. If granted, the petition would
generate additional revenues and increased earnings.

In New Mexico, we operate under an Alternative Form of Regulation Plan that is
specific to our company. The Plan was adopted in 2000 and will expire on March
31, 2006. During its term, the Plan provides for a freeze on the prices of our
intrastate telecommunications services, requires us to invest $83 million in
capital in New Mexico, provides for a streamlined tariff approval process and
prescribes quality of service standards, including penalties for failure to meet
certain service levels. Under the Plan, we will be able to increase our prices
for optional services by 10% if we meet the quality service standards in 2005.

Recently enacted legislation mandates that the New Mexico Public Regulation
Commission adopt rules tailored to the size and market demographics of local
exchange carriers like our company that have between 50,000 and 375,000 access
lines and flexible rules that allow pricing freedoms on retail services. It also
mandates the streamlining of rules governing the introduction and withdrawal of
tariffs and the packaging and bundling of services. Therefore, we will not have
to renegotiate and renew our current Plan.

                                        43
In Oklahoma, we operate under rate of return regulation in the provision of
intrastate telecommunications services. Pending legislation in Oklahoma would
allow us significant pricing freedom for our basic services and reduce our costs
of regulation. The governor of Oklahoma, however, vetoed similar legislation
last year. Also pending is legislation that would eliminate most of Oklahoma's
retail pricing regulation. We would also significantly benefit from the
enactment of this legislation.

We also operate under rate of return regulation in the provision of intrastate
telecommunications services in Arkansas. We operate approximately 17,000 access
lines in Texarkana, Arkansas, which is our only market in Arkansas. Pursuant to
an agreement with the Arkansas Public Service Commission, our Arkansas tariffs
mirror the prices charged in our Texas tariffs.

Federal Regulation. Most of our interstate access revenues are regulated
pursuant to the FCC's price cap rules. Generally, these rules establish an upper
limit for access prices, but allow annual formula-based adjustments and limited
pricing flexibility. In 2000, the FCC adopted the Coalition for Affordable Local
and Long Distance Service, or CALLS plan, an integrated interstate access reform
and universal service framework for price cap local exchange carriers. The CALLS
plan allowed subscriber line charges billed to end users to rise, but forced
substantial decreases in access charges billed to long distance carriers. The
CALLS plan will expire in mid-2005, unless extended by the FCC. The FCC is
currently considering whether to make substantial changes in the manner in which
local exchange carriers can charge for access to their networks. It has proposed
that current intercarrier compensation for all types of telecommunications
traffic be collected only from the end user customers of the carriers. We do not
know whether the FCC will adopt this proposal or what impact its adoption would
have on our business.

UNIVERSAL SERVICE FUND

In furtherance of public policy, we receive Universal Service Fund, or USF,
revenues from the State of Texas and the federal government to support the high
cost of providing telecommunications services in rural markets.

Texas Universal Service Fund. The Texas Universal Service Fund, or Texas USF,
supports eligible telecommunications providers that serve high cost markets. We
received $103.1 million from the Texas USF in 2003, representing 20.7% of total
revenues for that year. Texas USF is promulgated under a statute that will
become subject to review and renewal in late 2005. We expect that the Texas
Legislature will renew the statute or replace it with a similar regulation that
will not materially change the benefits we receive under the current regulatory
structure.

Federal Universal Service Fund. The federal USF revenue we receive helps to
offset interstate access charges, defrays the high fixed switching costs in
areas with fewer than 50,000 access lines and provides support where our average
cost per line exceeds 115% of the national average cost per line. In 2003, we
received $16.7 million, or 3.4% of our total revenues, in federal USF support.
Currently, significant policy debate is occurring at the FCC and in Congress
over whether universal service support should be available as a means to foster
competitive entry in rural telecommunications markets, rather than its historic
purpose to offset the high cost to serve the country's rural areas. Several
parties have raised objections to the size of the universal service fund and the
types of services eligible for support and the sources of contribution to the
USF. The outcome of any of these proceedings or other legislative or regulatory
changes could affect the amount of federal universal service support that we
receive, and could have an adverse effect on our business, revenue or
profitability.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

Our financial statements are prepared in accordance with accounting principles
that are generally accepted in the United States. The preparation of these
financial statements requires management to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses.
Management continually evaluates its estimates and judgments including those
related to revenue recognition, allowance for doubtful accounts, pension and
postretirement benefits, accounting for goodwill and intangible assets, and
estimated useful lives of property, plant and equipment. Actual results may
differ from these estimates. We believe that of our significant accounting
policies, the following may

                                        44
involve a higher degree of judgment and complexity (See Note 2 to the
consolidated financial statements for a complete discussion of our significant
accounting policies.):

Revenue Recognition. Revenue is recognized when evidence of an arrangement
between our customer and us exists, the earnings process is complete and
collectibility is reasonably assured. The prices for most services are filed in
tariffs with the appropriate regulatory bodies that exercise jurisdiction over
the various services.

Basic local services, enhanced calling features such as caller identification,
special access circuits, long distance flat rate calling plans, and most data
services are billed one month in advance. Revenue for these services is
recognized in the month services are rendered. The portion of advance-billed
revenue associated with services that will be delivered in a subsequent period
is deferred and recorded as a current liability under "Advance billings and
customer deposits" in the Consolidated Balance Sheets.

Amounts billed to customers for activating service are deferred and recognized
over the average life of the customer. The costs associated with activating such
services are deferred and are recognized as an operating expense over the same
period. Costs in excess of revenues are recognized as an operating expense in
the period of activation.

Revenues for providing usage based services, such as per-minute long distance
service and access charges billed to long distance companies for originating and
terminating long distance calls on our network, are billed in arrears. Revenues
for these services are recognized in the month services are rendered.

Universal Service revenues are government-sponsored support received in
association with providing service in mostly rural, high-cost areas. These
revenues are typically based on information provided by us and are calculated by
the government agency responsible for administering the support program and are
recognized in the month the service is performed.

Allowance for doubtful accounts. In evaluating the collectibility of accounts
receivable, we assess a number of factors, including a specific customer's or
carrier's ability to meet its financial obligations, the length of time the
receivable has been past due and historical collection experience. Based on
these assessments, we record both specific and general reserves for
uncollectible accounts receivable to the amount we ultimately expect to collect
from customers and carriers. If circumstances change or economic conditions
worsen such that our past collection experience is no longer relevant, our
estimate of the recoverability of accounts receivable could be further reduced
from the levels reflected in the accompanying consolidated balance sheet.

Pension and postretirement benefits. The amounts recognized in the financial
statements related to pension and postretirement benefits are determined on an
actuarial basis utilizing several critical assumptions.

A significant assumption used in determining our pension and postretirement
benefit expense is the expected long-term rate of return on plan assets. In
2003, we used an expected long-term rate of return of 8.5%. We continue to
believe that 8.5% is an appropriate rate of return for our plan assets given our
investment strategy and will continue to use this assumption for 2004. The
projected portfolio mix of the plan assets is developed in consideration of the
expected duration of related plan obligations and as such is more heavily
weighted toward equity investments, including public and private equity
positions. Our investment policy is to invest 55-75% of the pension assets in
equity funds with the remainder being invested in fixed income funds and cash
equivalents. The expected return on plan assets is determined by applying the
expected long-term rate of return to the market-related value of plan assets.
The actual return on our equity portfolio has been significantly below expected
return levels due to overall equity market conditions in 2001 and 2002.

Another significant estimate is the discount rate used in the annual actuarial
valuation of pension and postretirement benefit plan obligations. In determining
the appropriate discount rate at year-end, we considered the current yields on
high quality corporate fixed-income investments with maturities corresponding to
the expected duration of the benefit obligations. As of December 31, 2003, we
reduced the discount rate by 45 basis points to 6.05%.

                                        45
We expect to contribute $4.7 million to our pension plan and $0.6 million to our
other postretirement benefits plan in 2004.

Goodwill and Intangible Assets. During 2001, the Financial Accounting Standards
Board, or FASB, issued Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets," or SFAS 142, which requires that
effective January 1, 2002, goodwill recorded in business combinations cease
amortizing. SFAS 142 requires that goodwill be reviewed for impairment using
fair value measurement techniques. Specifically, goodwill impairment is
determined using a two-step process. The first step of the goodwill impairment
test is used to identify potential impairment by comparing the fair value of the
reporting unit to its carrying value, including goodwill. If the fair value of a
reporting unit exceeds its carrying amount, goodwill of the reporting unit is
considered not impaired and the second step of the impairment test is
unnecessary. If the fair value of the reporting unit is less than the carrying
value, the second step of the goodwill impairment test calculation is performed
to measure the amount of the impairment charge. The second step of the goodwill
impairment test compares the implied fair value of the reporting unit's goodwill
with its carrying value. The implied fair value of goodwill is determined in the
same manner as the amount of goodwill recognized in a business combination. That
is, the fair value of the reporting unit is allocated to all of the assets and
liabilities of that unit (including any unrecognized intangible assets) as if
the reporting unit had been acquired in a business combination and the fair
value of the reporting unit was the purchase price paid to acquire the reporting
unit. If the implied fair value of goodwill is less than its carrying value,
goodwill must be written down to its implied fair value.

Determining the fair value of a reporting unit under the first step of the
goodwill impairment test and determining the fair value of individual assets and
liabilities of a reporting unit (including unrecognized intangible assets) under
the second step of the goodwill impairment test is judgmental in nature and
often involves the use of significant estimates and assumptions. These estimates
and assumptions could have a significant impact on whether or not an impairment
charge is recognized and also the magnitude of any such charge. We perform
internal valuation analyses and consider other market information that is
publicly available. Estimates of fair value are primarily determined using
discounted cash flows. This approach uses significant estimates and assumptions
including projected future cash flows (including timing) and the selection of a
discount rate that reflects the risk inherent in future cash flows.

Upon completion of our initial assessment in May 2002, and our annual
assessments in the third quarters of 2002 and 2003, we determined that no
write-down in the carrying value of goodwill was required.

Useful Life of Property, Plant and Equipment. We estimate the useful lives of
property, plant and equipment in order to determine the amount of depreciation
expense to be recorded during any reporting period. The majority of our
telecommunications plant, property and equipment is depreciated using the group
method, which develops a depreciation rate based on the average useful life of a
specific group of assets, rather than the individual asset as would be utilized
under the unit method. The estimated life of the group is based on historical
experience with similar assets as well as taking into account anticipated
technological or other changes. If technological changes were to occur more
rapidly than anticipated or in a different form than anticipated, the useful
lives assigned to these assets may need to be shortened, resulting in the
recognition of increased depreciation expense in future periods. Likewise, if
the anticipated technological or other changes occur more slowly than
anticipated, the life of the group could be extended based on the life assigned
to new assets added to the group. This could result in a reduction of
depreciation expense in future periods. We review these types of assets for
impairment when events or circumstances indicate that the carrying amount may
not be recoverable over the remaining lives of the assets. In assessing
impairment, we follow the provisions of Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," or SFAS 144, utilizing cash flows which take into account management's
estimates of future operations.

Redeemable Preferred Interests and Phantom Stock Units.  We are required to make
an estimate of the fair value of our Redeemable Preferred Interests in order to
determine the carrying value of the liability at the balance sheet date. In
addition, we are required to make an estimate of the fair value of our Phantom
Stock Units in order to determine the appropriate related compensation expense.
We estimate the fair value of these items by initially determining an overall
enterprise value and allocating the enterprise value

                                        46
to the various preferred and common equity components that impact the
determination of the fair value of the Redeemable Preferred Interests and the
Phantom Stock Units. The enterprise value is estimated through a combination of
a discounted cash flow analysis and an enterprise comparability analysis to
publicly traded companies in the same industry classification. We expect that
after the reorganization of our corporate structure, we will not be required to
make an estimate of fair value of these items because both the Redeemable
Preferred Interests and the Phantom Stock Units will be exchanged for IDSs and
Class B common stock.

Income Taxes.  We intend to account for our issuance of the IDS units in this
offering as representing shares of Class A common stock and senior subordinated
notes by allocating the proceeds for each IDS unit to the underlying Class A
common stock or senior subordinated note based upon the relative fair values of
each. Accordingly, we will account for the portion of the aggregate IDSs
outstanding that represent senior subordinated notes as long-term debt bearing a
stated interest rate of      % maturing on 2014. We have concluded that it is
appropriate and we intend to annually deduct interest expense of approximately
$          on the senior subordinated notes from taxable income for U.S. federal
and state income tax purposes. There can be no assurance that the Internal
Revenue Service or the courts will not seek to challenge the treatment of these
senior subordinated notes as debt or the amount of interest expense deducted,
although to date we have not been notified that the senior subordinated notes
should be treated as equity rather than debt for U.S. federal and state income
tax purposes. If the senior subordinated notes were required to be treated as
equity for income tax purposes, the cumulative interest expense associated with
the senior subordinated notes would not be deductible from taxable income and we
would be required to recognize additional tax expense and establish a related
income tax liability. In addition, to the extent any portion of the interest
expense is determined not to be deductible, we would be required to recognize
additional tax expense and establish a related income tax liability. The
additional tax due to the federal and state authorities would be based on our
taxable income or loss for each of the years that we take the interest expense
deduction and would materially reduce our after tax cash flow and materially
affect our ability to make interest or dividend payments on the IDS units. We do
not currently intend to record a liability for a potential disallowance of this
interest expense deduction. In addition, non U.S. holders could be subject to
withholding taxes on the payment of interest which could subject the Company to
additional liability for the withholding taxes that we do not intend to collect
on payments of such interest.

The determination of whether the IDSs constitute investment units where the
senior subordinated notes are instruments separate and distinct from the common
stock portion of the IDS Units and appropriately classified as debt or equity
for U.S. federal income tax purposes is based on the Company's facts and
circumstances. There is no statutory definition of indebtedness for U.S. federal
and state income tax purposes and its characterization is governed by principles
developed in case law, which analyzes numerous factors that are intended to
identify the economic substance of the investor's interest in the Company. While
the IRS has not published an exhaustive list of relevant items, principal
factors often cited include the intent of the parties, whether the instrument in
question is an unconditional obligation to pay a sum certain at a maturity date
that is not unduly far in the future and whether the instrument has significant
equity-like characteristics (e.g., convertibility into the stock of the
corporation, participation rights, voting power, subordination to other
creditors).

Additionally, the IRS may challenge the determination that the fixed interest
rate on the senior subordinated notes represents an arm's length rate and, if
successful, any excess amount over the arm's length rate could be characterized
as a non-deductible payment (dividend) instead of an interest payment for U.S.
federal and state income tax purposes, which could materially increase our
taxable income and, thus our income tax liability. The Company intends to
determine, upon consummation of this offering, the appropriate arm's length
interest rate on the senior subordinated notes through the utilization of a
third party valuation firm and through the sale of the separate senior
subordinated notes with the same terms that are part of this offering.

Nevertheless, weighing all of the factors and based in part on the foregoing
determination from independent financial advisors and advice they have received
from outside legal counsel, our U.S. tax counsel believe that the senior
subordinated notes, one of the securities comprising an IDS Unit, should be
characterized as debt and the interest paid on the senior subordinated notes
should be deductible for U.S.

                                        47
federal income tax purposes. We intend to take such position. However, there can
be no assurance that this position would be sustained if challenged by the IRS.

IDSs and Class B common stock.  Our IDS units include common stock, senior
subordinated debt and three embedded derivate features that may require
bifurcation under FASB 133. The embedded derivative features include a call
option, a change-of-control put option, and a term-extending option on the
senior subordinated debt. Upon completion of this offering, proceeds from the
issuance of the IDSs will be allocated, based upon relative fair value, to Class
A common stock and the senior subordinated notes. If it is determined at the
time of issuance that any of the embedded derivatives are required to be
bifurcated and separately accounted for, a portion of the proceeds from the
original issuance will also be allocated to these derivatives equal to the
combined fair value of the embedded derivatives that require bifurcation. If a
portion of the initial proceeds is allocated to any of the derivatives, the
senior subordinated notes will initially be recorded at a discount and accreted
to their redemption value as a component of interest expense using the effective
interest method. Any such allocation will not effect the tax treatment of the
IDSs.

The Class A common stock portion of the IDS unit will be included in
stockholders' equity, net of related transaction costs, and dividends paid on
the Class A common stock will be recorded as a reduction to retained earnings
when declared by us. The senior subordinated debt portion of the IDS unit will
be included in long-term debt, and the related transaction costs will be
capitalized as deferred financing costs and amortized to interest expense using
the effective interest method. Interest on the senior subordinated notes will be
charged to expense as accrued by us. The bifurcated derivatives will be recorded
as a liability and will be marked to market with changes in fair value being
recorded in earnings. We intend to determine the fair value of the Class A
common stock, the senior subordinated debt and embedded derivatives through the
utilization of a third party valuation firm and the sale of the separate senior
subordinated notes with the same terms that are part of this offering.

In connection with the reorganization, we will issue shares of Class B common
stock to certain current equity holders, which may, subject to certain
conditions, be exchanged for IDSs. The Class B common stock contains dividend
features which are intended to replicate the yield on the IDS units. Any time a
dividend is paid to the holders of Class A common stock, holders of the Class B
common stock will be paid a dividend equal to the same amount per share as paid
to the holders of the Class A common stock. In addition to any such dividend,
holders of the Class B common stock will accrue dividends at a rate that will
replicate the interest payable on the senior subordinated note component of the
of IDS unit.

Following the second anniversary of the consummation of this offering, at the
option of the holder of the shares, a share of Class B common stock may be
exchanged for one IDS (as may be adjusted for stock splits, dividends,
combinations or reclassifications), in connection with the sale of shares of
Class B common stock. Accordingly, at the date of issuance, based on relative
fair values, a pro rata portion of the Class B common stock exchangeable for
senior subordinated debt will be classified as mezzanine equity and pro rata
portion exchangeable for Class A common stock will be classified as permanent
equity. If it is determined at the time of issuance the embedded exchange option
is required to be bifurcated and separately accounted for, a portion of the
proceeds from the original issuance of the Class B common stock will also be
allocated to this derivative. If a portion of the initial proceeds is allocated
to the derivative, the amount recorded in mezzanine equity will initially be
recorded at a discount and accreted to the redemption value using the effective
interest method. The bifurcated derivatives will be recorded as liabilities and
will be marked to market with changes in fair value being recorded as a
component of interest expense.

The dividends paid on the Class B common stock will be deducted from net income
in the determination of net income available to Class A common stockholders for
determination of earnings per share. At the time the holder exercises its
exchange right, the portion of the Class B common stock included in mezzanine
equity will be reclassified to debt and the associated interest payments will be
included in interest expense.

                                        48
In connection with the reorganization, management will receive IDSs in exchange
for their outstanding stock options and phantom stock units. The resulting
compensation expense will be based upon fair value of the IDSs received by
management at the date of exchange.

CONSOLIDATED RESULTS OF OPERATIONS

  Operating Revenues

The following table sets forth our total average revenue per access line:
YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
Total revenue (in thousands)............................  $424,916    $479,883    $497,334
   Average access lines....................................   552,316     574,922     564,027
   Average revenue per access line per month...............  $  64.11    $  69.56    $  73.48
Local Service--Revenues are derived from providing local exchange telephone
services to both residential and business customers, including monthly recurring
charges from basic service such as local dial-tone and enhanced services such as
caller identification, voicemail and call waiting and non-recurring charges for
service activation and reconnection of service.

Data Services--Revenues are derived from monthly recurring charges for DSL,
private lines, Internet and other data related services.

Long Distance Services--Revenues are derived from usage charges assessed on long
distance and local toll calls and from revenue on flat rate calling plans.

Access Services--Network access revenues include switched access, special
access, and end user charges. Switched access represents use sensitive charges
to long distance companies for access to our network in connection with the
completion of interstate and intrastate long-distance calls. Special access
represents dedicated circuits, which are typically purchased by long distance
companies. End user charges are monthly flat-rate charges assessed on access
lines.

Universal Service Fund, or USF--We receive monthly payments from state and
federal government-sponsored support associated with providing basic telephone
services generally in rural, high cost areas.

Other Services--Other revenues primarily represent sales of customer premise
equipment, or CPE, directory advertising, unbundled network elements, or UNE,
and billing and collection fees.

The following table sets forth our revenues for the periods shown:
YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
Local service...........................................  $132,514    $147,130    $156,369
   Data services...........................................    17,927      20,741      20,990
   Long distance services..................................    14,652      22,961      30,816
   Access services.........................................   119,421     133,037     132,047
   Universal service fund..................................   116,305     121,607     119,727
   Other services..........................................    24,097      34,407      37,385
                                                             --------    --------    --------
                                                             $424,916    $479,883    $497,334
                                                             ========    ========    ========
The following table sets forth several key metrics:
AS OF DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
Total access lines......................................   551,599     571,308     556,745
   Long distance subscribers...............................    62,234     130,622     188,526
     Penetration rate of total access lines................        11%         23%         34%
   DSL subscribers.........................................       511       3,510       8,779
     Penetration rate of total access lines................         0%          1%          2%
49
Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Local Service Revenues. Local service revenue increased $9.3 million, or 6%, to
$156.4 million in 2003 from $147.1 million in 2002, despite declining access
lines during the period. Revenue from the provision of basic service decreased
$2.3 million primarily as a result of access line loss. This access line related
loss was more than offset by an increase of $9.0 million in enhanced services,
primarily resulting from our bundle strategy. The remainder of the increase was
from activation and reconnection charges.

Data Services Revenues. Data services revenues improved 1% in 2003 to $21.0
million from $20.7 million in 2002. DSL revenues increased $1.8 million and
other data revenue increased $1.7 million. The number of DSL subscribers grew by
5,269 during the year. The increase in the number of DSL subscribers represents
a 150% increase from 2002. We have been able to grow our data services revenue
despite the loss of substantially all the revenue from one of our large Internet
service provider customers. The loss of this customer represented a $3.2 million
decrease in revenue during 2003.

Long Distance Services Revenues. Long distance services revenue increased $7.8
million, or 34%, to $30.8 million in 2003 from $23.0 million in 2002. Our flat
rate plans and direct-dialed long-distance products increased $10.1 million.
This increase was partially offset by a reduction in local toll revenue of $2.3
million, or 37%, compared to the previous year. This results primarily from
customers switching to one of our new plans offering toll-free local calling or
switching to alternate lower cost service providers.

Access Services Revenues. Access services revenues declined $1.0 million to
$132.0 million in 2003 from $133.0 million in 2002. Switched access revenue
decreased approximately $4.8 million, which was primarily attributable to lower
access rates. Lower switched access revenue was partially offset by higher
special access and end user revenues. Special access revenues increased by $1.6
million as the demand for special circuits ordered by interexchange carriers to
transport their customers' voice and data traffic continue to improve. End user
revenues increased by $2.2 million, of which $3.8 million was due to an increase
in rates, offset by a $1.6 million reduction resulting from a loss in access
lines.

USF Revenues. USF revenues declined $1.9 million, or 2%, to $119.7 million in
2003 from $121.6 million in 2002. Texas State USF declined $1.1 million in 2003
compared to 2002 as a result of a loss in access lines.

Other Services Revenues. Other services revenue increased $3.0 million, or 9%,
to $37.4 million. $2.4 million of this increase was related to CLECs leasing
additional facilities to service their customers in our markets. The remaining
$0.6 million increase was due primarily to higher directory advertising and
other miscellaneous items.

  Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Local Service Revenues. Local service revenue increased $14.6 million, or 11%,
to $147.1 million in 2002 from $132.5 million in 2001. Comparing access lines at
December 31, 2002 to December 31, 2001, access lines increased 19,709. $4.9
million of the revenue increase and 27,537 of the access line increase was
related to our acquisition of Kerrville Communications Corporation, or KCC, in
2002.

Excluding the effects of the KCC acquisition, access lines declined 7,828, or
1.4%, most of which occurred near the end of the year. As a result, this decline
had a minimal effect on our 2002 revenues. Revenues excluding the acquisition of
KCC increased $9.7 million, or 7.3%. $4.2 million of this increase was related
to sales of enhanced services, primarily as a result of our bundled products
which we began marketing during 2002. Other increases to local service revenues
include $3.4 million in activation and reconnection charges and $2.1 million of
other miscellaneous increases.

Data Services Revenues. Data services revenues increased $2.8 million, or 16%,
to $20.7 million in 2002 from $17.9 million in 2001. $2.5 million of the
increase was related to our acquisition of KCC in 2002. The remaining increase
was due substantially to our efforts to increase the number of DSL subscribers
in our markets and sales of other data products.

Long Distance Services Revenues. Long distance services revenue increased $8.3
million, or 57%, to $23.0 million in 2002 from $14.7 million in 2001. $1.7
million of the revenue increase and approximately 8,400 of the long distance
subscriber increase was related to our acquisition of KCC in 2002.

                                        50
Excluding the effects of the KCC acquisition, revenue from our flat rate plans
and direct-dialed long-distance products increased $8.7 million as a result of
the number of long distance subscribers increasing by 96% to 122,257 from 62,234
at the end of 2001. This increase was partially offset by a reduction in local
toll revenue of $2.1 million. This reduction in local toll results primarily
from customers switching to one of our new plans offering toll-free local
calling or switching to alternate lower cost service providers.

Access Services Revenues. Access services revenues increased $13.6 million, or
11%, to $133.0 million from $119.4 million for 2002 and 2001, respectively. $8.3
million of the revenue increase was attributable to the acquisition of KCC.

Excluding the effects of the KCC acquisition, access services revenues increased
$5.3 million in 2002 as compared to 2001. Higher special access revenues
contributed $7.9 million of the increase as inter-exchange carriers purchased
special circuits to transport their customers' voice and data traffic and from
fulfilling pent-up demand for circuits in our exchanges. Adding to the increases
in access services revenue in 2002 were higher subscriber line charges of $3.6
million. These increases were offset by lower switched access revenue. Switched
access revenue declined by $6.2 million, or 10%, compared to the previous year.

USF Revenues. USF revenues increased $5.3 million, or 5%, to $121.6 million in
2002 from $116.3 million in 2001. $4.1 million of the increase was related to
our acquisition of KCC in 2002. The remaining $1.2 million increase was due
primarily to higher net federal USF support, partially offset by lower Texas
state USF as a result of our declining access lines in Texas.

Other Services Revenues. Other services revenue increased $10.3 million, or 43%,
to $34.4 million in 2002 from $24.1 million in 2001. $4.0 million of the
increase was related to our acquisition of KCC in 2002. Equipment sales
increased $4.0 million from a mix of sales of large systems to business
customers, sales of individual phone sets, and other small items. Other
miscellaneous items contributed the remaining increase of $2.3 million.

  Operating Expenses

Cost of Service. Cost of service includes operational costs of owning and
operating our facilities, cost of leasing other facilities to interconnect our
network, access charges paid to third parties to transport and terminate toll
calls, and the cost of sales of customer premise equipment.

Selling, General and Administrative. Selling, general and administrative
expenses represent the cost of billing our customers, operating our call
centers, performing sales and marketing activities in support of our efforts to
grow revenues, and other general corporate support activities.

Depreciation and Amortization. Depreciation and amortization includes
depreciation of our communications network and equipment and amortization of
goodwill through December 31, 2001. The following table sets forth operating
expenses for the periods shown:
YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
Cost of service.........................................  $105,357    $113,891    $106,527
   Selling, general and administrative.....................   105,418     133,468     126,896
   Depreciation and amortization...........................   110,843      73,273      81,638
                                                             --------    --------    --------
                                                             $321,618    $320,632    $315,061
                                                             ========    ========    ========
Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Cost of Service. Cost of service decreased $7.4 million, or 6%, to $106.5
million from $113.9 million. Costs for external circuits and network capacity
declined $5.4 million as a result of efficiencies gained from upgrades we made
to our network. Costs to maintain and operate our network declined $6.6 million
as a result of the investment we made in our telecommunications infrastructure.
Additionally, cost of goods sold for customer premise equipment decreased $2.1
million as sales for this equipment slowed during 2003. These decreases were
partially offset by higher access charges of $7.4 million paid to third parties
related

                                        51
to the increase in usage from our increasing long distance subscriber base.
Other miscellaneous items contributed the remaining decrease of $0.7 million.

Selling, General and Administrative. Selling, general and administrative
expenses decreased $6.6 million, or 5%, to $126.9 million in 2003 from $133.5
million in 2002. We recorded a $5 million charge during 2002 as a result of one
of our largest customers, MCI, declaring bankruptcy. In 2003, we sold the
receivables related to the charge and negotiated setoff of amounts owed by us to
MCI against amounts owed by MCI to us, recovering approximately $3.4 million.
The effect of these transactions decreased our expense in 2003 as compared to
2002 by $8.4 million. Offsetting this reduction in expense was an increase of
$1.8 million of various other miscellaneous expenses.

Depreciation and Amortization. Depreciation and amortization expense increased
by $8.4 million, or 11%, to $81.6 million during 2003 as compared to 2002.
Higher depreciation expense resulted from our spending on capital projects to
improve our network infrastructure.

  Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Cost of Service. Cost of service increased $8.5 million, or 8%, to $113.9
million in 2002 from $105.4 million in 2001. $5.8 million of the increase was
related to our acquisition of KCC in 2002. Of the remaining $2.7 million
increase, higher access charges of $4.3 million were paid to third parties
related to the increased usage from our increasing long distance subscriber
base, and higher cost of goods sold for $2.0 million primarily resulted from
large equipment system sales in late 2002. These increases were offset by a
reduction of $3.6 million, primarily from lower costs for external circuits and
network capacity as a result of efficiencies gained from upgrades we made to our
network.

Selling, General and Administrative. Selling, general and administrative
expenses increased $28.1 million, or 27%, to $133.5 million in 2002 from $105.4
million in 2001. $7.1 million of the increase was from our 2002 acquisition of
KCC. Of the remaining $21.0 million, $5.3 million was due principally to
headcount increases in our call centers. This was done to eventually shift
reliance away from third parties to generate sales and to increase the overall
effectiveness of our customer service function. Sales and marketing expense
increased $6.4 million as a result of efforts to generate sales of bundle
products and long distance. We wrote off approximately $5.0 million of
receivables when one of our largest customers, MCI, declared bankruptcy in 2002.
Of the remaining $4.3 million increase, $1.4 million was due to a restructuring
charge taken in the fourth quarter of 2002 for elimination of 81 positions and
$2.9 million was from various other miscellaneous increases.

Depreciation and Amortization. Depreciation and amortization expense decreased
$37.5 million to $73.3 million in 2002 from $110.8 million in 2001. $53.9
million of this decrease resulted from our adoption of SFAS 142, which required
that goodwill no longer be amortized. Excluding the effects of SFAS 142,
depreciation and amortization expense increased $16.4 million. $4.1 million of
the increase was related to our acquisition of KCC in 2002. The remaining $12.3
million increase in depreciation expense results from our spending on capital
projects to improve our network infrastructure.

INTEREST EXPENSE

The following table sets forth interest expense:
YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
Interest expense........................................  $133,156    $127,365    $119,185
Interest expense decreased $8.2 million to $119.2 million in 2003 from $127.4
million in 2002, due to lower average principal outstanding on our senior debt.

Excluding the effects of the borrowings for the KCC acquisition, our interest
expense decreased $10.9 million to $122.3 million in 2002 from $133.2 million in
2001, as a result of our paying down debt. This decrease was partially offset by
an increase of deferred interest on our subordinated notes and lower capitalized
interest as spending for projects declined in 2002 compared to 2001.

                                        52
LOSS ON INTEREST RATE HEDGING ARRANGEMENTS

The following table sets forth our loss on interest rate hedging arrangements:
YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
Loss on interest rate hedging arrangements..............  $(14,292)   $(12,348)    $(2,113)
The adjustment to mark our hedging arrangements to market value resulted in
non-cash income of $8.5 million during 2003 and non-cash expense of $2.7 million
in 2002 and $9.9 million in 2001. The remaining loss relates to cash settlements
during the periods. These hedging arrangements will be terminated and replaced
in connection with our reorganization.

EARNINGS FROM UNCONSOLIDATED CELLULAR PARTNERSHIPS AND OTHER INCOME AND EXPENSE

The following table sets forth other income and expense for the periods shown:
YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
Earnings from unconsolidated cellular partnerships......      $  -      $2,757      $3,258
   Other income and (expense)..............................      $358      $ (268)      $ (62)
Earnings from unconsolidated cellular partnerships are our share of the earnings
in the equity interest of the two cellular partnerships acquired in 2002 as part
of the KCC acquisition. In 2002 and 2003, we recorded $2.8 million and $3.3
million, respectively, for these equity earnings. Other income and (expense)
represents various other miscellaneous income and expense items, including
interest income on our cash balances held at financial institutions.

INCOME TAXES

The following table sets forth income taxes for the periods shown:
YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
Income taxes............................................        $0      $1,649      $2,478
The income taxes represent those of Valor Telecommunications Southwest II, LLC,
which has elected to be taxed as a corporation for federal income tax purposes.
(See Note 2, "Summary of Significant Accounting Policies" and Note 10, "Income
Taxes" of our consolidated financial statements for an expanded discussion of
income taxes.)

MINORITY INTEREST

The following table sets forth the minority interest for the periods shown:
YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
Minority interest.......................................    $3,595       $(615)    $(3,568)
Minority interest reflects the share of income and loss of minority shareholders
in Valor Telecommunications Southwest, LLC and Valor Telecommunications
Southwest II, LLC.

DISCONTINUED OPERATIONS

The following table sets forth discontinued operations for the periods shown:
YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             --------    --------    --------
                                                                  (Dollars in thousands)
Discontinued operations.................................   $(8,443)    $(3,461)       $108
53
We sold our competitive local exchange carrier, or CLEC, in Texas during April
2002 to NTS Communications for $0.2 million. In accordance with the provisions
of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," which was effective for us on January 1, 2002, the revenue, costs and
expenses and cash flows of our competitive local exchange business have been
excluded from the respective captions in our Consolidated Statements of
Operations and Consolidated Statements of Cash Flows, and have been reported
through their respective dates of separation as "Net income (loss) from
discontinued operations" and as "Net cash used in discontinued operations."

In connection with the sale, we recorded a liability of approximately $2.0
million related to certain employee termination benefits and other exit costs
such as non-cancelable leases. As of December 31, 2003 and 2002, approximately
$0.1 million and $0.4 million of the $2.0 million had not been paid. These
amounts have been classified as current liabilities in the Consolidated Balance
Sheets. Income from discontinued operations of $0.1 million in 2003 represents a
revision to the estimates we made in 2002 for recording certain employee
termination benefits and other exit costs.

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," or
SFAS 133, as amended by SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133,"
and by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain
Hedging Activities," which became effective for our company on January 1, 2001,
established accounting and reporting standards that required every derivative
instrument be recorded in the balance sheet as either an asset or liability
measured at fair value, with changes in fair value reflected in the statement of
operations.

We entered into interest rate hedge contracts to adjust the interest rate
profile of our debt obligations (see "Interest Rate Risk" below). In addition,
our credit arrangements include provisions that require interest rate protection
(hedge agreements) for a portion of our variable debt. We entered into interest
rate hedging agreements with certain financial institutions to reduce the
financial impact of changes in interest rates on our debt. Our interest rate
swap and collar agreements do not qualify for hedge accounting under SFAS 133
and therefore are carried at fair market value and included in "Deferred credits
and other liabilities" in the Consolidated Balance Sheets. The transitional
unrealized loss on the interest rate hedging arrangements at January 1, 2001 is
reflected as the "Cumulative effect of change in accounting principle" on the
Consolidated Statements of Operations. Changes in the fair market value and
settlements are recorded as "Loss on hedging arrangements" each quarter.

FINANCIAL CONDITION AND LIQUIDITY

Current Financial Condition. At December 31, 2003, we had net debt of $1,469.2
million, defined as total debt less cash and equivalents, and $49.9 million of
common owners' equity, compared to net debt of $1,544.2 million and $5.6 million
of common owners' deficit at December 31, 2002.

As discussed in more detail below, our management believes that our operating
cash flows, cash and cash equivalents, and borrowing capacity under our new
credit facility will be sufficient to fund our capital and liquidity needs for
the foreseeable future.

  Cash Flows
FOR THE YEARS ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2001        2002        2003
                                                             ---------   ---------   --------
                                                                  (Dollars in thousands)
Net cash provided by operating activities...............  $ 100,301   $ 150,383   $166,065
   Net cash used in investing activities...................   (106,614)   (216,773)   (66,299)
   Net cash provided by (used in) financing activities.....      8,117      71,015    (99,465)
   Net cash used in discontinued operations................     (8,373)     (3,662)      (176)
                                                             ---------   ---------   --------
   Net (decrease) increase in cash and cash equivalents....  $  (6,569)  $     963   $    125
                                                             =========   =========   ========
54
Net cash provided by continuing operations of $166.1 million in 2003, was
generated primarily by $58.1 million of income from continuing operations,
adjusted to exclude non-cash items of $102.7 million. The most significant
non-cash items were depreciation and amortization expense of $81.6 million and
non-cash interest expense related items of $17.4 million, which includes
amortization of debt issuance costs, unrealized gain on hedging arrangements,
and non-cash interest expense on our senior subordinated debt. We began making
cash payments related to our 10% senior subordinated notes in 2003, which is
discussed in "Outstanding Senior Subordinated Notes" below.

Net cash provided by continuing operations of $150.4 million in 2002, was
generated primarily by $19.8 million of income from continuing operations,
adjusted to exclude non-cash items of $124.8 million. The most significant
non-cash items were depreciation and amortization expense of $73.3 million,
non-cash interest expense related items of $42.2 million, and $11.4 million of
bad debt expense. Cash flows from continuing operations were also favorably
impacted by working capital improvements of $3.3 million. The growth in cash
flows from continuing operations from 2001 to 2002 relates primarily to the
acquisition of KCC in 2002, as well as the unfavorable working capital
requirements in 2001.

Net cash provided by continuing operations of $100.3 million in 2001, resulted
from a $44.9 million of net loss from continuing operations, adjusted to exclude
non-cash items of $168.0 million and working capital requirements of $29.9
million. The most significant non-cash items were depreciation and amortization
expense of $110.8 million, non-cash interest expense related items of $49.4
million, and $11.4 million of bad debt expense.

Cash used in investing activities was $66.3 million in 2003, compared to $216.8
million in 2002, and $106.6 million in 2001. The investing activities during
2002 include the cash paid of $128.1 million to acquire all the outstanding
common stock, preferred stock and common stock equivalents of KCC. Our investing
activities consisted primarily of capital expenditures for property, plant and
equipment. We fund capital expenditures to deploy new network services,
modernize our property, plant and equipment, position our network infrastructure
for future growth, and to meet regulatory obligations.

Capital expenditures for the years ended 2001, 2002 and 2003 were $107.9
million, $89.5 million and $69.9 million, respectively. The decreases in capital
spending from 2002 to 2003 and from 2001 to 2002 reflect the completion of
certain switch upgrades in 2002, as well as continued improvement in the overall
plant condition. For the period from January 1, 2004 to December 31, 2004, we
expect capital expenditures to be approximately $68.8 million, and we anticipate
that future capital expenditures will be at, or slightly below, current levels.
Cash used for capital expenditures was partially offset by distributions of $3.5
million in 2003, and $1.9 million in 2002, received from our equity investment
in two wireless partnerships. Future cash distributions from these equity
investments are uncertain.

Cash used by financing activities was $99.5 million in 2003, compared to cash
provided by financing activities of $71.0 million in 2002, and $8.1 million in
2001. These changes are principally due to the net incremental repayments of
long-term debt of $100.0 million in 2003, and net incremental borrowings of
$39.2 million in 2002, and net incremental repayments of $2.2 million in 2001,
respectively. Cash provided by financing activities in 2002 includes the
proceeds from partner capital contribution of $46.1 million, which together with
the additional borrowings of $82.0 million, was used primarily to acquire all
the outstanding common stock, preferred stock and common stock equivalents of
KCC.

Historically, we have managed our cash on hand through the use of revolving
credit facilities to maximize the amount of debt repayment. Of the total net
debt repayments of $100.0 million in 2003, $58.9 million were required principal
payments and $41.1 million were optional principal payments.

                                        55
OUTSTANDING DEBT AND EXISTING FINANCING ARRANGEMENTS

At December 31, 2003 we had various financing arrangements outstanding with a
total borrowing capacity of $1,621.6 million. Of this total borrowing capacity,
$150.9 million was available to fund future contractual obligations and $1,470.7
million was outstanding as debt (refer to Note 8 to the consolidated financial
statements for more details on outstanding debt):
TOTAL BORROWING     UNUSED      OUTSTANDING
                                                           CAPACITY       CAPACITY(1)      DEBT
                                                        ---------------   -----------   -----------
                                                                  (Dollars in thousands)
Senior credit facilities
     Revolver.........................................    $  264,900       $150,900     $  114,000
     Bank term loans..................................       444,822              -        444,822
     Rural Telephone Finance Cooperative, or RTFC,
        term loans....................................       591,561              -        591,561
   10.0% Senior Subordinated Notes....................       314,257              -        314,257
   Capitalized leases and other.......................         6,020              -          6,020
                                                          ----------       --------     ----------
                                                          $1,621,560       $150,900     $1,470,660
                                                          ==========       ========     ==========
---------------

(1) Unused capacity is reduced by an outstanding letter of credit in the amount
    of $0.1 million.

The agreements for the senior credit facilities limit, among other things,
additional borrowings, transactions with affiliates, capital expenditures and
the payment of dividends and require us to maintain certain financial ratios
including debt to cash flow ratios, interest coverage and fixed charge coverage.
We expect to replace these facilities with a new senior credit facility that
contains substantially similar covenants.

OUTSTANDING SENIOR SUBORDINATED NOTES

As of December 31, 2003, Valor Telecommunications Southwest, LLC had $314.3
million aggregate principal amount of 10% Senior Subordinated Notes due 2010
outstanding. Until our pro forma fixed charge coverage equals or exceeds one to
one, our 10% Senior Subordinated Notes do not pay cash interest, but accrue
interest at 12.0% and is converted into additional note principal. During the
years ended December 31, 2002 and 2003, we converted $32.6 million and $17.8
million, respectively, of interest into additional note principal. During 2003,
we began making cash interest payments on our 10% Senior Subordinated Notes.

All our outstanding senior subordinated notes are held by our equity sponsors,
and we will repay all our outstanding senior subordinated notes as part of our
reorganization. We will repay the equity sponsors for our outstanding senior
subordinated notes in cash with the proceeds of this offering and borrowings
under our new credit facility.

NEW CREDIT FACILITY

We intend to enter into a $     new senior secured credit facility with a
syndicate of financial institutions. We expect that the new credit facility will
be comprised of a senior secured revolving credit facility of up to $
million, which we refer to as the "new revolver," and a senior secured term loan
facility in an aggregate principal amount of $     million, which we refer to as
the "new term loan." We expect that the new revolver and the new term loan will
each have an approximately five-year maturity with no amortization of principal
prior to maturity. We expect that the new credit facility will have several
provisions similar to credit facilities of this nature, including but not
limited to: interest rate and fees, mandatory prepayments, voluntary
prepayments, affirmative and negative covenants, restrictions on collateral and
events of default. See "Description of Certain Indebtedness--New Credit
Facility".

                                        56
CONTRACTUAL AND OTHER OBLIGATIONS

In addition to the above financing arrangements, we have commitments under
certain contractual arrangements to make future payments for goods and services.
These commitments secure the future rights to various assets and services to be
used in the normal course of operations. For example, we are contractually
committed to make certain minimum lease payments for the use of property under
operating lease agreements. In accordance with current accounting rules, the
future rights and obligations pertaining to such firm commitments are not
reflected as assets or liabilities on the consolidated balance sheet. The
following table summarizes our contractual and other obligations at December 31,
2003, and the effect such obligations are expected to have on liquidity and cash
flow in future periods:

                           PAYMENTS DUE BY PERIOD(1)
2004     2005-2006   2007-2008   THEREAFTER     TOTAL
                                        --------   ---------   ---------   ----------   ----------
                                                          (Dollars in thousands)
Contractual obligations(2).........  $ 50,786   $ 72,204    $    713     $      -    $  123,703
   Long-term debt obligations(3)......  $154,074   $306,511    $686,909     $867,307    $2,014,801
   Capital lease obligations(4).......  $  1,777   $  2,551    $    397     $      -    $    4,725
   Operating lease obligations(5).....  $  2,257   $  4,400    $  3,644     $  2,873    $   13,174
                                        --------   --------    --------     --------    ----------
   Total contractual cash
     obligations......................  $208,894   $385,666    $691,663     $870,180    $2,156,403
                                        --------   --------    --------     --------    ----------
---------------------------
(1)  The table above does not include an estimate for income taxes, obligations
     to preferred equity holders, cash contributions to our pension plan and
     cash contributions to our post-retirement medical plan which we are
     required to make but not required to include above.
(2)  Our contractual obligations represent our required capital investment in
     New Mexico, officers' salaries under employment agreements, capital
     expenditure commitments and payments to third party service providers.
(3)  The long-term debt obligations represent our cash debt service obligations,
     including both principal and interest.
(4)  The capital lease obligations represent our future rental payments for
     vehicles leased under five year terms.
(5)  Operating lease obligations represent the future minimum rental payments
     required under the operating leases that have initial or remaining
     non-cancelable lease terms in excess of one year as of December 31, 2003.

OFF-BALANCE SHEET ARRANGEMENTS

Except as noted in the table above under Contractual obligations and Operating
lease obligations, we have no material off-balance sheet obligations.

RISK MANAGEMENT

Interest Rate Risk. We are exposed to market risk from changes in interest rates
on our long-term debt obligations. To manage our interest rate risk exposure and
fulfill a requirement of our credit facility, we entered into two agreements
with investment grade financial institutions in 2000, an interest rate swap and
an interest rate collar. Each of these agreements covered a notional amount of
$100 million. As a further hedge against interest rate exposure, we elected a
fixed rate option for some of our senior debt during the year ended December 31,
2003.

The fair value of our fixed-rate long-term debt is sensitive to changes in
interest rates. Interest rate changes would result in gains or losses in the
market value of the debt due to differences between the market interest rates
and rates at the incurrence of the obligation.

Inflation. Historically, we have mitigated the effects of increased costs by
recovering certain costs applicable to our regulated telephone operations
through the ratemaking process over time. Possible future regulatory changes may
alter our ability to recover increased costs in our regulated operations. As
inflation raises the operating expenses in our non-regulated lines of business,
we will attempt to recover rising costs by raising prices for our services.

Derivatives. Except for the interest rate swap and interest rate collar
agreements described above, we generally do not use derivative financial
instruments.

                                        57
Following our reorganization and the consummation of this offering, we
anticipate that we will employ similar methods to reduce our exposure to
interest rate fluctuations and inflation.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities". This statement addresses financial accounting
and reporting for costs associated with exit or disposal activities and
nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." The provisions of this
Statement are effective for exit or disposal activities that are initiated after
December 31, 2002. We adopted this statement on January 1, 2003. The adoption of
this standard did not have a material impact on our financial position or the
results of operations.

Financial Accounting Standards Board Interpretation (FIN) No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others--an Interpretation of FASB Statements No.
5, 57, and 107 and Rescission of FIN No. 34" was issued in November 2002 and
became effective for disclosures made in December 31, 2002 financial statements.
The interpretation requires expanded disclosures of guarantees. In addition, the
interpretation requires recording the fair value of guarantees upon issuance or
modification after January 1, 2003. While we have various guarantees included in
contracts in the normal course of business, these guarantees do not represent
significant commitments or contingent liabilities related to the indebtedness of
others.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities, an Interpretation of Accounting Research Bulletin No. 51 (ARB 51)",
which clarifies the consolidation accounting guidance in ARB 51, "Consolidated
Financial Statements," as it applies to certain entities in which equity
investors who do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entities to finance
their activities without additional subordinated financial support from other
parties. Such entities are known as variable interest entities (VIEs). FIN No.
46 requires that the primary beneficiary of a VIE consolidates the VIE. FIN No.
46 also requires new disclosures for significant relationships with VIEs,
whether or not consolidation accounting is used or anticipated. In December
2003, the FASB revised and re-released FIN No. 46 as "FIN No. 46(R)." The
provisions of FIN No. 46(R) are effective for periods ending after March 15,
2004. However, we have elected to adopt FIN No. 46(R) as of December 31, 2003.
The adoption of FIN No. 46(R) did not have a material impact on our financial
position or the results of operations.

In May 2003, the FASB issued SFAS No. 150 "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." This Statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability because that financial instrument embodies an obligation of the
issuer. This Statement is effective for periods beginning after June 15, 2003.
We have included the redeemable preferred interests as part of total liabilities
as of December 31, 2002 and 2003.

In January 2004, FASB Staff Position (FSP) No. 106-1, "Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003" was issued. FSP No. 106-1 permits the deferral of
recognizing the effects of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the Act) in the accounting for post-retirement health
care plan under SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions," and in providing disclosures related to the plan required
by SFAS No. 132 (revised 2003), "Employers' Disclosures about Pensions and Other
Postretirement Benefits." The deferral of the accounting for the Act continues
to apply until authoritative guidance is issued on the accounting for the
federal subsidy provided by the Act or until certain other events requiring plan
remeasurement. We have elected the deferral provided by this FSP and are
evaluating the magnitude of the potential favorable impact of this FSP on our
results of operations and financial position. See Note 11 to our financial
statements included elsewhere in this prospectus for further discussion of
postretirement benefits.

                                        58
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from changes in interest rates on our long-term
debt obligations. We estimate our market risk using sensitivity analysis. Market
risk is defined as the potential change in the fair value of a fixed-rate debt
obligation due to a hypothetical adverse change in interest rates and the
potential change in interest expense on variable rate long-term debt obligations
due to changes in market interest rates. Fair value on long-term debt
obligations is determined based on a discounted cash flow analysis, using the
rates and maturities of these obligations compared to terms and rates currently
available in the long-term markets. The potential change in interest expense is
determined by calculating the effect of the hypothetical rate increase on our
variable rate debt for the year and does not assume changes in our financial
structure.

The results of the sensitivity analysis used to estimate market risk are
presented below, although the actual results may differ from these estimates.

At December 31, 2003, the fair value of our fixed rate long-term debt was
estimated to be $700.1 million based on the overall weighted average rate of our
fixed rate long-term debt of 7.7% and an overall weighted maturity of 5.8 years,
compared to terms and rates currently available in long-term financing markets.
Market risk is estimated as the potential loss in fair value of our long-term
debt resulting from a hypothetical increase of 10% in interest rates. Such an
increase in interest rates would result in approximately $18.3 million decrease
in the fair value of our long-term debt. At December 31, 2003, we had
approximately $564.8 million of variable rate debt. If market interest rates
increase 100 basis points in 2004 over the rates in effect at December 31, 2003,
interest expense would increase $4.9 million.

To manage our interest rate risk exposure and fulfill a requirement of our
credit facility, we entered into two agreements with investment grade financial
institutions in 2000, an interest rate swap and an interest rate collar. Each of
these agreements covers a notional amount of $100 million and effectively
converts this portion of our variable rate debt to fixed rate debt. Our interest
rate swap and collar agreements do not qualify for hedge accounting under SFAS
No. 133; therefore, they are carried at fair market value and are included in
"Deferred credits and other liabilities" on the Consolidated Balance Sheets. We
do not hold or issue derivative financial instruments for trading or speculative
purposes.

With respect to these hedges, market risk is estimated as the potential loss in
the fair value of the hedge resulting from a hypothetical 10% change in the
forward rates used to determine the fair value. A hypothetical 10% decrease in
the forward rates would result in a $0.1 million decrease in the fair value of
our swap agreement. A hypothetical 10% decrease in the forward rates would
result in a $0.1 million decrease in the fair value of our collar agreement.

                                        59
BUSINESS

OVERVIEW

We are one of the largest providers of telecommunications services in rural
communities in the southwestern United States and the seventh largest
independent local telephone company in the country. We operate approximately
550,000 telephone access lines in primarily rural areas of Texas, Oklahoma, New
Mexico and Arkansas. The geographic concentration of our assets has enabled us
to create operational efficiencies. We believe that in many of our markets we
are the only service provider that offers customers an integrated package of
local and long distance voice, high-speed data and Internet access, and enhanced
services such as voicemail, call waiting, caller identification and call
forwarding. For the year ended December 31, 2003, we generated revenues of
$497.3 million.

We formed our company in 2000 in connection with the acquisition of select
telephone assets from GTE Southwest Corporation, which is now part of Verizon.
In January 2002, we acquired the local telephone company serving Kerrville,
Texas from BA Capital Company and individual shareholders. The rural telephone
businesses that we own have been operating in the markets we serve for over 75
years.

Since our inception, we have invested substantial resources to improve and
expand our network infrastructure to provide high quality telecommunications
services and superior customer care. This capital investment, in combination
with a focused selling effort, has contributed to an increase in our revenue of
$72.4 million, or 17% from 2001 through 2003. We believe that we are well
positioned for future revenue and cash flow growth through both expanded service
offerings and acquisitions.

We operate our business through telephone company subsidiaries that qualify as
rural local exchange carriers, or RLECs, under the Telecommunications Act of
1996. Like many RLECs, our business is characterized by stable operating
results, revenue and cash flow and a relatively favorable regulatory
environment. In addition, we are entitled to exemptions from certain
interconnection regulatory requirements. We have historically experienced less
competition than regional Bell operating companies because of the low customer
density and high residential component of our customer base. In Texas, where our
largest customer base is located, we serve an average of 9.23 access lines per
square mile, which is approximately half the national average of access lines
per square mile served by other RLECs. Since a majority of our customer base is
located in areas that are less densely populated than areas served by other
RLECs, we believe that we are more insulated from competitive pressures than
many other local telecommunications providers.

Our company culture values and promotes diversity among our employees and in our
supplier base. We have made a strong commitment to ensuring inclusion of
minority, women-owned, veteran-owned and disabled-owned enterprises in our
contracts as an intelligent business strategy in view of the markets we serve.
We believe that this commitment to diversity has created value for our company
by increasing customer loyalty, enhancing recruitment and promotion of highly
qualified employees, and helping to grow our revenue base.

OUR STRENGTHS

We believe that our key strengths will enable us to continue to experience
stable and growing streams of revenue and cash flows. Our principal strengths
include:

Ability to Generate Consistent Cash Flows. We have increased our operating cash
flow in each year since our inception. We have accomplished this by growing
revenues through providing additional services to our customers, reducing
expenses by improving operating efficiencies and negotiating favorable terms
with our suppliers and contractors and optimizing our capital expenditures.
Historically, we have been able to increase our cash flow by using excess cash
to repay outstanding indebtedness and reduce our interest expense. Furthermore,
RLECs in general have been able to attain predictable and stable cash flow from

                                        60
operations due to a steady demand for telecommunications services in rural areas
and public policies that support universal, affordable local telephone service.

Leading Market Position. In the markets we serve, we are the leading provider of
telecommunications services. We generally face less competition from wireless
providers, cable television operators and other local exchange carriers than
other industry participants because competitive entry into our markets is less
attractive due to the generally lower population density and primarily
residential customer base. In addition, access line loss has generally been less
for RLECs than other industry participants due to several reasons, including
fewer competitive alternatives and incomplete wireless coverage. With a lower
rate of line loss, we are not required to expend as much to replace customers as
some other industry participants. Furthermore, our customer base is located in
areas that are generally less densely populated than areas served by other
RLECs, which helps insulate us from competitive pressures. These factors allow
us to focus on offering additional services and provide opportunities to
increase revenue per customer. We reinforce our market position by providing
reliable customer service, offering a full range of voice and data services and
maintaining a strong local presence in the communities we serve.

Scalable, State-of-the-Art Network Infrastructure. We invested more than $300
million since our inception in 2000 to improve and expand our network
infrastructure. These initiatives have enabled us to provide additional services
to our customers and improve the overall quality of our network, as demonstrated
by reductions in trouble reports and service outages and our surpassing all
applicable statewide regulatory service quality measures in 2003. In all our
markets we have implemented a technologically advanced switching network that
has the capacity to accommodate future technologies. While our competitors do
offer some voice and data services in some of our markets, many providers of
potentially competing platforms in our markets operate on older analog equipment
and are less able to provide a reliable, high grade of voice and data services
to our customers. The rural nature of our markets creates substantial costs to
transport voice and Internet connectivity to central network connection points.
By implementing our state-of-the-art networks, we have been able to minimize
these costs and service our markets in a cost effective manner. We believe that
our prior capital investment in our network, combined with our focus on the
quality of our service, leaves us well positioned for future cash flow growth.

Wide Array of Integrated Services. We believe that we are the only
telecommunications service provider in many of the markets we serve that has the
ability to provide an integrated package of local, long distance, high-speed
data and Internet access as well as a variety of enhanced services such as
voicemail and caller identification. By offering a bundled package of services
we have improved our long distance and enhanced services penetration, resulting
in increased revenue and higher margins.

Experienced and proven management team. We have a highly experienced senior
management team that has an average of over 20 years of experience in the local
telecommunications industry. Our senior executives have a solid track record of
managing the expansion of public telecommunications companies through both
internal growth and integration of acquisitions. Our operating results
demonstrate that our management team can successfully generate revenue and
decrease costs while integrating and consolidating an expanding business in an
evolving, regulated and increasingly competitive industry. Our management team
has instilled a corporate culture that focuses on revenue opportunities,
reducing costs and providing quality service. We reinforce this culture and
these objectives through specifically targeted incentive bonus and employee
recognition programs that motivate our employees to seek opportunities to expand
our customer base, augment subscriptions for services and reduce costs. In
addition, we measure performance at all levels for the purposes of these
incentive programs by employing a wide range of performance tracking metrics.
Upon completion of this offering, our management team will hold a significant
investment in IDSs.

BUSINESS STRATEGY

Our business strategy is to be the leading provider of telecommunications
services to the rural communities that we serve. We strive to grow our revenues,
control our expenses and deploy our capital in a manner

                                        61
that maximizes our earnings and free cash flow. In order to achieve this goal,
we have formulated the following strategy:

Increase Penetration of Higher Margin Services. We intend to capitalize on our
ability to offer higher margin enhanced calling and data services as a bundled
package. We have been aggressively marketing enhanced services to our customers,
and we have witnessed an increasing demand for data services. The wide array of
enhanced services such as voicemail and caller identification, generally produce
higher margins than basic telephone service. We also offer dial-up Internet
access and DSL broadband services, as well as satellite television services
through a resale arrangement with a satellite operator. We believe there is
significant opportunity to continue to increase our revenue per customer by
cross-selling data services and enhanced services as a bundled package.

Provide Superior Service and Customer Care. We seek to build long-term customer
relationships by offering a wide range of telecommunications services and
consistent customer support. We believe that our service-driven customer
relationship strategy leads to high levels of customer satisfaction and will
lead to an increase in demand for enhanced and ancillary services. We currently
provide personalized customer care through three call centers that support our
business and residential customers. These call centers are located in the rural
areas we serve and are staffed with customer representatives with knowledge of
our local markets. We recently installed an interactive voice response system
that has automated many of our customer service functions and expanded our
customers' ability to interact with our company 24 hours a day, 365 days a year.
Customers can now receive answers to many frequently asked questions without
having to speak with a customer care representative. In addition, in 2003 we
surpassed all applicable statewide service quality standards imposed by the
regulators in all of the states in which we operate. In each year since 2001, we
have experienced a substantial year-over-year improvement in our service
quality.

Improve Operating Efficiency and Profitability. We strive for greater
efficiencies and improved profit margins by consolidating corporate functions,
negotiating favorable terms with our suppliers and contractors and focusing
capital expenditures on projects that exceed our internal rate of return
thresholds. Our investment in customer service and focus on implementing a high
level of customer support has substantially reduced the number of customer
service calls that we receive since 2001, with a resulting reduction in related
cash operating costs. These initiatives have led to increases in our
profitability. In addition, our capital investments have provided us with a
state-of-the-art scalable network that has resulted in a significantly decreased
number of service outages and significantly reduced the number of overtime calls
that our service technicians had to make since 2001.

Pursue Selective Strategic Acquisitions. We believe that a key to the long-term
growth of our business will be the successful acquisition of telecommunications
assets to increase the size of our business and capitalize on the
state-of-the-art network that we have built. We believe that our network
infrastructure and labor force can support significant growth through strategic
acquisitions. Selective acquisitions can drive growth by increasing revenue and
improving profit margins through cost synergies and by expanding service
offerings. Our management team has a solid track record of evaluating,
purchasing and successfully integrating RLEC assets. We seek to acquire
companies that could generate significant internal rates of return on investment
and will be accretive to cash flows, as well as increase penetration, broaden
our target areas and add to our offering of services.

INDUSTRY OVERVIEW

The U.S. local telephone industry is composed of a few large, well-known
companies, including the regional Bell operating companies, or RBOCs, and
numerous small and mid-sized independent telephone companies. RLECs are
independent telephone companies that typically operate in sparsely populated
rural areas where competition has been limited due to the generally unfavorable
economics of constructing and operating such competitive systems. To ensure that
affordable universal telephone service is available in these remote areas, RLECs
typically benefit from various support mechanisms provided by both state and
federal government regulation.

                                        62
Federal and state regulations promoting the widespread availability of telephone
service have allowed rural telephone companies to invest in their networks while
keeping prices affordable for customers. This policy commitment was reaffirmed
and expanded by the universal service provisions of the federal
Telecommunications Act of 1996. In light of the high cost per access line of
installing lines and switches and providing telephone service in sparsely
populated areas, a system of cost recovery mechanisms has been established to,
among other things, keep customer telephone charges at a reasonable level and
yet allow owners of such telephone companies to earn a fair return on their
investment. These cost recovery mechanisms, which are less available to larger
telephone companies, have resulted in robust telecommunications networks in many
rural areas.

The passage of the Telecommunications Act of 1996 substantially changed the
regulatory structure applicable to the telecommunications industry, with a
stated goal of stimulating competition for telecommunications services,
including local telephone service, long distance service and enhanced services.
In recent years, the telecommunications industry has undergone significant
structural change. Many of the largest service providers have achieved growth
through acquisitions and mergers while an increasing number of competitive
providers have restructured or entered bankruptcy to obtain protection from
their creditors. Since 2001, capital in the form of public financing was
generally difficult to obtain for new entrants and competitive providers.
Capital constraints have caused a number of competitive providers to change
their business plans, resulting in consolidation. Despite these changes, the
demand for all types of telecommunications services, particularly data services,
has not diminished, and companies increasingly bundle services and provide
integrated offerings for end-user customers.

Families or small groups of individuals own many RLECs. We believe that the
owners of many of these RLECs may be interested in selling such companies as the
growing technical, administrative and regulatory complexities of the local
telephone business challenge the capabilities of the existing management. In
addition, a number of large telephone companies are selling many of their rural
telephone assets to focus their attention on their major metropolitan operations
that generate the bulk of their revenue. As a result, we believe that we may
have opportunities to acquire additional rural telephone assets.

OUR SERVICES

We offer a wide range of high quality telecommunications and related services to
residential, business and government customers and transport services to end
users and other data and voice carriers. We locally manage our service offerings
to serve the needs of each community effectively and efficiently. We are
committed to a high standard of service and have dedicated sales and customer
service representatives with local market knowledge positioned in each of the
states in which we operate. Based on our understanding of our local customers'
needs, we offer bundled services that are designed to simplify the customer's
selection and use of our services. Offering bundled services allows us to
capitalize on our network infrastructure by offering a full suite of integrated
communications services in voice, high-speed data, fiber transport, Internet
access and long distance services, as well as enhanced services, such as
voicemail and caller identification, all on one bill.

We also generate revenue through the provision of network access to
interexchange carriers for origination and termination of interstate and
intrastate long distance phone calls, the receipt of government-sponsored
universal service fund support, and from the sale of other services, such as
customer premise equipment and directory advertising.

                                        63
The following chart summarizes each component of our revenue sources for the
year ended December 31, 2003:
PERCENT OF
   REVENUE SOURCE             REVENUE                          DESCRIPTION
   --------------            ----------                        -----------
Local Services..........    31.4%      We derive revenue from providing local exchange
                                          telephone services to both residential and business
                                          customers, including monthly recurring charges from
                                          basic services such as local dial tone and enhanced
                                          services such as caller identification, voicemail and
                                          call waiting.
   Data Services...........     4.2%      We receive revenues from monthly recurring charges for
                                          services, including DSL, special access, private
                                          lines, Internet and other data related services.
   Long Distance                6.2%      We receive revenues for intrastate and interstate long
     Services..............               distance services provided to our retail users by
                                          reselling the services of wholesale long distance
                                          carriers.
   Access Services.........    26.6%      We receive network access charges from inter-exchange
                                          carriers in connection with the completion of
                                          interstate and intrastate long-distance calls and for
                                          special access services, including dedicated circuits
                                          purchased by long distance telephone companies.
   Universal Service                      We receive Universal Service Fund, or USF, payments
     Fund:.................               from
     Texas.................    20.7%      the State of Texas and from the federal government to
                                          support
     Federal...............     3.4%      the high cost of providing local telephone service in
                                          rural locations. The funds are allocated and
                                          distributed to us from pools of funds generated by
                                          surcharges on telecommunications services.
   Other Services..........     7.5%      We generate revenues from selling telecommunications
                                          equipment, selling advertisements in directories and
                                          for billing and collecting long distance fees for
                                          other carriers, and other miscellaneous services.
You should refer to the section "Management's Discussion and Analysis of
Financial Condition and Results of Operations" for more information.

Local Calling Services. Local calling services include basic local lines,
private lines and switched data services as well as enhanced services such as
voicemail and caller identification. We provide local calling services to
residential, business and government customers, generally for a fixed monthly
charge. In the markets we serve, the amount that we can charge a customer for
local service is determined by the appropriate state regulatory authorities
pursuant to the laws and regulations of the particular state. We also generate
revenue from non-recurring services, such as service activation and reconnection
of service.

Data Services. We provide Internet access services to approximately 13,600
dial-up Internet subscribers. Our dial-up Internet service provides customers,
primarily residential customers, with a local dial-up number they can use to
establish a connection to the Internet over their existing phone lines for a
flat, monthly fee. We also provide high speed Internet access with our DSL
products to approximately 8,779 customers for a monthly fee. Currently, our
network is capable of providing DSL service to 35% of our customers at
downstream speeds of up to 1.5 MB per second. Our Internet access services also
enable customers to establish an email account and to send and receive email.

Long Distance Services. We generate revenue from the provision of long distance
calling services either based on usage or pursuant to flat-rate calling plans.
These services include traditional switched and dedicated long distance, toll
free calling, international, calling card and operator services.

                                        64
Access Services. Long distance carriers pay us network access charges when our
local customers make or receive long distance telephone calls. Since toll calls
are generally billed to the customer originating the call, a mechanism is
required to compensate each RLEC, RBOC or long distance carrier providing
services relating to the call. Services include switched access, charges that
depend on call volume, and special access, involving dedicated circuits for
which long distance telephone companies pay a flat fee. We bill access charges
to long distance companies and other customers for the use of our facilities to
access the customer, as described below. In addition, end users are charged a
monthly flat-rate fee assessed on access lines.

     Intrastate Access. We generate intrastate access revenue when an intrastate
long distance call involving a long distance carrier is originated by or
terminated with a customer in our exchange to or from a customer in another
exchange in the same state. The long distance carrier pays us an intrastate
access payment for either terminating or originating the call. We record the
details of the call through our carrier access billing system and receive the
access payment from the long distance carrier. When one of our customers
originates the call, we typically provide billing and collection for the long
distance carrier through a billing and collection agreement. The access charge
for our intrastate service is regulated and approved by the state regulatory
authority.

     Interstate Access. We generate interstate access revenue when an interstate
long distance call is originated by or terminated with a customer in our
exchange to or from a customer in another state. We bill interstate access
charges in the same manner as we bill intrastate access charges, however, the
interstate access charge is regulated and approved by the FCC instead of the
state regulatory authority.

  Universal Service Fund

     Texas USF. The Texas Universal Service Fund commenced payments in January
2000, pursuant to rules enacted by the Public Utility Commission of Texas, or
TPUC, in 1998. It was designed to offer competitively neutral assistance so that
telecommunications companies could provide basic local telecommunications
services at affordable rates to customers in high cost-rural areas and to
qualifying low-income and disabled customers. By order of the TPUC, the Texas
USF pays eligible carriers servicing areas identified as high cost, on a
per-line basis. Customers of telecommunications services in Texas fund the Texas
USF through monthly surcharges on their bills.

We receive disbursements from the Texas USF in the amounts specified in the
order establishing the fund payments to our predecessor, GTE Southwest, Inc. In
2003, we received $103.1 million from the Texas USF, representing 20.7% of total
revenues for that year. The receipt of funds is dependent on the number of
eligible access lines served by the company, and therefore is impacted by
economic and competitive factors. If a line is removed from service, state
universal service funding for that line is discontinued.

The TPUC's rules provide for a review of the Texas USF every three years. The
TPUC recently completed this review, the first since the fund was established.
The TPUC received comments from interested parties regarding changes to the
fund, and upon review, the TPUC staff has recommended no changes to the fund at
this time. The TPUC will undertake its next review in late 2005. The regulation
under which the Texas USF is promulgated will become subject to review and
renewal in late 2005. We expect that the Texas Legislature will renew the
regulation or replace it with a regulation that does not materially change the
benefits we receive under the current regulatory structure.

     Federal USF Revenue. The federal USF supplements the amount of local
service revenue that we receive to ensure that basic local service rates for
customers in high cost rural areas are comparable to rates charged in lower cost
urban and suburban areas. The federal USF, which is funded by monthly fees paid
by long distance carriers and LECs, distributes funds to us on a monthly basis
based upon our embedded costs for providing local service. Federal USF payments
represented approximately 3.4% of our revenues for the year ended December 31,
2003. This mostly reflects the changes in the universal service support as a
result of the CALLS plan that moved the implicit support from access charges and
made it explicit. See "Regulation--Promotion of Universal Service."
                                        65
Other Services. Our other services consist primarily of the sale of customer
premises equipment, directory advertising, unbundled network elements, billing
and collection fees, and other ancillary services.

SALES AND MARKETING

Our marketing approach emphasizes customer-oriented sales, marketing and service
with a local presence. We market our products primarily through our customer
service representatives, direct sales representatives, local retail stores and
outsourced telemarketing supported by direct mail, bill inserts, newspaper
advertising, website promotions, public relations activities and sponsorship of
community events. We have established relationships with local government
officials and business leaders, and we offer to deploy DSL service if a
community can guarantee that a minimum number of customers will use our services
for one year. In our largest operating areas, we maintain retail business
offices that allow our customers the opportunity to pay their bills directly or
meet personally with our customer service and sales representatives to purchase
additional services or, in some locations, customer premise equipment. Our
customer service and sales representatives are well trained and earn incentive
compensation to promote sales of services that meet the unique needs of our
customers.

We, or our predecessors, have been serving our established markets for over 75
years. Our sales force makes direct calls to prospective and existing business
customers and conducts analyses of business customers' usage histories and
service needs, and demonstrates how our service package will improve a
customer's communications capabilities and costs. Our network engineers work
closely with our various sales groups to design service products and
applications, such as high-speed data and wholesale transport services, for our
customers. Our technicians survey customer premises to assess building entry,
power and space requirements and coordinate delivery, installation and testing
of equipment.

To foster long-term relationships with our subscribers, we have undertaken many
initiatives to provide superior customer service to our subscribers. We operate
three call centers located in the rural areas that we serve with customer
service representatives who are knowledgeable about the local market. In
addition, we have automated many of our customer service functions so our
customers can receive answers to many frequently asked questions regarding their
telecommunications services 24 hours a day without speaking to a customer
service representative.

NETWORK ARCHITECTURE AND TECHNOLOGY

Our network consists of central office hosts and remote sites with advanced
digital switches, primarily manufactured by Nortel, Lucent and Siemens,
generally operating with the most current software. The outside plant consists
of transport and distribution delivery networks connecting our host central
office with remote central offices and ultimately with our customers. As of
December 31, 2003, we maintained over 46,000 route miles of copper plant. Our
network also includes approximately 3,700 route miles of local and long-haul
fiber optic cable predominantly based in the four state area we serve. We own
fiber optic cable, which has been deployed throughout our current network and is
the primary transport technology between our host and remote central offices and
interconnection points with other incumbent carriers. We also lease fiber optic
capacity from other major carriers.

In our markets, DSL-enabled integrated access technology is being deployed to
provide significant broadband capacity to our customers. We continue to remove
any network impediments to ensure we can offer DSL service to as many customers
as possible, however, we only equip central offices with DSL enabling equipment
to the extent a demonstrated customer demand exists. As of December 31, 2003, we
had invested approximately $4.5 million to deploy DSL technology, reaching over
196,000 potential broadband customers.

Rapid and significant changes in technology are expected in the communications
industry. Our future success will depend, in part, on our ability to anticipate
and adapt to technological changes. We believe that our network architecture
enables us to respond efficiently to these technological changes.

                                        66
We offer facilities-based services in each of our markets. Our fully integrated
telecommunications network is comprised primarily of asynchronous transport
mode, or ATM, core switches, capable of handling both voice and data, and time
division modulation, or TDM, digital central office switches in our four regions
of operation. We currently own or lease all of our network facilities and have
not booked any revenues from swaps of indefeasible rights to use, or IRUs.

Our network operations center located in Texarkana, Texas monitors all our
networks, transport and ATM elements, digital switching systems and Internet
services infrastructure devices 24 hours a day, seven days a week.

INFORMATION TECHNOLOGY AND SUPPORT SYSTEMS

We have a full suite of proven operational support systems, or OSS, and customer
care/billing systems that allow us to meet or exceed our customers'
expectations. Our OSS and billing systems include automated provisioning and
service activation systems, mechanized line record and trouble reporting
systems, inter-company provisioning and trading partner electronic data exchange
systems. The bulk of these OSS and billing services are provided through the use
of systems contracted or leased from ALLTEL. We employ an Internet service
provider provisioning system and helpdesk database software to assist new data
customers and to communicate with them when necessary. Our approach to OSS and
billing systems focuses on implementing best-of-class applications that allow
consistent communication and coordination throughout our entire organization.
Our objective is to improve profitability by reducing individual company costs
through the sharing of best practices, centralization or standardization of
functions and processes, and deployment of technologies and systems that provide
for greater efficiencies and profitability.

COMPETITION

While the telecommunications industry as a whole is extremely competitive,
competition has been comparatively limited for RLECs because RLECs have
historically operated in markets with:

   --  low population densities;

   --  significant distance to competitive urban areas;

   --  relatively low business customer base;

   --  limited competitive commercially viable substitution alternatives; and

   --  reduced interconnection, resell or unbundled network element platform
       requirements.

These factors render uneconomic most business plans for developing a
facilities-based network to compete against an RLEC. Nonetheless, we have
experienced moderate competition from rural telephone cooperatives, edging out
from the territories where they are incumbent carriers, as well as from wireless
providers and other intermodal competitors, including cable television
operators. In Broken Arrow, Oklahoma, where we operate approximately 64,000
access lines, Cox Communications, or Cox, a cable television operator, has
requested interconnection with our network. Cox has requested to adopt an
existing Valor interconnection agreement which may indicate that Cox, which
currently provides broadband services in Broken Arrow, may intend to enter into
this market and offer voice telecommunications services. In addition, future
technological changes could negatively impact our competitive position. For
example, as Voice over Internet Protocol, or VoIP, develops, some wholesale
customers may be able to bypass network access charges.

PROPERTIES

Our corporate headquarters are located in Irving, Texas. We lease over 67,000
square feet of office space for our headquarters in Irving pursuant to a lease
that will expire in August 2010. In addition, we lease an aggregate of over
100,000 square feet with respect to three call centers in New Mexico and Texas
pursuant
                                        67
to leases that expire at various times between June 2005 and April 2010. We own
all of the other properties that are material to our business. Our other
properties include maintenance facilities, rolling stock, central office and
remote switching platforms and transport and distribution network facilities in
the states in which we operate our business. Our administrative and maintenance
facilities are generally located in or near the rural communities we serve and
our central offices are often within the administrative building and outlying
customer service centers. Auxiliary battery or other non-utility power sources
are at each central office to provide uninterrupted service in the event of an
electrical power failure. Mobile generators are located near our central offices
in the event of a major power outage that continues for a long period of time.
Transport and distribution network facilities include fiber optic backbone and
copper wire distribution facilities, which connect customers to remote switch
locations or to the central office and to points of presence or interconnection
with the incumbent long distance carrier. These facilities are located on land
pursuant to permits, easements, rights of way or other agreements.

EMPLOYEES

As of December 31, 2003, our work force consisted of 1,559 full time employees.
Approximately 1,050 of our employees are subject to collective bargaining
agreements with the Communications Workers of America, or CWA. Most of our union
employees work in our call centers and in technical positions related to the
operation of our network and provision of service to our customers. Our labor
agreement with the CWA, which covers our non-Kerrville employees, was
renegotiated during 2002 for a three-year period that ends in February 2005. Our
labor agreement with the CWA relating to employees of our Kerrville operations
was renegotiated in 2003 and will expire in 2006. We believe that our relations
with our employees are good.

LEGAL PROCEEDINGS

We are involved in various claims, legal actions and regulatory proceedings
arising in the ordinary course of our business. In the opinion of our
management, the resolution of these matters will not have a material adverse
effect on our financial condition, results of operations or cash flows.

                                        68
REGULATION

The following summary of the regulatory environment in which our business
operates does not describe all present and proposed federal, state and local
legislation and regulations affecting the telecommunications industry. Some
legislation and regulations are currently the subject of judicial proceedings,
legislative hearings and administrative proposals that could change the manner
in which this industry operates. We cannot predict the outcome of any of these
matters or their potential impact on our business. Regulation in the
telecommunications industry is subject to rapid change, and any such change may
have an adverse effect on us in the future. See "Risk Factors--"Regulatory
Risks" and "Risks Relating to Our Business."

OVERVIEW

The telecommunications services we provide and from which we derive a large
majority of our revenue are subject to federal, state and local regulation. At
the federal level, the FCC generally exercises jurisdiction over our facilities
and services used to provide, originate, or terminate interstate or
international communications. State regulators in Texas, Oklahoma, New Mexico
and Arkansas exercise jurisdiction over our facilities and services used to
provide, originate or terminate intrastate communications. Local governments
often regulate the public rights-of-way necessary to install and operate our
networks and, in some of our states, local governments may require us to enter
into franchise agreements that compensate the local government for use of their
rights-of-way. State and federal regulators share responsibility for
implementing and enforcing the policies of the Telecommunications Act of 1996
intended to foster competition in local telecommunications services. We believe
that the competition we have experienced to date in our markets has not been
substantial as compared to that experienced by other local exchange carriers.
Competition in our markets may increase in the future as a result of the
Telecommunications Act and subsequent decisions by regulators implementing the
Telecommunications Act.

PROMOTION OF UNIVERSAL SERVICE

The universal service fund, or USF, payments we receive from the Texas and
federal USF Funds are intended to support the high cost of our operations in
rural markets. Texas USF support payments represented approximately 20.7% of our
revenues for the year ended December 31, 2003. In 2003, we received $16.7
million, or 3.4% of our total revenues, in federal USF support. We also collect
charges from our customers to support these funds.

The purpose of the TUSF is to implement a competitively neutral mechanism to
assist telecommunications providers in providing basic local telecommunications
services at reasonable prices to customers in high cost rural areas and to
qualifying low-income and disabled customers. By order of the TPUC, the Texas
USF pays eligible carriers serving areas identified as high cost, on a per-line
basis. Texas USF support payments are based on actual lines in service and
therefore are subject to reduction if customers discontinue service or migrate
from our lines to a competitive carrier.

All customers of telecommunications services in Texas fund the Texas USF through
the payment of a monthly surcharge on their bills. AT&T has challenged the TPUC
rule that makes all telecommunications services offered in Texas subject to
surcharge to support the Texas USF. AT&T contends that only intrastate services
should be subject to surcharge to support the Texas USF. This matter is pending
decision in the appellate courts. We do not believe that the outcome of this
appeal will impact the amount of Texas USF we receive.

The rules governing the Texas USF provide for a review of the Texas USF every
three years starting in 1999. In September 2002, the TPUC undertook its first
review. Interested parties provided the TPUC with comments on whether there
should be changes made to the Texas USF. In September 2003, the TPUC staff
recommended no changes be made to the Texas USF at this time. The TPUC will
undertake its next review of the rules in September 2005. We do not expect any
material change in the Texas USF

                                        69
methodology or the manner in which the amount of support we receive is
calculated under our current Texas regulations.

The Texas regulatory structure under which we operate, including the enabling
statute for the Texas USF, will become subject to legislative review and renewal
in late 2005. The current Texas USF rules will not expire with their enabling
statute in 2005, but if the enabling statute changes as part of the 2005 review,
the TPUC would have to amend the Texas USF rules to comply with the statute. We
believe that there is strong support of the Texas USF in its current form from a
variety of constituents, and we do not believe it is likely that there will be
any material change in the current USF enabling statute during the Legislative
review period. However, such changes are possible and may be adverse to our
revenues.

The federal USF revenue we receive helps to offset interstate access charges,
defrays the high fixed switching costs in areas with fewer than 50,000 access
lines and provides support where our average cost per line exceeds 115% of the
national average cost per line. Funding for the federal USF comes from
surcharges on interstate and international telecommunications services.
Providers pass these charges through to their customers on the customers'
monthly bills. In May 2001, the FCC adopted a proposal to reform universal
service support for rural areas. The FCC has indicated that, for the period
after July 1, 2006, it will develop a comprehensive plan for high-cost support
mechanisms for rural and non-rural carriers that may rely on a different cost
methodology than currently is applied. We are unable to predict whether and to
what extent we would be eligible to receive any federal high-cost support under
such a plan. However, the federal high cost support we receive today is less
than one percent of our total revenues.

Federal USF payments are only available to carriers that are designated as
eligible telecommunications carriers, or ETCs, by a state regulatory body.
Competitive providers that have been granted ETC status are eligible to receive
the same amount of universal service support per customer as the local exchange
carrier serving the same area. Under current federal rules, the payment of
federal universal service funds to a competitor qualifying as an ETC in an area
served by an local exchange carrier is not intended to reduce significantly any
federal universal support payable to the local exchange carrier. The FCC,
however, could promulgate rules that reduce universal service support for local
exchange carriers under such conditions. Currently, five competitive carriers
have received ETC designation in our markets in Texas and New Mexico and draw
support.

The FCC has requested comment on the standards for ETC designations, as well as
whether and how it might limit USF support payments in markets where competitive
ETCs have been designated. A federal-state joint board recently made
recommendations to the FCC on these issues, including creating tighter standards
for ETC designation and limiting federal USF support to only one primary line
per location. The FCC will have one year to act on these recommendations. We
cannot predict the outcome of these proceedings. In addition, Congress may
address universal service issues in legislation, but we cannot predict the
occurrence, timing or effects of such legislation.

STATE REGULATION

We operate in Texas, Oklahoma, New Mexico and Arkansas, and we are certified in
those states to provide local telecommunications services.

Intrastate Rate Regulation. State regulators in our states regulate the prices
we charge for intrastate services, including our prices for local, intrastate
long distance and intrastate access services paid by providers of intrastate
long distance services. In Texas, most of our intrastate operations are subject
to price caps, while regulations in Oklahoma and Arkansas employ rate-of-return
regulation to set our prices. Our subsidiaries in New Mexico operate under an
alternative regulation plan whereby prices are fixed through the term of the
plan, which expires in 2006. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Regulatory Matters--State
Regulation."

                                        70
New Mexico Investment. In New Mexico, we operate under an Alternative Form of
Regulation Plan, or Plan. Adopted in 2000, the Plan provides for a freeze on the
prices of our intrastate telecommunications services during the term of the
Plan, requires us to invest $83 million in capital in New Mexico during the term
of the plan, provides for streamlined tariff approval process and prescribes
quality of service standards, including penalties for failure to meet certain
service levels. This Plan expires on March 31, 2006. As of December 31, 2003, we
have invested approximately $47.4 million of the $83 million capital investment
commitment. At this time, we believe that we can substantially complete our
investment commitment by the end of the Plan within our current projected
capital expenditures.

Service Quality. State regulators impose service quality reporting obligations
on us and require us to adhere to prescribed service quality standards. These
standards measure the performance of various parts of our business. If we fail
to meet these standards, regulators may impose fines or we may have to issue
credits to our customers, or both.

Competition. State regulators have a number of duties in implementing the
Telecommunications Act of 1996, including mediating or arbitrating disputed
issues in interconnection agreements, setting the prices of unbundled network
elements, and designating ETCs.

Acquisitions. Our state regulators may review sales, acquisitions or transfers
of control directly involving local exchange carriers certified to provide
intrastate telecommunications services within our states. Therefore, if we seek
to acquire companies that provide intrastate telecommunications services, or
engage in other activities by which a change in control occurs, we may have to
report or seek approval of state regulators in connection with such activities.
State regulators may deny, delay or impose conditions on such transactions.

Compliance. Our state regulators also have the authority to condition, modify,
cancel, terminate or revoke operating authority for failure to comply with
applicable laws or rules, regulations, and policies of the state regulatory
agency. Fines or other penalties may be imposed for such violations.

FEDERAL REGULATION

We must comply with the Communications Act of 1934, as amended, and FCC rules
which require, among other things, that we offer interstate services at just and
reasonable prices and on non-discriminatory terms and conditions. The
Telecommunications Act of 1996 significantly changed and is expected to continue
to change the telecommunications industry.

Rural Telephone Company. The Telecommunications Act of 1996 prescribes different
regulatory requirements for local exchange carriers that meet the definition of
a rural telephone company. We have certified as a rural telephone company, RLEC,
in each of the states in which we operate. A wireless carrier has challenged our
certification at the FCC on two occasions, and these challenges have been
pending since 2000 and 2003. We do not believe that the challenges have merit,
and we do not expect the FCC to conclude we fail to meet the RLEC definition.

Interconnection. A central aim of the Telecommunications Act of 1996 was to open
local telecommunications marketplaces to competition while enhancing universal
service. Pursuant to the Telecommunications Act, most local exchange carriers
have obligations to open their networks to competitors, including:

   --  negotiate in good faith with any carrier requesting interconnection;

   --  provide interconnection for the transmission and routing of
       telecommunications at any technically feasible point in its network on
       just, reasonable and nondiscriminatory rates, terms and conditions;

   --  provide access to unbundled network elements, or UNEs, such as local
       loops, switches and trunks, or combinations of UNEs at nondiscriminatory,
       cost-based rates;

   --  offer retail local telephone services to resellers at discounted
       wholesale rates; and

                                        71
--  provide physical collocation, which allows a competitor to install and
       maintain its network termination equipment in an local exchange carrier's
       central office, or to obtain functionally equivalent forms of
       interconnection.

Competitors are required to compensate local exchange carriers for the cost of
providing these services.

Because we qualify as a RLEC under the Telecommunications Act, we may rely on a
statutory exemption from these additional interconnection requirements until we
receive a bona fide request for interconnection and the applicable state
regulator lifts the exemption. To lift the exemption, the state regulator must
find that competitive entry would not impose an undue economic burden on us, is
technically feasible and will not harm universal service. We have agreed not to
exercise the rural exemption in Oklahoma, where we were classified as a
non-rural carrier prior to July 1, 2003. In Texas and New Mexico, we agreed to
continue providing interconnection to those competitive carriers that had
interconnections agreements with GTE at the time we acquired the GTE properties
and we continue to provide interconnection to these carriers today.
Notwithstanding these agreements, we may request suspension or modification of
certain interconnection requirements in all states, including Oklahoma, by
petition to the state regulator and upon the demonstration of certain statutory
factors.

Since the passage of the Telecommunications Act, we have experienced a modest
amount of competition from small RLECs serving adjacent markets, other
competitive local carriers, resellers and wireless service providers. Many of
these competitors were already providing competitive services in our markets
when we acquired the business in 2000. As of December 31, 2003, we had 33
interconnection agreements with 19 competitors and 40 resale agreements with 28
resellers. Many of these competitors have agreements in more than one of our
states, and not all of these competitors currently offer competitive local
services in our markets.

In Broken Arrow, Oklahoma, Cox Communications, the cable television provider,
has requested interconnection with our network. Cox has requested to adopt an
existing Valor interconnection agreement which may indicate that Cox, which
currently provides broadband services in Broken Arrow, may intend to offer voice
telecommunications services there as well.

In its Triennial Review order released in August 2003, the FCC eliminated some
of the obligations imposed on local exchange carriers under prior rules, and
redefined some of the standards used to determine what parts of its network an
local exchange carrier must make available to competitors. The United States
Court of Appeals for the District of Columbia Circuit recently overturned
significant aspects of the Triennial Review Order. Further appellate and FCC
proceedings are expected.

In addition, the FCC is reexamining its pricing standard for unbundled network
elements and may reconsider other aspects of its new rules. Congress may
consider legislation that may modify some aspects of the Telecommunications Act
or these rules. We cannot predict the outcome of any of these proceedings or of
any action taken by our state regulatory commissions pursuant to the new rules.

The FCC recently ruled that we and other local exchange carriers must port our
telephone numbers to requesting wireless carriers, so-called
wireline-to-wireless local number portability, or LNP. Local exchange carriers
operating in the country's largest urban areas were required to make LNP
capability available to wireless carriers by November 24, 2003. We have LNP
available to wireless carriers in our Broken Arrow exchange, which is part of
the Tulsa metropolitan area. Since deploying LNP, we have had only a few
requests to port one of our numbers to a wireless carrier. RLECs serving rural
areas have to make LNP available to wireless carriers on May 24, 2004 or six
months after a bona fide request from a wireless carrier. The FCC still has
under consideration a number of technical and cost recovery issues associated
with deployment of LNP.

We have received bona fide requests for LNP in some of our exchanges. We
estimate that upgrading our switches to provide LNP will cost approximately $3.2
million in capital expenditures. We have filed petitions before the New Mexico
Public Regulation Commission, the Oklahoma Corporation Commission,

                                        72
and the Texas Public Utility Commission, requesting that these regulators
suspend our obligation to deploy LNP until at least March 31, 2005 in order to
provide time for the FCC to issue orders on the open technical and cost recovery
issues.

End-User and Access Charges. The FCC regulates the prices that we charge for the
use of our local telephone facilities in originating or terminating interstate
telecommunications services. The FCC has structured these prices as a
combination of flat monthly charges paid by the end-users and usage sensitive
charges or flat rated facilities charges paid by long distance carriers, also
referred to as access charges. The FCC regulates the levels of interstate access
charges we charge by imposing price caps on those charges. In 2000, the FCC
adopted an integrated interstate access reform and universal service framework
for price cap LECs called the CALLS Plan, which allowed end user rates to rise,
but forced substantial decreases in access charges billed to long distance
carriers. The CALLS Plan will expire in mid-2005 unless extended by the FCC.

The CALLS Plan provides for a "low-end adjustment" to increase prices to achieve
a 10.25% annual return, if needed, to address a situation where a LEC's earnings
drops below 10.25%. In essence, this is a protection against unreasonably low
earnings. We requested and were granted low-end adjustment relief pursuant to
FCC rules for our Texas study area in 2001, 2002 and 2003, and we expect to
request and obtain such relief in our 2004 annual tariff filing. We also
obtained a waiver in 2002 that delayed a price decrease in access charges until
July 2004. We currently have pending a request to make the 2002 waiver
permanent.

The FCC has made, and is continuing to consider, various changes to the existing
access charge price structure. The FCC has sought comment on how it should
change inter-carrier compensation, including interstate access charges,
reciprocal compensation for local calling between competitors, and intrastate
access charges. Specifically, the FCC proposed to adopt for all inter-carrier
compensation a "bill and keep" mechanism in which carriers would exchange
traffic at no charge to each other, and recover their costs from their own end
users. Carrier charges would be limited to compensation for transporting traffic
to another carrier's network. If implementation of such a proposal raises the
prices paid by end users to the point where the prices are unaffordable, the FCC
proposed that a universal service mechanism would be used to compensate a
carrier for costs in excess of what could be recovered through affordable rates.
The FCC stated that the proposed mechanism would not be adopted until after
expiration of the CALLS plan. This matter has been pending at the FCC for three
years. It is not known what kind of changes, if any, the FCC will adopt pursuant
to this rulemaking, but the FCC could significantly alter inter-carrier
compensation as early as 2005.

Interstate Long Distance Services. The FCC does not actively regulate the
prices, terms or facilities of our interstate long distance services. However,
we must comply with the general requirement that our prices and terms be just,
reasonable and nondiscriminatory. Also, we must comply with FCC rules regarding
unauthorized switching of a customer's long distance service provider, or
slamming; the FCC has recently levied substantial fines on some carriers for
slamming. In addition, our long distance carrier must post the prices, terms and
conditions of its interstate service on its Internet web site and engage in
other public disclosure activities.

Acquisitions. The FCC generally must approve in advance most transfers of
control and assignments of operating authorizations by FCC-regulated entities.
Therefore, if we seek to acquire companies that hold FCC authorizations, in most
instances we will be required to seek approval from the FCC prior to completing
those acquisitions. The FCC may deny, delay or impose conditions on such
transactions.

Compliance and Penalties. The FCC has the authority to condition, modify,
cancel, terminate or revoke operating authority for failure to comply with
applicable federal laws or rules, regulations and policies of the FCC. Fines or
other penalties also may be imposed for such violations.

Communications Assistance for Law Enforcement Act. Under the Communications
Assistance for Law Enforcement Act, or CALEA, and related federal statutes, we
are required to provide law enforcement

                                        73
officials with call content and call identifying information under a valid
electronic surveillance warrant and to reserve a sufficient number of circuits
for use by law enforcement officials in executing court-authorized electronic
surveillance. We believe we are in compliance with those laws and regulations.

LOCAL GOVERNMENT AUTHORIZATIONS

We may be required to obtain permits from municipal authorities for street
opening and construction or operating franchises to install and expand fiber
optic facilities in certain rural communities. Some of these franchises may
require the payment of franchise fees. We have obtained such municipal
franchises in some parts of Texas, Oklahoma, New Mexico and Arkansas.

POTENTIAL INTERNET REGULATORY OBLIGATIONS

In connection with our Internet access offerings, we could become subject to
laws and regulations as they are adopted or applied to the Internet. To date,
the FCC has treated Internet service providers, or ISPs, as enhanced service
providers, rather than common carriers, and therefore ISPs are exempt from most
federal and state regulation, including the requirement to pay access charges or
contribute to the federal USF. As Internet services expand, federal, state and
local governments may adopt rules and regulations, or apply existing laws and
regulations to the Internet. The FCC is currently reviewing the appropriate
regulatory framework governing broadband access to the Internet through
telephone and cable television operators' communications networks. At this time,
we cannot estimate what regulatory changes may occur as a result of the FCC's
review, or what impact any such changes would have on our operations or
revenues.

In February 2004, the FCC determined that a particular entirely Internet-based
Voice over Internet Protocol, or VoIP, service is an information service and
exempt from such regulatory obligations. Also in February 2004, the FCC launched
a comprehensive rulemaking to determine the appropriate types of regulation,
including such matters as intercarrier compensation and contributions to USF, to
which ISPs offering or enabling different types of services, including VoIP,
should be subject. We cannot predict the outcome of these proceedings or the
effect of FCC decisions in this area on our business.

ENVIRONMENTAL REGULATIONS

Our operations are subject to federal, state and local laws and regulations
governing the use, storage, disposal of, and exposure to hazardous materials,
the release of pollutants into the environment and the remediation of
contamination. As an owner or operator of property, we could be subject to
environmental laws that impose liability for the entire cost of cleanup at
contaminated sites, regardless of fault or the lawfulness of the activity that
resulted in contamination. We believe, however, that our operations are in
substantial compliance with applicable environmental laws and regulations.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth information with respect to our executive
officers and directors and other key employees of Valor as of April 7, 2004.
NAME                          AGE                          POSITION
----                          ---                          --------
Anthony J. de Nicola........  39    Chairman, Director
Kenneth R. Cole.............  56    Vice Chairman
John J. Mueller.............  47    Chief Executive Officer and President
John A. Butler..............  42    Executive Vice President--Chief Financial Officer
William M. Ojile, Jr. ......  43    Senior Vice President--Chief Legal Officer and
                                    Secretary
W. Grant Raney..............  43    Senior Vice President--Operations, Engineering and
                                    Customer Service
Cynthia B. Nash.............  39    Senior Vice President and Chief Information Officer
Keith D. Terreri............  39    Vice President--Treasury and Corporate Development
Julie Burnett...............  49    Vice President--Marketing
Cynthia T. Cruz.............  44    Vice President--Corporate Communications
Randal S. Dumas.............  34    Vice President--Accounting and Controller
Ben Muro....................  57    Vice President--Human Resources
Sanjay Swani................  37    Director
Todd Khoury.................  38    Director
ANTHONY J. DE NICOLA has served as a director of our company since February 2004
and as Chairman since April 2004. Mr. de Nicola is currently a general partner
of Welsh, Carson, Anderson & Stowe, which is one of our existing equity holders.
He joined Welsh, Carson, Anderson & Stowe in 1994 and focuses on investments in
the information business services and communications industries. Before joining
Welsh, Carson, Anderson & Stowe, he worked for four years in the private equity
group at William Blair & Company. Previously, Mr. de Nicola worked at Goldman
Sachs & Co. in the Mergers and Acquisitions Department.

KENNETH R. COLE has served as our Vice Chairman since April 2004. Prior to then,
Mr. Cole served as our Chief Executive Officer from January 2002 to April 2004.
Mr. Cole joined our company at its inception in January 2000 as President and
Chief Operating Officer. Prior to joining our company, Mr. Cole had a 26-year
career at CenturyTel, Inc., culminating in his service as Chief Operating
Officer from May 1999 to January 2000.

JOHN J. MUELLER has served as our Chief Executive Officer and President since
April 2004 and was previously our President and Chief Operating Officer since
November 2002. Mr. Mueller joined us in April 2002 as Executive Vice President
and Chief Operating Officer. Prior to joining our company, Mr. Mueller spent 23
years at Cincinnati Bell Inc. including serving as General Manager--Consumer
Markets from February 1999 to May 1999, President--Business Units from May 1999
to November 1999 and President of the Cincinnati Bell Telephone Company from
November 1999 to October 2001.

JOHN A. BUTLER has served as our Executive Vice President and Chief Financial
Officer since joining us in March 2000. Before joining our company, Mr. Butler
served as Executive Vice President and Chief Financial Officer of Commonwealth
Telephone Enterprises, Inc. starting in 1998. Prior to 1998, he was a director
at First Union Capital Markets (Wachovia) in the Media and Communications Group.
Mr. Butler has over 18 years of experience in the finance and telecommunications
industries. Mr. Butler began his career at Arthur Andersen & Co. and is a
licensed, certified public accountant.

WILLIAM M. OJILE, JR. has served as our Senior Vice President, Chief Legal
Officer and Secretary since November 2000. Before joining our company, Mr. Ojile
worked at U.S. WEST, Inc. for approximately

                                        75
12 years, serving as Regional Executive Director--Public Policy from January
1998 to July 2000, and, after the merger between U.S. WEST and Qwest
Communications International in July 2000, as Corporate Counsel for Qwest
Communications International from July 2000 to November 2000.

W. GRANT RANEY has served as our Senior Vice President--Operations and
Engineering since January 2001. In February 2000, Mr. Raney joined our company
as Vice President--Operations. Prior to joining our company, from March 1999 to
February 2000, Mr. Raney was Division Vice President at Spectra Communications
Group, a partnership of CenturyTel, Inc. Starting March 1979 at CenturyTel, Mr.
Raney has gained 25 years of experience in the telecommunications industry in a
variety of roles of increasing responsibility.

CYNTHIA B. NASH has served as our Senior Vice President and Chief Information
Officer since January 2004. In April 2002, Ms. Nash joined our company as our
Vice President and Chief Technology Officer. Before joining our company, Ms.
Nash held various positions of increasing responsibility with CenturyTel, Inc.,
including Vice President of Information Technology from January 2001 to April
2002, Director of the Program Management Office and Customer Care from September
2000 to January 2001, Director of Applications Development from December 1999 to
September 2000 and Director of Telco Applications from September 1997 to
December 1999. Ms. Nash has over 17 years of experience in the
telecommunications industry.

KEITH D. TERRERI has served as our Vice President--Treasury and Corporate
Department since July 2001. Prior to joining our company, Mr. Terreri was Vice
President and Treasurer of RCN Corporation from December 1999 to June 2001 and
Director of Finance from January 1998 to December 1999. Mr. Terreri has over 6
years experience in the telecommunications industry. Mr. Terreri began his
career at Deloitte & Touche LLP and is a certified public accountant.

JULIE BURNETT has served as our Vice President--Marketing since May 2002. Prior
to that, she served as our Vice President--Long Distance and Emerging Markets
starting in April 2000. Prior to joining our company, Ms. Burnett worked at
CenturyTel, Inc. starting in 1979, where, from November 1999 until joining our
company, she was Vice President--Long Distance Operations.

CYNTHIA T. CRUZ has served as our Vice President--Corporate Communications since
June 2000. Prior to joining our company, Ms. Cruz was Senior Manager, Public
Affairs, for Levi Strauss & Company from 1998 to 2000.

RANDAL S. DUMAS has served as our Vice President--Controller since July 2003. He
joined our company in January 2001 as Director--Accounting, and he added the
responsibility of Controller in June 2002. Prior to joining our company, Mr.
Dumas worked for Citizens Communications starting in 1994, where he was Revenue
Accounting Manager from January 1997 to January 2000, Director of General
Accounting from January to June 2000 and Director of Financial Operations from
June 2000 until January 2001. Mr. Dumas is a certified public accountant.

BEN MURO has served as our Vice President--Human Resources since February 2000.
Prior to joining our company, Mr. Muro was Senior Vice President of Human
Resources for Parkland Health and Hospital System in Dallas from March 1991 to
February 2000.

SANJAY SWANI has served as a director of our company since February 2004. Mr.
Swani is currently a general partner of Welsh, Carson, Anderson & Stowe, which
is one of our existing equity holders. He joined Welsh, Carson, Anderson & Stowe
in 1999 and focuses on investments in the information business services and
communications industries. Previously, he was a director of Fox Paine & Company,
a San Francisco-based private equity firm. Mr. Swani also spent four years in
the Mergers, Acquisitions & Restructuring Department and two years in the Debt
Capital Markets Department of Morgan Stanley Dean Witter & Co.

                                        76
TODD KHOURY has served as a director of our company since February 2004. Mr.
Khoury is currently a managing director of Vestar Capital Partners, which is one
of our existing equity holders. Prior to joining Vestar in 1993, Mr. Khoury was
a member of the Corporate Finance Group of Salomon Brothers Inc.

Our board of directors will consist of at least      members. Within one year of
the consummation of this offering, a majority of our board of directors will be
independent. The term of office for each director will be until his successor is
elected or appointed, with elections for each directorship being held annually.

BOARD COMMITTEES

Prior to the consummation of this offering, we intend to establish an audit
committee, a nominating committee, a compensation committee and a pension
committee. Each committee will consist of three persons, at least one of whom is
not an employee of, and has no business relationships with, Valor. Within one
year of the consummation of this offering, all the members of our audit
committee, nominating committee and compensation committee will be "independent"
as defined by the           rules.

The audit committee will be responsible for reviewing our internal accounting
procedures and consulting with and reviewing the services provided by our
independent accountants. The nominating committee will evaluate the
qualifications of potential nominees to our board of directors and make
recommendations to the board as to which candidates should be nominated for
election to our board of directors. The compensation committee will be
responsible for reviewing and recommending to the board of directors the
compensation and benefits of all our officers and directors, including stock
compensation and loans and establishing and reviewing general policies relating
to the compensation and benefits of our employees. The pension committee will be
responsible for reviewing the quality of services provided by our pension and
savings plan advisors and administrators.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The current compensation of our executive officers was determined by the
compensation committee of Valor Telecommunications Southwest, LLC, which is
comprised of Anthony J. de Nicola, William E. Garcia, Edward J. Lujan and Anne
K. Bingaman, with Mr. de Nicola serving as committee chairman. Prior to the
consummation of this offering, we plan to form a compensation committee of our
board of directors to oversee executive compensation issues. We anticipate that
no member of our compensation committee will serve as a member of the board of
directors or compensation committee of an entity that has one or more executive
officers serving as a member of our board of directors or compensation
committee.

DIRECTOR COMPENSATION

Non-employee members of our board of directors will receive compensation for
their services as directors of $          per meeting of the board of directors
that they attend. Directors will also be reimbursed for out-of-pocket expenses
for attending board and committee meetings.

LIMITATIONS ON DIRECTORS' LIABILITY AND INDEMNIFICATION

Our amended and restated certificate of incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a corporation will not be personally liable for monetary
damages for breach of their fiduciary duties as directors, except liability for:

   --  any breach of their duty of loyalty to the corporation or its
       stockholders;

   --  acts or omissions not in good faith or which involve intentional
       misconduct or a knowing violation of law;

   --  unlawful payments of dividends or unlawful stock repurchases or
       redemptions; or

                                        77
--  any transaction from which the director derived an improper personal
       benefit.

The limitation of liability does not apply to liabilities arising under the
federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.

Our amended and restated certificate of incorporation provide that we will
indemnify our directors and officers and may indemnify our employees and other
agents to the fullest extent permitted by law. We believe that indemnification
under our amended and restated certificate of incorporation covers at least
negligence and gross negligence on the part of indemnified parties. Our amended
and restated certificate of incorporation also permit us to secure insurance on
behalf of any officer, director, employee or other agent for any liability
arising out of his or her actions in his or her capacity as an officer,
director, employee or other agent.

The limited liability and indemnification provisions in our amended and restated
certificate of incorporation may discourage stockholders from bringing a lawsuit
against our directors for breach of their fiduciary duty and may reduce the
likelihood of derivative litigation against our directors and officers, even
though a derivative action, if successful, might otherwise benefit us and our
stockholders. A stockholder's investment in us may be adversely affected to the
extent we pay the costs of settlement or damage awards against our directors and
officers under these indemnification provisions.

At present, there is no pending litigation or proceeding involving any of our
directors, officers or employees in which indemnification is sought, nor are we
aware of any threatened litigation that may result in claims for
indemnification.

Insofar as indemnification for liabilities arising under the Securities Act may
be permitted for directors, officers and controlling persons of us pursuant to
the foregoing provisions or otherwise, we have been advised that in the opinion
of the Securities and Exchange Commission, or SEC, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.

                                        78
EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth the compensation
earned, awarded or paid for services rendered to us in all capacities for the
fiscal year ended December 31, 2003, by our Chief Executive Officer and our four
next most highly compensated executive officers who earned more than $100,000 in
salary and bonus during the fiscal year ended December 31, 2003, to whom we
refer in this prospectus collectively as the named executive officers:

                           SUMMARY COMPENSATION TABLE
LONG-TERM
                                                ANNUAL COMPENSATION     COMPENSATION
                                                --------------------    ------------
                                                                         SECURITIES
                                                                         UNDERLYING      ALL OTHER
                                 FISCAL YEAR     SALARY      BONUS       OPTIONS(2)     COMPENSATION
                                 -----------    --------    --------    ------------    ------------
Kenneth R. Cole.............     2003        $525,000    $800,000            --        $30,761(3)
     Vice Chairman(1)
   John J. Mueller.............     2003        $325,000    $550,000            --        $28,238(4)
     Chief Executive Officer
        and President
   John A. Butler..............     2003        $284,625    $482,000       200,000        $22,004(5)
     Executive Vice President
        and Chief Financial
        Officer
   W. Grant Raney..............     2003        $232,875    $279,279       150,000        $18,580(6)
     Senior Vice President of
        Operations, Engineering
        and Customer Service
   William M. Ojile, Jr. ......     2003        $207,000    $225,138            --        $22,169(7)
     Senior Vice President,
        Chief Legal Officer and
        Secretary
---------------------------
(1)  Mr. Cole served as our Chief Executive Officer from January 2002 through
     April 2004.
(2)  Represents options to purchase equity interests of Valor Telecommunications
     Southwest LLC, or VTS, under VTS's 2000 Equity Incentive Non-Qualifying
     Option Plan. These options will be exchanged for IDSs as part of our
     reorganization.
(3)  Consists of $20,003 of insurance premiums ($7,365 for medical insurance;
     $7,623 for life insurance; and $5,015 for Long-Term Disability), $1,758 for
     related medical exams, and a $9,000 company contribution to our 401(k)
     plan.
(4)  Consists of $16,905 of insurance premiums ($8,046 for medical insurance;
     $1,649 for life insurance; and $7,210 for Long-Term Disability), $2,333 for
     related medical exams, and a $9,000 company contribution to our 401(k)
     plan.
(5)  Consists of $10,839 of insurance premiums ($7,364 for medical insurance;
     $1,260 for life insurance; and $2,215 for Long-Term Disability), $2,165 for
     related medical exams, and a $9,000 company contribution to our 401(k)
     plan.
(6)  Consists of $7,141 of insurance premiums ($5,064 for medical insurance;
     $1,033 for life insurance; and $1,044 for Long-Term Disability), $2,439 for
     related medical exams, and a $9,000 company contribution to our 401(k)
     plan.
(7)  Consists of $10,710 of insurance premiums ($8,043 for medical insurance;
     $808 for life insurance; and $1,859 for Long-Term Disability), $2,459 for
     related medical exams, and a $9,000 company contribution to our 401(k)
     plan.

                                        79
EMPLOYMENT AND SEVERANCE AGREEMENTS

We have entered into employment, confidentiality and non-competition agreements
with Messrs. Cole, Mueller, Butler, Ojile and Raney, the material terms of which
are discussed below. We also have agreements with other key employees at the
director level and above that provide for an agreement not to compete with us
for a maximum period of up to twelve months, in return for the payment of
severance benefits for involuntary termination without cause.

Agreement with Kenneth R. Cole. We entered into an employment agreement with
Kenneth C. Cole in 2000 that, as amended, will remain in effect until February
7, 2006. Mr. Cole currently receives an annual base salary of $575,000, an
annual incentive bonus and medical and other benefits. Mr. Cole's annual bonus
is targeted to be one times his base salary for the appropriate year. For the
year ended December 31, 2003, Mr. Cole received a bonus of $800,000. Mr. Cole
may work part-time under mutually agreeable wages, terms and conditions agreed
for the period from February 7, 2004 until the expiration of his employment
agreement.

If we terminate Mr. Cole's employment without cause or if he resigns for "Good
Reason," as such term is defined in his employment agreement, he will be
entitled to receive severance benefits consisting of his annual base salary and
continued medical and other benefits for one year following the date of his
termination, plus the pro rata portion of the annual bonus he would have
received had he been employed by our company for the full fiscal year. Mr.
Cole's employment agreement provides that he will be restricted from engaging in
competitive activities for one year after the termination of his employment. Mr.
Cole may not solicit employees for eighteen months following termination of his
employment with our company.

Agreement with John J. Mueller. We entered into an employment agreement with
John J. Mueller in 2002 that will remain in effect until April 7, 2007 and can
be renewed for successive one year periods thereafter. Mr. Mueller currently
receives an annual base salary of $400,000, an annual incentive bonus and
medical and other benefits. Mr. Mueller's annual bonus is targeted to be one
times his base salary for the appropriate year. For the year ended December 31,
2003, Mr. Mueller received a bonus of $550,000.

If we terminate Mr. Mueller's employment without cause or if he resigns for
"Good Reason," as such term is defined in his employment agreement, he will be
entitled to receive severance benefits consisting of his annual base salary and
continued medical and other benefits for one year following the date of his
termination, plus the pro rata portion of the annual bonus he would have
received had he been employed by our company for the full fiscal year. Mr.
Mueller's employment agreement provides that he will be restricted from engaging
in competitive activities for one year after the termination of his employment.
Mr. Mueller may not solicit employees for eighteen months following termination
of his employment with our company.

Agreement with John A. Butler. We entered into an employment agreement with John
A. Butler in 2000. The agreement provides for automatic one-year extensions of
the employment term unless either party provides written notice of its intention
not to review the agreement within 90 days of the expiration of the then current
term. Mr. Butler currently receives an annual base salary of $315,000, an annual
incentive bonus and medical and other benefits. Mr. Butler's annual bonus is
targeted to be one-half his base salary for the appropriate year. For the year
ended December 31, 2003, Mr. Butler received a bonus of $482,000.

If we terminate Mr. Butler's employment without cause or if he resigns for "Good
Reason," as such term is defined in his employment agreement, he will be
entitled to receive severance benefits consisting of his annual base salary and
continued medical and other benefits for one year following the date of his
termination, plus the pro rata portion of the annual bonus he would have
received had he been employed by our company for the full fiscal year. Mr.
Butler's employment agreement provides that he will be restricted from engaging
in competitive activities for one year after the termination of his employment.
Mr. Butler may not solicit employees for one year following termination of his
employment with our company.

                                        80
Agreement with William M. Ojile, Jr. We entered into an employment agreement
with William M. Ojile in 2000. The agreement provides for automatic one-year
extensions of the employment term unless either party provides written notice of
its intention not to review the agreement within 90 days of the expiration of
the then current term. Mr. Ojile currently receives an annual base salary of
$250,000, an annual incentive bonus and medical and other benefits. Mr. Ojile's
annual bonus is targeted to be one-half his base salary for the appropriate
year. For the year ended December 31, 2003, Mr. Ojile received a bonus of
$225,138.

If we terminate Mr. Ojile's employment without cause or if he resigns for "Good
Reason," as such term is defined in his employment agreement, he will be
entitled to receive severance benefits consisting of his annual base salary and
continued medical and other benefits for one year following the date of his
termination, plus the pro rata portion of the annual bonus he would have
received had he been employed by our company for the full fiscal year. Mr.
Ojile's employment agreement provides that he will be restricted from engaging
in competitive activities for one year after the termination of his employment.
Mr. Ojile may not solicit employees for one year following termination of his
employment with our company.

Agreement with W. Grant Raney. We entered into an employment agreement with W.
Grant Raney in 2000. The agreement provides for automatic one-year extensions of
the employment term unless either party provides written notice of its intention
not to review the agreement within 90 days of the expiration of the then current
term. Mr. Raney currently receives an annual base salary of $257,000, an annual
incentive bonus and medical and other benefits. Mr. Raney's annual bonus is
targeted to be one-half his base salary for the appropriate year. For the year
ended December 31, 2003, Mr. Raney received a bonus of $279,279.

Under certain circumstances, the termination of Mr. Raney's employment with our
company will entitle him to receive severance benefits consisting of his annual
base salary and continued medical and other benefits for one year following the
date of his termination, plus the pro rata portion of the annual bonus he would
have received had he been employed by our company for the full fiscal year. Mr.
Raney's employment agreement provides that he will be restricted from engaging
in competitive activities for one year after the termination of his employment.
Mr. Raney may not solicit employees for one year following termination of his
employment with our company.

TRANSACTION BONUS

Upon the consummation of this offering, we will award           to members of
our senior management team in recognition of their efforts in connection with
our reorganization and this offering. The awards will be as follows: Kenneth R.
Cole,        ; John J. Mueller,        ; John A. Butler,        ; William M.
Ojile,        ; W. Grant Raney,        ; and an aggregate of      to other
members of our management team.                One-third of each person's award
will vest on each of the first three anniversaries of the date we consummate
this offering. In the event that the employment of any person who has received
an award terminates prior to the time their award fully vests, any unvested
       will be forfeited. We anticipate the impact of the transaction bonus on
compensation expense to be approximately $     for each of years ending December
31, 2004, 2005 and 2006.

BONUS AND INCENTIVE PLANS

Long-Term Incentive Plan. Our officers, other senior executives and other key
employees to be identified by the compensation committee of our board of
directors will be eligible to participate in the Long-Term Incentive Plan, or
the LTIP. The purpose of the LTIP will be to attract, retain, motivate and
reward executives and key employees by making a significant portion of their
incentive compensation directly dependent upon achieving key strategic,
financial and operational objectives that are critical to our ongoing growth and
profitability. The LTIP will be administered by our compensation committee,
which shall also have the power to amend or terminate the LTIP at any time.
                                        81
The LTIP will provide for cash payments out of an incentive pool that may be
earned by and paid to selected participants based on the achievement, over
multiple-year performance periods, of objective performance goals established by
our compensation committee and based on certain minimum and maximum target
amounts that a participant may earn through the allocation of the incentive
pool, as well as require that the participants remain employed with us for some
period of time in order to vest in such amounts. The performance goals will have
the effect of aligning the interests of management with those of the holders of
IDSs.

We intend for the LTIP to be a performance-based compensation arrangement within
the meaning of Section 162(m) of the Internal Revenue Code, in order to ensure
the full deductibility of all payments made under the LTIP to our executive
officers and other key employees whose compensation could otherwise be subject
to the limitations on deductibility under Section 162(m).

Annual Incentive Compensation Plan. We maintain an incentive compensation plan
whereby certain management and supervisory personnel qualify for incentive
payments if our company and executives both meet or exceed certain financial
performance targets.

Individual awards are paid to participants in lump sum payments within 60 days
following the end of the fiscal year, subject to withholding of applicable
federal, state and local taxes. Individual awards are paid annually but we may
choose to make semi-annual payments if we are meeting or exceeding financial
objectives and the outlook for the remaining half of the year is favorable.
Participants may also qualify for a separate mid-year award at our management's
discretion. Our chief executive officer, in consultation with the board of
directors, may adjust or eliminate any incentive payment that would otherwise be
earned under the incentive compensation plan based on such factors as they may
determine in their sole discretion. Our chief executive officer, in consultation
with the board of directors, may also amend or cancel the bonus plan at any time
for any reason.

In January 2004, our chief executive officer, with the approval of our
compensation committee, authorized bonus amounts for fiscal year 2003 for
members of our management team eligible to participate in the incentive
compensation plan that qualified for payment.

Savings Plan. We sponsor the Valor Telecommunications Southwest, LLC Savings
Plan, a tax qualified plan in which our eligible employees may participate.
Subject to certain limitations, participants in our 401(k) plan may elect to
make pre-tax contributions up to 16% of their annual base salary each year. At
our discretion, we make matching contributions equal to a percentage of a
participant's contributions. Matching contributions fully vest after two years
of employment with our company.

Pension Plan. We also sponsor the Valor Telecommunications Enterprises, LLC
Pension Plan, a defined benefit plan, in which qualified employees may
participate. This plan is offered only to union employees and is not available
for management. Former employees of GTE Southwest Corporation, or GTE, who
participated in the pension plan of GTE and became our employees upon our
acquisition of assets from GTE also participate in our pension plan. We
contribute the full cost of the pension plan to a pension trust fund. The
average annual compensation and accredited service determines the amount of
payments an employee receives under the pension plan.

                                        82
PRINCIPAL STOCKHOLDERS

The following table shows information regarding the beneficial ownership of
shares of our Class A common stock and Class B common stock immediately prior to
completion of this offering and shows the number of and percentage owned by:

   --  each person who is known by us to own beneficially more than 5% of our
       capital stock;

   --  each member of our board of directors;

   --  each of our named executive officers;

   --  each of our nominees to our board of directors; and

   --  all members of our board of directors and our executive officers as a
       group.

Both prior to and after completion of this offering, there will be no shares of
Class C common stock outstanding. Except as indicated in the footnotes to this
table (1) each person has sole voting and investment power with respect to all
shares attributable to such person and (2) each person's address is c/o Valor
Communications Group, Inc., 201 E. John Carpenter Freeway, Suite 200, Irving,
Texas 75062.
SHARES BENEFICIALLY OWNED
                                                              -----------------------------------------
                                                                    CLASS A               CLASS B
                                                              -------------------   -------------------
                                                               NUMBER    PERCENT     NUMBER    PERCENT
                                                              --------   --------   --------   --------
Welsh, Carson, Anderson & Stowe(1)..........................
Vestar Capital Partners(2)..................................
Citicorp Venture Capital(3).................................
Kenneth R. Cole.............................................
John Mueller................................................
John Butler.................................................
William Ojile...............................................
Grant Raney.................................................
Anthony J. de Nicola(4).....................................
Sanjay Swani(5).............................................
Todd Khoury(6)..............................................
All directors and executive officers as a group (9
  persons)..................................................
---------------------------
(1)  The address of Welsh, Carson, Anderson & Stowe is 320 Park Avenue, Suite
     2500, New York, NY 10022.
(2)  The address of Vestar Capital Partners is 245 Park Avenue, 41st Floor, New
     York, NY 10167.
(3)  The address of Citicorp Venture Capital is 299 Park Avenue, New York, NY
     10022.
(4)  As a general partner of Welsh, Carson, Anderson & Stowe, Mr. de Nicola may
     be deemed to have an indirect beneficial ownership interest in shares owned
     by Welsh, Carson, Anderson & Stowe.
(5)  As a general partner of Welsh, Carson, Anderson & Stowe, Mr. Swani may be
     deemed to have an indirect beneficial ownership interest in shares owned by
     Welsh, Carson, Anderson & Stowe.
(6)  As a managing director of Vestar Capital Partners, Mr. Khoury may be deemed
     to have an indirect beneficial ownership interest in shares owned by Vestar
     Capital Partners.

                                        83
RELATED PARTY TRANSACTIONS

EQUITY SPONSORS

Repurchase of Existing Subordinated Notes with Proceeds from this Offering. Upon
the consummation of this offering, we will repay an aggregate of $314.3 million
of subordinated notes held by affiliates of Welsh, Carson, Anderson & Stowe, or
WCAS, Vestar Capital Partners, or Vestar, and Citicorp Venture Partners, or CVC.
In connection with the repayment of the subordinated notes, WCAS will receive
$     million, Vestar will receive $     million and CVC will receive $
million of the proceeds from this offering. Anthony J. de Nicola and Sanjay
Swani, two members of our board of directors, may receive or be deemed to have
received a portion of WCAS proceeds by virtue of their affiliation with WCAS. In
addition, Todd N. Khoury, a member of our board of directors, may receive or be
deemed to have received a portion of the Vestar proceeds by virtue of his
affiliation with Vestar.

Management Fees. Pursuant to the limited liability company operating agreement
of our subsidiary, Valor Telecommunications, LLC, or VTC, each of WCAS and
Vestar provides management services to us. In return for these services we paid
management fees of $571,430 to an affiliate of WCAS and $428,570 to an affiliate
of Vestar in each of fiscal 2000, 2001, 2002 and 2003. We will cease paying
these fees upon the closing of the offering. In addition, we will use a portion
of the proceeds of this offering to pay $     million to affiliates of WCAS and
$     million to affiliates of Vestar for a one-time, non-recurring transaction
fee in connection with our reorganization and this offering.

Investor Rights Agreement. We will enter into an investor rights agreement with
the equity sponsors and certain other existing equity investors pursuant to
which upon any sale of shares of Class B common stock following the second
anniversary of the consummation of this offering, at the option of the holder of
such shares, we will exchange each share of Class B common stock with the
purchaser thereof for one IDS (as may be adjusted for stock splits, dividends,
combinations or reclassifications).

As a condition to any sale of shares of Class B common stock involving an
election to require us to issue IDSs in exchange for such shares:

   --  such sale and exchange must comply with applicable laws, including,
       without limitation, securities laws, laws relating to redemption of
       common stock and laws relating to the issuance of debt;

   --  such sale and exchange must occur pursuant to an effective registration
       statement in the United States and a receipted prospectus for all the
       provinces of Canada;

   --  such sale and exchange must not conflict with or cause a default under
       any material financing agreement;

   --  such sale and exchange must not cause a mandatory suspension of dividends
       or deferral of interest under any material financing agreement as of the
       measurement date immediately following the proposed sale and exchange
       date;

   --  no event of default or deferral of interest has occurred and is
       continuing under the Indenture governing the senior subordinated notes;
       and

   --  the selling stockholder must have given us at least 30 but not more than
       60 days advance notice of such transaction.

In the event that the IDSs are automatically separated as a result of the
continuance of a payment default on the senior subordinated notes for 90 days,
or the redemption or maturity of any senior subordinated notes, at such time we
will amend our bylaws to delete the restriction that we may only issue shares of
Class A common stock in offerings registered with the Securities and Exchange
Commission and each share of Class B common stock will automatically be
exchanged for one share of Class A common stock and one senior subordinated
note.

                                        84
In addition, the investor rights agreement will contain the following
registration rights:

   --  our equity sponsors will collectively have demand registration rights
       relating to the IDSs and the shares of our Class A common stock and
       senior subordinated notes represented by the IDSs that they hold as well
       as the shares of Class B common stock they hold and the IDSs into which
       such shares of Class B common stock may be exchanged, subject to the
       requirement that the securities covered by each demand registration have
       an aggregate public offering price of at least $     million; provided
       that an equity sponsor must beneficially own more than one percent of our
       outstanding shares of Class A common stock, Class B common stock, senior
       subordinated notes, or IDSs, as the case may be, to initiate a demand for
       registration; provided, further, that an equity sponsor may exercise a
       demand right for less than an aggregate public offering price of
       $          million if such proposed offering is for all of the remaining
       shares of Class A common stock, Class B common stock, senior subordinated
       notes or IDSs held by the equity sponsor; and

   --  the equity sponsors and certain other existing equity investors will have
       the right to include in our future public offerings of securities the
       shares of our Class A common stock, senior subordinated notes or IDSs
       held by each of them as well as the shares of Class B common stock they
       hold and the IDSs into which such shares of Class B common stock may be
       exchanged.

The equity sponsors may only exercise their demand registration rights with
respect to their Class A common stock once our Class A common stock is listed on
the             and their demand registration rights with respect to their Class
B common stock, following the second anniversary of the consummation of this
offering. If the equity sponsors exercise their demand registration rights, we
will file a registration statement or prospectus and undertake an offering in
the United States and Canada, as requested by the equity sponsors. The
registration rights are transferable by the equity sponsors and certain other
existing equity investors.

We have agreed to pay all costs and expenses in connection with each such
registration, except underwriting discounts and commissions applicable to the
securities sold, and to indemnify the equity sponsors and certain other existing
equity investors that have included securities in such offering against certain
liabilities, including liabilities under the Securities Act and any Canadian
securities laws.

Furthermore, we have agreed not to repurchase any shares of Class B common stock
prior to the second anniversary of the consummation of this offering.

INDEMNIFICATION AND INSURANCE

For a description of our limitation on liability and indemnification of, and
provision of insurance covering, our directors and executive officers, see
"Management--Limitations on Liability and Indemnification of Officers and
Directors."

                                        85
DETAILED TRANSACTION STEPS

Immediately prior to and in connection with the consummation of this offering,
we will reorganize our corporate structure. All the equity interests in our
subsidiaries Valor Telecommunications, LLC, or VTC, Valor Telecommunications
Southwest, LLC, or VTS, and Valor Telecommunications Southwest II, LLC, or VTS
II, are currently held by the following individuals and entities to whom we
refer to collectively as our "existing equity holders":

   --  affiliates of Welsh, Carson, Anderson and Stowe; affiliates of Vestar
       Capital Partners; and affiliates of Citicorp Venture Capital, to whom we
       refer collectively as our "equity sponsors";

   --  a group of individuals who assisted us in forming our company, to whom we
       refer collectively as our "founders"; and

   --  our management and employees.

Our existing equity holders currently own equity interests in Valor
Telecommunications, LLC, Valor Telecommunications Southwest, LLC and Valor
Telecommunications Southwest II, LLC. The equity interests in Valor
Telecommunications, LLC are held by certain of our founders, our management
through a Delaware limited partnership and our equity sponsors both directly and
indirectly through various entities. The equity interests in Valor
Telecommunications Southwest, LLC are held by Valor Telecommunications, LLC, our
management, our equity sponsors both directly and indirectly through various
entities and by certain of our founders. The equity interests in Valor
Telecommunications Southwest II, LLC are held by Valor Telecommunications, LLC,
and many of the same founders who hold interests in Valor Telecommunications
Southwest, LLC. Valor Communications Group, Inc. is currently a wholly-owned
subsidiary of Valor Telecommunications, LLC.

Immediately prior to the consummation of this offering, the following
transactions will take place:

1.  Our founders, our management and our equity sponsors will contribute
    directly or indirectly their equity interests in Valor Telecommunications,
    LLC to Valor Communications Group, Inc. in exchange for an aggregate of
        IDSs ,          shares of Class B common stock and $          in cash
    from the proceeds of this offering.

2.  Our management, our equity sponsors and our founders who hold equity
    interests in Valor Telecommunications Southwest, LLC will contribute their
    equity interests in Valor Telecommunications Southwest, LLC to Valor
    Communications Group, Inc. in exchange for an aggregate of     IDSs,
              shares of Class B common stock and $     in cash from the proceeds
    of this offering.

3.  The founders who hold equity interests in Valor Telecommunications Southwest
    II, LLC will contribute their equity interests in Valor Telecommunications
    Southwest II, LLC to Valor Communications Group, Inc. in exchange for
              IDSs and $          in cash from the proceeds of this offering.

4.  The stock of Valor Communications Group, Inc. held by Valor
    Telecommunications, LLC will be retired.

As a result of our founders, our management and our equity sponsors'
contribution of their redeemable preferred interests in VTC, VTS and VTS II to
Valor, we will record an expense of approximately $     , resulting from the
excess of the fair value of the IDSs, Class B common stock and cash received
over the carrying amount of the redeemable preferred interests. In addition, as
a result of our management exchanging their outstanding stock options and
phantom stock units for           IDSs, we will record approximately $     in
compensation expense. As a result of this reorganization, each of Valor
Telecommunications, LLC, Valor Telecommunications Southwest, LLC and Valor
Telecommunications Southwest II, LLC will be either a direct or indirect
wholly-owned subsidiary of Valor Communications Group, Inc.

                                        86
DESCRIPTION OF CERTAIN INDEBTEDNESS

NEW CREDIT FACILITY

Our subsidiaries Valor Telecommunications, LLC, or VTC, and Valor
Telecommunications Southwest II, LLC, or VTS II, intend to enter into a $
new senior secured credit facility with a syndicate of financial institutions,
to be arranged by Banc of America Securities LLC and CIBC World Markets Corp as
joint lead arrangers and joint book-managers.

Each of VTC's and VTS II's respective subsidiaries, other than certain of their
subsidiaries which they may acquire or organize after the date hereof, will also
be co-borrowers under the new credit facility. We will guaranty the obligations
of VTC and VTS II and their subsidiaries under the new credit facility.

We expect that the new credit facility will be comprised of a senior secured
revolving credit facility of up to $     million, which we refer to as the "new
revolver," and a senior secured term loan facility in an aggregate principal
amount of $     million, which we refer to as the "new term loan."

We expect that the new revolver and the new term loan will each have an
approximately five-year maturity with no amortization of principal prior to
maturity.

We expect that the new credit facility will have several features similar to
credit facilities of this nature, including but not limited to:

Interest Rate and Fees. We expect that borrowings will bear interest, at our
option, for the new revolver facility and the new term facility at either (a)
the Eurodollar Rate plus an applicable margin or (b) the Base Rate plus an
applicable margin, as such terms will be defined in the new credit facility.

We also expect the new revolver will provide payment to the lenders of a
commitment fee on any unused commitments equal to   % per annum.

Mandatory Prepayments. We expect that the new credit facility will require us to
prepay outstanding loans under the new senior notes with, subject to certain
conditions and exceptions,    % of the cash proceeds received by us from any
loss, damage, destruction or condemnation of or any sale, transfer or other
disposition of any assets,    % of the net cash proceeds from the incurrence of
any indebtedness by us, and    % of any Distributable Cash during any Dividend
Suspension Period, and    % of Available Cash during any Interest Deferral
Period, as such terms are defined in the new credit facility.

Voluntary Prepayments. We expect that the new credit facility will provide for
voluntary commitment reductions and prepayments of the new revolver and new
senior notes, respectively, subject to certain conditions and restrictions.

Covenants. We expect that the new credit facility will require that we meet
certain financial tests, including, without limitation, the following tests: a
maximum total leverage ratio, a maximum senior leverage ratio and a minimum
interest coverage ratio.

We also expect that our new credit facility will contain customary covenants and
restrictions, including, among others, limitations or prohibitions on declaring
and paying dividends and other distributions, redeeming and repurchasing our
other indebtedness, loans and investments, additional indebtedness, liens,
recapitalizations, mergers, acquisitions and asset sales and transactions with
affiliates.

Collateral. We expect to give to the administrative agent on behalf of each
lender a security interest in collateral consisting of, without limitation, a
pledge of our intercompany debt, 100% of the capital stock of our wholly-owned
domestic subsidiaries and a security interest in substantially all our other
personal property. VTC, VTS II and each of their respective subsidiaries which
is a co-borrower under the new credit facility will also give the administrative
agent a security interest in all of such persons' collateral of such types.

Events of Default. We expect that our new credit facility will specify certain
customary events of default.

                                        87
DESCRIPTION OF IDSS

GENERAL

We are selling        IDSs in this offering. Each IDS initially represents:

   --  one share of our Class A common stock; and

   --  a    % senior subordinated note with a $     principal amount.

The ratio of Class A common stock to principal amount of senior subordinated
notes represented by an IDS is subject to change in the event of a stock split,
recombination or reclassification of our common stock. For example, if we elect
to effect a two-for-one stock split, from and after the effective date of the
stock split, each IDS will represent two shares of Class A common stock and the
same principal amount of senior subordinated notes as it previously represented.
Likewise, if we effect a recombination or reclassification of our Class A common
stock, each IDS will thereafter represent the appropriate number of shares of
Class A common stock on a recombined or reclassified basis, as applicable, and
the same principal amount of senior subordinated notes as it previously
represented. Immediately following the occurrence of any such event, we will
file with the SEC a Current Report on Form 8-K or any other applicable form,
disclosing the changes in the ratio of Class A common stock to principal amount
of senior subordinated notes as a result of such event.

Holders of IDSs are at all times the beneficial owners of the Class A common
stock and senior subordinated notes represented by such IDSs and, through their
broker or other financial institution and DTC, will each have exactly the same
rights, privileges and preferences, including voting rights, rights to receive
distributions, rights and preferences in the event of a default under the
indenture governing the senior subordinated notes, ranking upon bankruptcy and
rights to receive communications and notices as a beneficial owner of separately
held Class A common stock and senior subordinated notes, as applicable, would
have through its broker or other financial institution and DTC.

The IDSs will be available in book-entry form only. As discussed below under
"Book-Entry Settlement and Clearance," a nominee of the book-entry clearing
system will be the sole registered holder of the IDSs. That means you will not
be a registered holder of IDSs or be entitled to receive a certificate
evidencing your IDSs. You must rely on the procedures used by your broker or
other financial institution that will maintain your book-entry position to
receive the benefits and exercise the rights of a holder of IDSs that are
described below. You should consult with your broker or financial institution to
find out what those procedures are.

VOLUNTARY SEPARATION AND RECOMBINATION

Holders of IDSs, whether purchased in this offering or in a subsequent offering
of IDSs of the same series may, at any time after the earlier of 45 days from
the date of the closing of this offering or the occurrence of a change of
control, through their broker or other financial institution, separate the IDSs
into the shares of our Class A common stock and senior subordinated notes
represented thereby. Unless the IDSs have been previously automatically
separated as a result of the continuance of a payment default on the senior
subordinated notes for 90 days, or the redemption or maturity of any senior
subordinated notes, any holder of shares of our Class A common stock and senior
subordinated notes may, at any time, through his or her broker or other
financial institution, combine the applicable number of shares of Class A common
stock and senior subordinated notes to form IDSs.

If a sufficient number of shares of our Class A common stock are held separately
to meet the minimum requirements for separate trading on the
                    for at least 30 consecutive trading days, we have agreed
that we will use reasonable efforts to cause the Class A common stock to be
listed on the                     , in addition to the Class A common stock
being listed on the Toronto Stock Exchange, provided that the Class A common
stock would meet the applicable exchange or quotation system listing standards.

                                        88
AUTOMATIC SEPARATION

Upon the occurrence of any of the following, the IDSs will be automatically
separated into the shares of Class A common stock and senior subordinated notes
represented thereby:

   --  a payment default on the senior subordinated notes continues for 90 days;

   --  exercise by us of our right to redeem all or a portion of the senior
       subordinated notes, which may be represented by IDSs at the time of such
       redemption;

   --  the date on which principal on the senior subordinated notes becomes due
       and payable, whether at the stated maturity date or upon acceleration
       thereof; or

   --  if DTC is unwilling or unable to continue as securities depository with
       respect to the IDSs or ceases to be a registered clearing agency under
       the Securities Exchange Act of 1934 and we are unable to find a successor
       depositary.

Following the automatic separation of the IDSs as a result of the continuance of
a payment default on the senior subordinated notes for 90 days, or the
redemption or maturity of any senior subordinated notes, shares of Class A
common stock and senior subordinated notes may no longer be combined to form
IDSs.

BOOK-ENTRY SETTLEMENT AND CLEARANCE

The Depository Trust Company, known as DTC, will act as securities depository
for the IDSs, and the senior subordinated notes and shares of Class A common
stock represented by the IDSs, or the "securities." The senior subordinated
notes and the shares of our Class A common stock represented by the IDSs will be
represented by one or more global notes and global stock certificates. The
global notes and global stock certificates will be issued in fully-registered
form in the name of DTC's nominee, Cede & Co.

Book-Entry Procedures. If you intend to purchase IDSs in the manner provided by
this prospectus you must do so through the DTC system or through direct and
indirect participants. The participant that you purchase through will receive a
credit for the applicable security on DTC's records. The ownership interest of
each actual purchaser of the applicable security, who we refer to as a
"beneficial owner," is to be recorded on the participant's records. Beneficial
owners will not receive written confirmation from DTC of their purchases, but
beneficial owners are expected to receive written confirmations providing
details of their purchase and sale transactions, as well as periodic statements
of their holdings, from the DTC participant through which the beneficial owner
entered into their purchase and sale transactions.

All interests in the securities will be subject to the operations and procedures
of DTC. We provide the following summary of DTC's operations solely for your
convenience. The operations and procedures of DTC may be changed at any time. We
are not responsible for those procedures and operations.

DTC has advised us as follows: DTC is a limited purpose trust company organized
under the laws of the State of New York, a "banking organization" within the
meaning of the New York State Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "clearing agency" registered under Section 17A of the Securities
Exchange Act of 1934. DTC was created to hold securities for its participants
and to facilitate the clearance and settlement of securities transactions
between its participants through electronic book-entry changes to the accounts
of its participants. DTC's participants include securities brokers and dealers,
including the underwriters, banks and trust companies, clearing corporations and
other organizations. Indirect access to DTC's system is also available to others
such as banks, brokers, dealers and trust companies. These indirect participants
clear through or maintain a custodial relationship with a DTC participant,
either directly or indirectly. The rules that apply to DTC and its participants
are on file with the SEC.

To facilitate subsequent transfers, all securities deposited by direct
participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of securities with DTC and their registration in the name of Cede &
Co. effect no change in beneficial ownership. DTC has no knowledge of the actual

                                        89
beneficial owners of the securities. DTC's records reflect only the identity of
the direct participants to whose accounts such securities are credited, which
may or may not be the beneficial owners. The participants will remain
responsible for keeping account of their holdings on behalf of their customers.

Transfers of ownership interests in the securities are to be accomplished by
entries made on the books of participants acting on behalf of beneficial owners.
Beneficial owners will not receive certificates representing their ownership
interests in the applicable security except in the event that use of the book-
entry system for the securities is discontinued.

Separation and Combination. Holders of IDSs may, at any time after 45 days from
the date of original issuance, through their broker or other financial
institution, separate their IDSs into the shares of Class A common stock and
senior subordinated notes represented thereby. Similarly, unless the IDSs have
previously been automatically separated as a result of the continuance of a
payment default on the senior subordinated notes for 90 days, or the redemption
or maturity of any senior subordinated notes, any holder of shares of our Class
A common stock and senior subordinated notes may, at any time after 45 days from
the date of original issuance, through their broker or other financial
institution, combine the applicable number of shares of Class A common stock and
senior subordinated notes to form IDSs.

In addition, the IDSs will be automatically separated into the shares of Class A
common stock and senior subordinated notes represented thereby upon the
occurrence of the following:

   --  a payment default on the senior subordinated notes continues for 90 days,

   --  exercise by us of our right to redeem all or a portion of the senior
       subordinated notes, which may be represented by IDSs at the time of such
       redemption,

   --  the date on which principal on the senior subordinated notes becomes due
       and payable, whether at the stated maturity date or upon acceleration
       thereof, or

   --  if DTC is unwilling or unable to continue as securities depository with
       respect to the IDSs or ceases to be a registered clearing agency under
       the Securities Exchange Act of 1934 and we are unable to find a successor
       depositary.

Following the automatic separation of the IDSs as a result of the continuance of
a payment default on the senior subordinated notes for 90 days, or the
redemption or maturity of any senior subordinated notes, shares of Class A
common stock and senior subordinated notes may no longer be combined to form
IDSs.

Any voluntary or automatic separation of IDSs and any subsequent combination of
IDSs from senior subordinated notes and Class A common stock are to be
accomplished by entries made by the DTC participants acting on behalf of
beneficial owners. In any such case, the participant's account through which a
separation or combination is effected will be credited and debited for the
applicable securities on DTC's records. Depending on the arrangements between a
holder and his or her brokerage firm, and the brokerage arrangements with the
DTC participant, the transaction fee for any voluntary separation or
recombination may be passed directly on to the holder.

Conveyance of notices and other communications by DTC to direct participants, by
direct participants to indirect participants, and by participants to beneficial
owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.

Neither DTC nor Cede & Co. will consent or vote with respect to the securities.
Under its usual procedures, DTC would mail an omnibus proxy to participants as
soon as possible after the record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those direct participants to whose accounts the
securities are credited on the record date.

We and the transfer agent and registrar will make any payments on the securities
to DTC. DTC's practice is to credit direct participants' accounts on the payment
date in accordance with their respective holdings

                                        90
shown on DTC's records unless DTC has reason to believe that it will not receive
payment on the payment date. Payments by participants to beneficial owners will
be governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participant and not of
DTC, us or the transfer agent and registrar, subject to any statutory or
regulatory requirements as may be in effect from time to time.

We or the transfer agent and registrar will be responsible for the payment of
all amounts to DTC. DTC will be responsible for the disbursement of those
payments to its participants, and the participants will be responsible for
disbursements of those payments to beneficial owners.

DTC may discontinue providing its service as securities depository with respect
to the IDSs, the shares of our Class A common stock or our senior subordinated
notes at any time by giving reasonable notice to us or the transfer agent and
registrar. If DTC discontinues providing its service as securities depository
with respect to the IDSs and we are unable to obtain a successor securities
depository, you will automatically take a position in the component securities.
If DTC discontinues providing its service as securities depository with respect
to the shares of our Class A common stock and/or our senior subordinated notes
and we are unable to obtain a successor securities depository, we will print and
deliver to you certificates for the securities that have been discontinued and
you will automatically take a position in any securities still subject to the
depository arrangement.

Also, in case we decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depository) we will print and deliver to
you certificates for the various certificates of Class A common stock and senior
subordinated notes you may own.

The information in this section concerning DTC and DTC's book-entry system has
been obtained from sources that we believe to be reliable, including DTC.

Except for actions taken by DTC in accordance with our instructions, neither we
nor the trustee nor the underwriters will have any responsibility or obligation
to participants, or the persons for whom they act as nominees, with respect to:

   --  the accuracy of the records of DTC, its nominee or any participant or any
       record of beneficial ownership interest in the securities on DTC's books,
       or

   --  any payments, or the providing of notice, to participants or beneficial
       owners.

Procedures Relating to Subsequent Issuances. The indenture governing our senior
subordinated notes will provide that, in the event there is a subsequent
issuance of senior subordinated notes having terms identical to the senior
subordinated notes represented by the IDSs except for the issuance date, if we
determine that such new senior subordinated notes need to have a new CUSIP
number, each holder of senior subordinated notes or IDSs (as the case may be)
agrees that a portion of such holder's senior subordinated notes (whether held
directly in book-entry form or held as part of IDSs) will be exchanged, without
any further action of such holder, for a portion of the senior subordinated
notes acquired by the holders of such subsequently issued senior subordinated
notes. Consequently, following each such subsequent issuance and exchange, each
holder of senior subordinated notes or IDSs (as the case may be) will own an
indivisible unit composed of senior subordinated notes of each separate issuance
in the same proportion as each other holder. Immediately following any exchange
resulting from a subsequent offering, a new CUSIP number will be assigned to
represent an inseparable unit consisting of the senior subordinated notes
outstanding prior to the subsequent issuance and the senior subordinated notes
issued in the subsequent issuance. Accordingly, the senior subordinated notes
issued in the original offering will not be able to be separated from the senior
subordinated notes issued in any subsequent offering. In addition, immediately
following any exchange resulting from a subsequent offering, new IDSs will be
issued in exchange for the existing IDSs which will consist of the inseparable
unit described above representing the proportionate principal amounts of each
issuance of senior subordinated notes (but with the same

                                        91
aggregate principal amount as the senior subordinated notes (or inseparable
unit) represented by the IDSs immediately prior to such subsequent issuance and
exchange) and the Class A common stock. All accounts of DTC participants with a
position in the securities will be automatically revised to reflect the new
CUSIP numbers.

Most subsequent issuances of senior subordinated notes, including subsequent
issuances of senior subordinated notes which have OID and all subsequent
issuances six months after the date of this offering, may require trades on the
                    to settle up to 24 hours after the date such trades would
settle absent such subsequent issuance or settle for cash, consistent with such
exchange's practices for the date of such issuance. The                     has
informed us that they will broadcast any such alternate settlement procedures in
advance of any relevant trading day, consistent with their established
procedures. Based upon these discussions, we do not believe that any settlement
delays or cash settlement procedures, if any, associated with subsequent
issuances will have a significant impact on the IDS trading market. Immediately
following any subsequent issuance, we will file with the SEC a Current Report on
Form 8-K or any other applicable form, disclosing the changes, if any, to the
OID attributable to your senior subordinated notes as a result of such
subsequent issuance.

IDS TRANSFER AGENT

          is the IDS transfer agent.

                                        92
DESCRIPTION OF CAPITAL STOCK

GENERAL

The following is a description of terms of our amended and restated certificate
of incorporation and by-laws, the forms of which have been filed with the
Securities and Exchange Commission, or SEC, as exhibits to the registration
statement of which this prospectus is part and which will become effective prior
to the offering contemplated by this prospectus.

AUTHORIZED CAPITALIZATION

Our authorized capital stock consists of:

   --         shares of Class A common stock, par value $0.01 per share;

   --         shares of Class B common stock, par value $0.01 per share;

   --         shares of Class C common stock, par value $0.01 per share; and

   --         shares of preferred stock, par value $0.01 per share.

After this offering there will be           shares of our Class A common stock,
          shares of our Class B common stock, no shares of our Class C common
stock and no shares of our preferred stock outstanding.

COMMON STOCK

Except as described below, shares of our Class A common stock, Class B common
stock and Class C common stock are identical in all respects. In addition, we
have entered into an agreement with our equity sponsors which, subject to
certain conditions, allows them to exchange their shares of Class B common stock
for IDSs, see "Related Party Transactions -- Investor Rights Agreement." There
are currently no shares of our Class C common stock outstanding, and following
the completion of this offering, no shares of our Class C common stock will be
outstanding. All outstanding shares of common stock are, and all shares of
common stock to be outstanding upon completion of this offering will be, validly
issued, fully paid and nonassessable.

Dividends. Holders of shares of our Class A common stock and Class C common
stock will be entitled to receive such dividends and other distributions in
cash, stock or property of ours as may be declared by our board of directors
from time to time out of our assets or funds legally available for dividends or
other distributions. See "Dividend Policy" for a complete description of the
dividends we expect to declare on our shares of common stock.

Our amended and restated certificate of incorporation contains dividend
provisions with respect to our shares of Class B common stock which are intended
to replicate the yield on our IDS units. Any time a dividend is paid to holders
of Class A common stock, holders of Class B common stock will be paid a dividend
equal to the same amount per share as paid to holders of Class A common stock.
In addition to any such dividend, holders of shares of our Class B common stock
will accrue dividends at a rate of   % per annum on a deemed issuance price per
share which will be equal to the public offering price of the IDSs; provided
that during the continuation of any event of default under the indenture
governing the senior subordinated notes, dividends will accrue at a rate of   %
per annum. Such dividends will accrue, and to the extent not paid, accumulate,
whether or not declared and whether or not we have funds legally available for
the payment of dividends. Such dividends will be paid, if declared by the board,
on the last day of each fiscal quarter or, to the extent not previously paid, at
such time as such shares of Class B common stock are exchanged for IDSs;
provided that such dividends may only be paid to the extent allowable under
applicable law, the terms of our new credit facility and the indenture governing
our senior subordinated notes.

Combination with Senior Subordinated Notes to Form IDSs. Only shares of our
Class A common stock may be combined with senior subordinated notes to form
IDSs. Our bylaws provide that we may only

                                        93
issue additional shares of our Class A common stock and IDSs pursuant to a
registration statement that has been declared effective by the Securities and
Exchange Commission.

Rights Upon Liquidation. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, holders of shares of our common stock
will be entitled to share equally in our assets remaining after payment of all
debts and other liabilities, subject to the liquidation preference of any
outstanding preferred stock.

Voting Rights. Shares of our common stock carry one vote per share. Holders of
shares of our common stock have no cumulative voting rights.

Other Rights. Holders of shares of our common stock have no preemptive rights.
The holders of common stock are subject to, and may be adversely affected by,
the rights of the holders of shares of any series of preferred stock that we may
designate and issue in the future.

PREFERRED STOCK

Our board of directors has the authority to issue shares of preferred stock from
time to time on terms that it may determine, to divide shares of preferred stock
into one or more series and to fix the designations, voting powers, preferences
and relative participating, optional or other special rights of each series, and
the qualifications, limitations or restrictions of each series, to the fullest
extent permitted by the General Corporation Law of the State of Delaware, or
DGCL. The issuance of shares of preferred stock could have the effect of
decreasing the market price of the IDSs and our shares of common stock, impeding
or delaying a possible takeover and adversely affecting the voting and other
rights of the holders of shares of our common stock.

DELAWARE ANTI-TAKEOVER LAW AND CHARTER AND BYLAW PROVISIONS

Provisions of Delaware law and our amended and restated certificate of
incorporation and bylaws could make it more difficult to acquire us by means of
a tender offer, a proxy contest or otherwise, or to remove incumbent officers
and directors. These provisions, summarized below, are expected to discourage
types of coercive takeover practices and inadequate takeover bids and to
encourage persons seeking to acquire control of us to first negotiate with us.
We believe that the benefits of increased protection of our potential ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to acquire
or restructure us outweigh the disadvantages of discouraging takeover or
acquisition proposals because, among other things, negotiation of these
proposals could result in an improvement of their terms.

Delaware Anti-Takeover Statute. We are subject to Section 203 of the Delaware
General Corporation Law, or DGCL, an anti-takeover statute. In general, Section
203 prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years
following the date the person became an interested stockholder, unless (with
certain exceptions) the "business combination" or the transaction in which the
person became an interested stockholder is approved in a prescribed manner.
Generally, a "business combination" includes a merger, asset or stock sale, or
other transaction resulting in a financial benefit to the interested
stockholder. Generally, an "interested stockholder" is a person who, together
with affiliates and associates, owns (or within three years prior to the
determination of interested stockholder status, did own) 15% or more of a
corporation's voting stock. The existence of this provision would be expected to
have an anti-takeover effect with respect to transactions not approved in
advance by the board of directors, including discouraging attempts that might
result in a premium over the market price for the shares of common stock held by
stockholders.

No Cumulative Voting. The DGCL provides that stockholders are denied the right
to cumulate votes in the election of directors unless our amended and restated
certificate of incorporation provides otherwise. Our amended and restated
certificate of incorporation does not expressly provide for cumulative voting.

No Stockholder Action by Written Consent; Calling of Special Meeting of
Stockholders. Our organizational documents prohibit stockholder action by
written consent. Our amended and restated certificate of
                                        94
incorporation provides that special meetings of our stockholders may be called
only by our board of directors.

Advance Notice Requirements for Stockholder Proposals and Director Nominations.
Our by-laws provide that stockholders seeking to bring business before or to
nominate candidates for election as directors at an annual meeting of
stockholders must provide timely notice of their proposal in writing to the
corporate secretary. To be timely, a stockholder's notice regarding (1) a
stockholder's proposal must be delivered or mailed and received at our principal
executive offices not less than 60 days not more than 90 days prior to the
meeting or (2) a director nomination must be delivered or mailed and received at
our principal executive offices not less than 60 nor more than 90 days in
advance of the anniversary date of the immediately preceding annual meeting of
stockholders; provided that if less than 70 days notice or prior public
announcement of the date of the meeting is given, notice regarding stockholder
nominations for the election of directors or notice of other stockholder
proposals must be received by our corporate secretary by the later of 10 days
following the day on which notice of the date of the special meeting was mailed
or public disclosure of the date of the special meeting was made. Our by-laws
also specify requirements as to the form and content of a stockholder's notice.
These provisions may impede stockholders' ability to bring matters before an
annual meeting of stockholders or make nominations for directors at an annual
meeting of stockholders.

Limitations on Liability and Indemnification of Officers and Directors. The DGCL
authorizes corporations to limit or eliminate the personal liability of
directors to corporations and their stockholders for monetary damages for
breaches of directors' fiduciary duties as directors. Our organizational
documents include provisions that eliminate, to the extent allowable under the
DGCL, the personal liability of directors for monetary damages for actions taken
as a director. Our organizational documents also provide that we must indemnify
and advance reasonable expenses to our directors and officers to the fullest
extent authorized by the DGCL. We will also be expressly authorized to carry
directors' and officers' insurance for our directors, officers and certain
employees for some liabilities.

The limitation of liability and indemnification provisions in our amended and
restated certificate of incorporation and by-laws may discourage stockholders
from bringing a lawsuit against directors for breach of their fiduciary duty.
These provisions may also have the effect of reducing the likelihood of
derivative litigation against directors and officers, even though such an
action, if successful, might otherwise benefit us and our stockholders. In
addition, your investment may be adversely affected to the extent that, in a
class action or direct suit, we pay the costs of settlement and damage awards
against directors and officers pursuant to these indemnification provisions.

There is currently no pending material litigation or proceeding involving any of
our directors, officers or employees for which indemnification is sought.

Removal of Directors. Our organizational documents provide that directors may be
removed only for cause by the affirmative vote of at least a majority in voting
power of the outstanding shares of our capital stock entitled to vote.

Authorized but Unissued Shares. Our authorized but unissued shares of common
stock and preferred stock will be available for future issuance without your
approval. We may use additional shares for a variety of corporate purposes,
including future public offerings to raise additional capital, corporate
acquisitions and employee benefit plans. The existence of authorized but
unissued shares of common stock and preferred stock could render more difficult
or discourage an attempt to obtain control of us by means of a proxy contest,
tender offer, merger or otherwise.

Supermajority Provisions. The DGCL provides generally that the affirmative vote
of a majority in voting power of the outstanding shares entitled to vote is
required to amend a corporation's certificate of incorporation, unless the
certificate of incorporation or by-laws require a greater percentage. Our
organizational documents provide that the following provisions in the
certificate of incorporation or by-laws

                                        95
may be amended only by a vote of two-thirds or more in voting power of all the
outstanding shares of our capital stock entitled to vote:

   --  the prohibition on stockholder action by written consent;

   --  the ability to call a special meeting of stockholders being vested solely
       in our board of directors and the chairman of our board of directors;

   --  the provisions relating to advance notice requirements for stockholder
       proposals and directors nominations;

   --  the provisions relating to the removal of directors;

   --  the limitation on the liability of our directors to us and our
       stockholders and the obligation to indemnify and advance reasonable
       expenses to the directors and officers to the fullest extent authorized
       by the DGCL;

   --  the provisions granting authority to our board of directors to amend or
       repeal our by-laws without a stockholder vote, as described in more
       detail in the next succeeding paragraph; and

   --  the supermajority voting requirements listed above.

In addition, our amended and restated certificate of incorporation grants our
board of directors the authority to amend and repeal our by-laws without a
stockholder vote in any manner not inconsistent with the laws of the State of
Delaware or our amended and restated certificate of incorporation. Our amended
and restated certificate of incorporation provides that these provisions in our
amended and restated certificate of incorporation may be amended only by a vote
of two-thirds or more in voting power of all the outstanding shares of our
capital stock entitled to vote.

LISTING

We will apply to list the IDSs on the                under the trading symbol
"          ." We will apply to list the IDSs on the Toronto Stock Exchange under
the trading symbol "          " and our shares of Class A common stock under the
symbol "          ."

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Class A common stock is           .

                                        96
DESCRIPTION OF SENIOR SUBORDINATED NOTES

The following is a description of the terms of the indenture under which our
senior subordinated notes will be issued, a copy of the form of which has been
filed with the Commission as an exhibit to the registration statement of which
this prospectus is a part. We refer to Valor Communications Group, Inc. as the
"Company" in this "Description of Senior Subordinated Notes" section.

GENERAL

The Notes are to be issued under an indenture, to be dated as of           ,
2004 (the "Indenture"), among us, the subsidiary guarantors and           , as
Trustee (the "Trustee").

The following description is a summary of the material provisions of the
Indenture and the Notes. It does not purport to be complete and we urge you to
read the Indenture, a copy of which will be available upon request from the
Company. This description is subject to, and is qualified in its entirety by
reference to, all the provisions of the Indenture, including the definitions of
certain terms therein and those terms made a part thereof by the Trust Indenture
Act of 1939, as amended. Capitalized terms used in this "Description of Senior
Subordinated Notes" section and not otherwise defined have the meanings set
forth in "--Certain Definitions" hereafter.

The Indenture will provide for the issuance of an unlimited aggregate principal
amount of additional senior subordinated notes having identical terms and
conditions to the Notes offered hereby (other than issuance date) (the
"Additional Notes"), subject to compliance with the covenants contained in the
Indenture. Additional Notes will vote on all matters with the Notes offered
hereby. The Additional Notes will be deemed to have the same accrued current
period interest, deferred interest and defaults as the Notes issued in this
offering and will be deemed to have expended Payment Blockage Periods and
interest deferral periods to the same extent as the Notes issued in this
offering.

The Notes will be issued only in fully-registered form, without coupons,
represented by one or more global notes which will be registered in the name of
Cede & Co., the nominee of DTC. See "Description of IDSs--Book-Entry Settlement
and Clearance."

TERMS OF THE NOTES

  Maturity

The Notes will be unsecured senior subordinated obligations of the Company and
will mature on           , 2014. The Company may extend the maturity of the
Notes for two additional successive five-year terms if the following conditions
are satisfied:

   --  during the twelve month period ending on the last day of the most recent
       fiscal quarter ending at least 45 days before the end of the then-current
       term, our Leverage Ratio is less than      to 1.0;

   --  no Event of Default (including certain events of bankruptcy, insolvency
       or reorganization of the Company or a Significant Subsidiary) has
       occurred and is continuing with respect to the Notes; and

   --  no event of default has occurred and is continuing with respect to any
       other Indebtedness of the Company having a principal amount in excess of
       $     million or could occur as a result of such extension, including
       under any Designated Senior Indebtedness.

If the Company is going to extend the maturity of the Notes, the Company will
cause a notice of such extension, including the new maturity date, to be sent to
holders at least 30 and not more than 60 days prior to the previously scheduled
maturity date.

Within 30 days prior to the maturity or redemption of the Notes, unless the
Company has sent a notice of extension of the maturity date, the Company will
use its reasonable efforts to list or quote the outstanding shares of its Class
A common stock on the securities exchange(s) or automated securities quotation
system(s), if any, on which the IDSs then are listed or quoted, in addition to
any other securities exchange on which the Class A common stock is then listed.

                                        97
Interest

The Notes will bear interest at a rate per year of   % from           , 2004 or
from the most recent date to which interest has been paid or provided for,
payable quarterly on the last day of each March, June, September and December to
Holders of record at the close of business on the 20th day or the immediately
preceding Business Day of such month, commencing           , 2004, provided that
if any such day is not a Business Day, interest shall be paid on the next
Business Day.

  Interest Deferral

Prior to           , 2009, the Company will be permitted, at its election, on
one or more occasions to defer interest payments on the Notes (each, an
"Interest Deferral Period") by delivering to the Trustee a copy of a resolution
of the Company's Board of Directors to the effect that, based upon a good-faith
determination of the Company's Board of Directors, such deferral is reasonably
necessary for bona-fide cash management purposes, or to reduce the likelihood of
or avoid a default under any Designated Senior Indebtedness; provided, however,
that no such deferral may be commenced, and any on-going deferral shall cease,
if a default in payment of principal or premium, if any, on the Notes has
occurred and is continuing, an Event of Default with respect to payment of
interest on the Notes has occurred and is continuing, or another Event of
Default with respect to the Notes has occurred and is continuing and the Notes
have been accelerated as a result of the occurrence of such Event of Default;
and provided, further, that interest payments on the Notes may not be deferred
under this provision for more than eight quarters in the aggregate or beyond
          , 2009.

After           , 2009 and prior to           , 2014 and during the term of each
additional five-year term of the senior subordinated notes, if any, the Company
will be permitted, at its election, on two occasions to defer interest payments
on the Notes (also an "Interest Deferral Period") with respect to two quarters
by delivering to the Trustee a copy of a resolution of the Company's Board of
Directors to the effect that, based upon a good-faith determination of the
Company's Board of Directors, such deferral is reasonably necessary for
bona-fide cash management purposes, or to reduce the likelihood of or avoid a
default under any Designated Senior Indebtedness; provided, however, that no
such deferral may be commenced, and any on-going deferral shall cease, if a
default in payment of principal or premium, if any, on the Notes has occurred
and is continuing, an Event of Default with respect to payment of interest on
the Notes has occurred and is continuing, or another Event of Default with
respect to the Notes has occurred and is continuing and the Notes have been
accelerated as a result of the occurrence of such Event of Default; and
provided, further, that interest payments on the Notes may not be deferred under
this provision for more than two quarters in the aggregate or beyond           ,
2014. At the end of any such Interest Deferral Period, the Company may not defer
interest on the Notes unless and until all deferred interest is paid in full.

Deferred interest on the Notes will bear interest at a rate per annum of      %,
compounded quarterly, until paid in full. At the end of any Interest Deferral
Period, the Company must pay all deferred interest and accrued interest thereon
and thereafter, the Company will be obligated to resume quarterly payments of
interest on the Notes.

During any Interest Deferral Period and so long as any deferred interest or
interest on deferred interest remains outstanding, the Company will not be
permitted to make any payment of dividends on the common stock.

                                        98
OPTIONAL REDEMPTION

The Notes will be redeemable at the Company's option as provided in the
Indenture.

In the case of any partial redemption, selection of the Notes for redemption
will be made by the Trustee on a pro rata basis, by lot or by such other method
as the Trustee shall deem fair and appropriate (and in such manner as complies
with the applicable legal and regulatory requirements). If any Note is to be
redeemed in part only, the notice of redemption relating to such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the holder thereof upon cancellation of the original Note. On and after
the date of redemption, interest will cease to accrue on Notes or portions
thereof called for redemption, so long as the Company has deposited with the
depositary funds sufficient to pay the principal of, plus accrued and unpaid
interest (including any deferred interest and accrued interest thereon) on, the
Notes to be redeemed.

A full or partial redemption of the Notes will result in an automatic separation
of the IDSs. See "Description of IDSs--Automatic Separation."

RANKING

The Indebtedness evidenced by the Notes will be unsecured senior subordinated
Indebtedness of the Company, will be subordinated in right of payment, to the
extent and in the manner provided in the Indenture, to the prior payment in full
in cash of all existing and future Senior Indebtedness of the Company, including
the Credit Facilities, will rank pari passu in right of payment with all
existing and future Pari Passu Indebtedness of the Company and will rank senior
in right of payment to all existing and future Subordinated Indebtedness of the
Company. The Notes will also be effectively subordinated to any Secured
Indebtedness of the Company to the extent of the value of the assets securing
such Indebtedness. However, payment from the money or the proceeds of U.S.
Government Obligations held in any defeasance trust described under
"--Defeasance" below is not subordinated to any Senior Indebtedness or subject
to the restrictions described herein.

The indebtedness evidenced by each Guarantee will be unsecured senior
subordinated indebtedness of the applicable Guarantor, will be subordinated in
right of payment, to the extent and in the manner provided in the Indenture, to
the prior payment in full in cash of all existing and future Senior Indebtedness
of such Guarantor, including the Senior Indebtedness of each Guarantor
represented by such Guarantor's guarantee of the Credit Facilities, will rank
pari passu in right of payment with all existing and future Pari Passu
Indebtedness of such Guarantor and will rank senior in right of payment to all
existing and future Subordinated Indebtedness of such Guarantor. The Guarantees
will also be effectively subordinated to any Secured Indebtedness of the
applicable Guarantor to the extent of the value of the assets securing such
Indebtedness.

As of December 31, 2003, on a pro forma basis, (i) the Company would have had
$     Senior Indebtedness outstanding, (ii) the Company would have had no Pari
Passu Indebtedness outstanding other than the Notes, (iii) the Guarantors would
have had $     million in Senior Indebtedness outstanding under the Credit
Facilities, all of which would have been Secured Indebtedness, and (iv) the
Guarantors would have had no Pari Passu Indebtedness outstanding other than the
Guarantees. Although the Indenture will contain limitations on the amount of
additional Indebtedness which the Company, the Guarantors and the Non-Guarantor
Subsidiaries may Incur, under certain circumstances the amount of such
Indebtedness could be substantial and, in any case, such Indebtedness may be
Senior Indebtedness or Secured Indebtedness. See "--Limitations on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred Stock" below.

As a holding company, the Company has no operations and, therefore, is dependent
on the cash flow of its subsidiaries and other entities to meet its own
obligations, including the payment of interest and principal obligations on the
Notes when due. As of December 31, 2003, on a pro forma basis, the total
liabilities of the Company's subsidiaries were approximately $     million,
including trade payables. Although the
                                        99
Indenture will limit the Incurrence of Indebtedness by and the issuance of
Preferred Stock of certain of the Company's subsidiaries, such limitation is
subject to a number of significant qualifications.

"Senior Indebtedness" with respect to the Company or any Guarantor means the
Senior Lender Indebtedness and all other Indebtedness of the Company or such
Guarantor, including principal, interest thereon (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization relating
to the Company or any Subsidiary of the Company at the rate specified in the
applicable Senior Indebtedness, whether or not a claim for post-filing interest
is allowed in such proceeding) and other amounts (including make-whole payments,
fees, expenses, reimbursement obligations under letters of credit and
indemnities) owing in respect thereof, whether outstanding on the Issue Date or
thereafter Incurred, unless in the instrument creating or evidencing the same or
pursuant to which the same is outstanding it is provided that such obligations
are not superior, or are subordinated, in right of payment to the Notes or such
Guarantor's Guarantee, as applicable; provided, however, that Senior
Indebtedness shall not include, as applicable, (i) any obligation of the Company
to any Subsidiary of the Company or of such Guarantor to the Company or any
other Subsidiary of the Company, (ii) any liability for federal, state, local or
other taxes owed or owing by the Company or such Guarantor, (iii) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including guarantees thereof or instruments evidencing such
liabilities), (iv) any Indebtedness or obligation of the Company or such
Guarantor which is Pari Passu Indebtedness, (v) any obligations with respect to
any Capital Stock, and (vi) any Indebtedness Incurred in violation of the
Indenture.

Only Senior Indebtedness or Secured Indebtedness of the Company or a Guarantor
will rank senior to the Notes or the relevant Guarantee in accordance with the
provisions of the Indenture. The Notes and each Guarantee will in all respects
rank pari passu with all other Pari Passu Indebtedness of the Company and the
relevant Guarantor, respectively.

The Company may not pay principal of, premium (if any) or interest on, the Notes
or make any deposit pursuant to the provisions described under "Defeasance"
below and may not otherwise purchase, redeem or otherwise retire any Notes
(except that Holders may receive and retain (a) Permitted Junior Securities and
(b) payments made from the trust described under "--Defeasance" below so long
as, on the date or dates the respective amounts were paid into the trust, such
payments were made with respect to the Notes without violating the subordination
provisions described herein or any other material agreement binding on the
Company, including the Credit Facilities) (collectively, "pay the Notes") if (i)
a default in the payment of the principal of, premium, if any, or interest on
any Designated Senior Indebtedness occurs and is continuing or any other amount
owing in respect of any Designated Senior Indebtedness is not paid when due, or
(ii) any other default on any Designated Senior Indebtedness occurs and results
in such Designated Senior Indebtedness becoming due or being declared due and
payable prior to the date on which it would otherwise become due and payable in
accordance with its terms, unless, in either case, the default has been cured or
waived and any such acceleration has been rescinded or such Designated Senior
Indebtedness has been paid in full. However, the Company may pay the Notes
without regard to the foregoing if the Company and the Trustee receive written
notice approving such payment from the Representative of each series of the
Designated Senior Indebtedness with respect to which either of the events set
forth in clause (i) or (ii) of the immediately preceding sentence has occurred
and is continuing. During the continuance of any default (other than a default
described in clause (i) or (ii) of the second preceding sentence) with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or upon the expiration of any applicable
grace periods, the Company may not pay the Notes for a period (a "Payment
Blockage Period") commencing upon the receipt by the Trustee (with a copy to the
Company) of written notice (a "Blockage Notice") of such default from the
Representative of such defaulted Designated Senior Indebtedness specifying an
election to effect a Payment Blockage Period and ending 179 days thereafter (or
earlier if such Payment Blockage Period is terminated (i) by written notice to
the Trustee and the Company from the Person or Persons who gave such Blockage
Notice, (ii) by repayment in full of such defaulted Designated Senior
Indebtedness or (iii) because the default giving rise to such Blockage Notice is
no longer continuing). Notwithstanding the provisions

                                       100
described in the immediately preceding sentence (but subject to the provisions
contained in the first sentence of this paragraph and in the succeeding
paragraph), unless the holders of such defaulted Designated Senior Indebtedness
or the Representative of such holders have accelerated the maturity of such
defaulted Designated Senior Indebtedness, the Company may resume payments on the
Notes after the end of such Payment Blockage Period. In no event may the total
number of days during which any Payment Blockage Period or Periods is in effect
exceed 179 days in the aggregate during any 360 consecutive day period. For
purposes of this provision, no default or event of default that existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period shall be, or be made, the basis of the commencement of a subsequent
Payment Blockage Period by the Representative of such Designated Senior
Indebtedness, unless such default or event of default shall have been cured or
waived for a period of not less than 90 consecutive days.

Upon any payment or distribution of the assets of the Company upon a total or
partial liquidation or dissolution or bankruptcy reorganization of, insolvency,
receivership or similar proceeding relating to the Company or its property or an
assignment for the benefit of its creditors or any marshalling of the Company's
assets or liabilities, the holders of Senior Indebtedness will be entitled to
receive payment in full in cash of all the Senior Indebtedness before the
Noteholders are entitled to receive any payment, and until the Senior
Indebtedness is paid in full in cash, any payment or distribution to which
Noteholders would be entitled but for the subordination provisions of the
Indenture will be made to holders of the Senior Indebtedness as their interests
may appear (except that Holders of Notes may receive and retain (i) Permitted
Junior Securities, and (ii) payments made from the trust described under
"--Defeasance" so long as, on the date or dates the respective amounts were paid
into the trust, such payments were made with respect to the Notes without
violating the subordination provisions described herein or any other material
agreement binding on the Company, including the Credit Agreement). If a
distribution is made to Noteholders that due to the subordination provisions of
the Indenture should not have been made to them, such Noteholders are required
to hold it in trust for the holders of Senior Indebtedness and pay it over to
them as their interests may appear.

After the occurrence of an Event of Default, the Company or the Trustee shall
promptly notify the holders of each series of Designated Senior Indebtedness (or
their respective Representative) of such occurrence. If any Designated Senior
Indebtedness is outstanding, the Company may not make any payments then due on
the Notes until five Business Days after the holders or the Representative of
such Designated Senior Indebtedness receive notice of such occurrence and,
thereafter, may pay the Notes only if the subordination provisions of the
Indenture otherwise permit payment at that time.

By reason of the subordination provisions contained in the Indenture, in the
event of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the Noteholders.

The Indenture will contain identical subordination provisions relating to each
Guarantor's obligations under its Guarantee.

GUARANTEES

Each of the Company's direct and indirect Wholly Owned Subsidiaries organized
under the laws of any state of the United States of America on the Issue Date
and certain future Subsidiaries of the Company (as described below), as primary
obligors and not merely as sureties, will jointly and severally irrevocably and
unconditionally guarantee on an unsecured senior subordinated basis (as
described under "--Ranking" above) the performance and punctual payment when
due, whether at Stated Maturity, by acceleration or otherwise, of all
obligations of the Company under the Indenture and the Notes, whether for
payment of principal of, premium, if any, or interest on the Notes, expenses,
indemnification or otherwise (all such obligations guaranteed by such Guarantors
being herein called the "Guaranteed Obligations"). Such Guarantors will agree to
pay, in addition to the amount stated above, any and all expenses (including
reasonable counsel fees and expenses) Incurred by the Trustee or the Holders in
enforcing any rights under the Guarantees. Each Guarantee will be limited in
amount to an amount not to exceed the

                                       101
maximum amount that can be guaranteed by the applicable Guarantor after giving
effect to all of its other contingent and fixed liabilities (including without
limitation all of its obligations under or with respect to the Credit Agreement)
without rendering the Guarantee, as it relates to such Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally. After the Issue Date,
the Company will cause each Restricted Subsidiary organized under the laws of
the United States of America or any state or territory thereof that has Total
Assets of more than $500,000 to execute and deliver to the Trustee a
supplemental indenture pursuant to which such Restricted Subsidiary will
guarantee, payment of the Notes on an unsecured senior subordinated basis. See
"Certain Covenants--Future Guarantors" below.

Each Guarantee is a continuing guarantee and shall, until released in accordance
with the next succeeding paragraph, (i) remain in full force and effect until
payment in full of all the Guaranteed Obligations, (ii) be binding upon each
such Guarantor and its successors, and (iii) inure to the benefit of and be
enforceable by the Trustee, the Holders and their successors, transferees and
assigns.

The Guarantee of a Guarantor will be released: (i) in connection with any
transaction permitted by the Indenture after which the Guarantor ceases to be a
Restricted Subsidiary of the Company; provided that the sale or other
disposition, if any, complies with the "Asset Sale" provisions of the Indenture;
or (ii) upon satisfaction and discharge or defeasance of the Notes as provided
below under "Defeasance" and "Satisfaction and Discharge."

CHANGE OF CONTROL

Upon the occurrence of any of the following events (each, a "Change of
Control"), each Holder will have the right to require the Company to repurchase
all or any part of such Holder's Notes of any series at a purchase price in cash
equal to 101% of the principal amount thereof, plus accrued and unpaid interest,
if any, to but not including the date of repurchase (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date): (i) the sale, lease or transfer, in one or a
series of related transactions, of all or substantially all of the Company's
assets to any person or group (as such term is used in Section 13(d)(3) of the
Exchange Act) other than the Permitted Holders, (ii) the adoption of a plan
relating to the liquidation or dissolution of the Company, (iii) the acquisition
by any person or group (as such term is used in Section 13(d)(3) of the Exchange
Act) other than the Permitted Holders of a beneficial ownership of more than 50%
of the voting power of the voting stock of the Company, by way of purchase,
merger or consolidation or otherwise (other than a creation of a holding company
that does not involve a change in the beneficial ownership of the Company as a
result of such transaction), (iv) the merger or consolidation of the Company
with or into another Person or the merger of another Person into the Company
with the effect that immediately after such transaction the stockholders of the
Company immediately prior to such transaction hold, directly or indirectly, less
than 50% of the total voting power of all securities generally entitled to vote
in the election of directors, managers, or trustees of the Person surviving such
merger or consolidation, in each case other than creation of a holding company
that does not involve a change in the beneficial ownership of the Company as a
result of such transaction or (v) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors.
In order to exercise this repurchase right, a Holder must separate its IDSs into
the shares of Class A common stock and Notes represented thereby.

In the event that at the time of such Change of Control the terms of any Senior
Lender Indebtedness restrict or prohibit the repurchase of Notes pursuant to
this covenant, then prior to the mailing of the notice to Holders provided for
in the immediately following paragraph but in any event within 30 days following
any Change of Control, the Company shall (i) repay in full all Senior Lender
Indebtedness or offer to repay in full all Senior Lender Indebtedness and repay
the Senior Lender Indebtedness of each lender who has accepted such offer or
(ii) obtain the requisite consent under the agreements governing the Senior
Lender Indebtedness to permit the repurchase of the Notes as provided for in the
immediately following paragraph.

                                       102
Within 30 days following any Change of Control, unless the Company has exercised
its right to redeem the Notes as described under "--Optional Redemption," the
Company shall mail a notice (a "Change of Control Offer") to each Holder with a
copy to the Trustee stating: (1) that a Change of Control has occurred and that
such Holder has the right to require the Company to purchase such Holder's Notes
at a purchase price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to but not including the date of repurchase
(subject to the right of Holders of record on a record date to receive interest
on the relevant interest payment date); (2) the circumstances and relevant facts
and financial information regarding such Change of Control; (3) whether the
agreements then governing the Senior Lender Indebtedness will permit the
repurchase of the Notes; (4) the repurchase date (which shall be no earlier than
30 days nor later than 60 days from the date such notice is mailed); and (5) the
instructions determined by the Company, consistent with this covenant, that a
Holder must follow in order to have its Notes purchased.

The Company will not be required to make a Change of Control Offer upon a Change
of Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in the
Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.

The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this covenant, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Indenture by virtue thereof.

The definition of Change of Control includes a phrase relating to the sale,
lease or transfer of "all or substantially all" the assets of the Company and
its Subsidiaries taken as a whole. Although there is a developing body of case
law interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
Holder of Notes to require the Company to repurchase such Notes as a result of a
sale, lease or transfer of less than all of the assets of the Company and its
Subsidiaries taken as a whole to another Person or group may be uncertain.

COVENANTS RELATING TO IDSS

Recombination of Notes and Class A Common Stock into IDSs. The Indenture will
provide that as long as any Notes are outstanding, any Holder of Notes and
shares of Class A common stock may, at any time and from time to time, recombine
these securities to form IDSs unless the IDSs have previously been automatically
separated as a result of the continuance of a payment default on the senior
subordinated notes for 90 days, or the redemption or maturity of any senior
subordinated notes.

Procedures Relating to Subsequent Issuance. The Indenture will provide that, in
the event there is a subsequent issuance of Additional Notes, each Holder of the
Notes or the IDSs (as the case may be) agrees that a portion of such Holder's
Notes (whether held directly in book-entry form or held as part of IDSs) will be
exchanged, without any further action of such Holder, for a portion of the
Additional Notes purchased by the Holders of such Additional Notes, such that,
following any such additional issuance and exchange, each Holder of the Notes or
the IDSs (as the case may be) owns an indivisible unit composed of the Notes and
Additional Notes of each issuance in the same proportion as each other Holder,
and the records of DTC and the Trustee will be revised to reflect each such
exchange without any further action of such Holder. The aggregate principal
amount of the Notes owned by each Holder will not change as a result of such
exchange. Any Additional Notes will be guaranteed by the Guarantors on the same
basis as the Notes. See "Material United States Federal Income Tax Consequences
to United States Holders--Senior Subordinated Notes--Additional Issuances."
There is a possibility that holders of Additional Notes having original issue
discount may not be able to collect the unamortized portion of the original
issue discount in the event of an acceleration of the senior subordinated notes
or bankruptcy of the Company as described under "Risk Factors--Risks Relating to
the IDSs, the Shares of Class A Common Stock and Senior Subordinated Notes
Represented by the IDSs, the Senior

                                       103
Subordinated Notes Offered Separately (and not in the Form of IDS), and our New
Credit Facility--Subsequent issuances of senior subordinated notes may cause you
to recognize taxable gain and/or original issue discount and may reduce your
recovery in the event of bankruptcy." Any such automatic exchange should not
impair the rights any holder would otherwise have to assert a claim against us
or the underwriters, with respect to the full amount of Notes purchased by such
holder.

CERTAIN COVENANTS

The Indenture will contain the following material covenants:

Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock.  The Indenture will provide that (i) the Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
Incur any Indebtedness (including Acquired Indebtedness) or issue any shares of
Disqualified Stock and (ii) the Company will not permit any of its Restricted
Subsidiaries to issue any shares of Preferred Stock; provided, however, that the
Company and any Restricted Subsidiary may Incur Indebtedness (including Acquired
Indebtedness) or issue shares of Disqualified Stock and any Guarantor may issue
shares of Preferred Stock if the Leverage Ratio of the Company for the most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is Incurred or such Disqualified Stock or Preferred Stock is issued
would have been no more than      to 1.0 determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been Incurred, or the Disqualified Stock or
Preferred Stock had been issued, as the case may be, and the application of
proceeds therefrom had occurred at the beginning of such four-quarter period.

The foregoing limitations will not apply to:

     (a)   the Incurrence by the Company or its Restricted Subsidiaries of
           Indebtedness under the Credit Facilities and the issuance and
           creation of letters of credit and bankers' acceptances thereunder
           (with letters of credit and bankers' acceptances being deemed to have
           a principal amount equal to the face amount thereof) up to an
           aggregate principal amount of the greater of the Borrowing Base or
           $     million then classified as having been Incurred pursuant to
           this clause (a) outstanding at any one time;

     (b)   the Incurrence by the Company and the Guarantors of Indebtedness
           represented by the Notes (not including any Additional Notes) and the
           Guarantees, as applicable;

     (c)   Indebtedness existing on the Issue Date (other than Indebtedness
           described in clauses (a) and (b));

     (d)   Indebtedness (including Capitalized Lease Obligations) Incurred by
           the Company or any of its Restricted Subsidiaries to finance the
           purchase, lease or improvement of property (real or personal) or
           equipment (whether through the direct purchase of assets or the
           Capital Stock of any Person owning such assets) in an aggregate
           principal amount which, when aggregated with the principal amount of
           all other Indebtedness then outstanding and Incurred pursuant to this
           clause (d) and all Refinancing Indebtedness (as defined below)
           Incurred to refund, refinance or replace any Indebtedness classified
           as having been Incurred pursuant to this clause (d), does not exceed
           the greater of   % of Total Assets at the time of Incurrence or
           $     million;

     (e)   Indebtedness Incurred by the Company or any of its Restricted
           Subsidiaries constituting reimbursement obligations with respect to
           letters of credit issued in the ordinary course of business,
           including without limitation letters of credit in respect of workers'
           compensation claims, health, disability or other employee benefits or
           property, casualty or liability insurance or self-insurance, or with
           respect to agreements to provide services, or other Indebtedness with
           respect to reimbursement type obligations regarding workers'
           compensation claims; provided, however, that upon the drawing of such
           letters of credit, such obligations are reimbursed within 30 days
           following such drawing;

                                       104
(f)   Indebtedness arising from agreements of the Company or a Restricted
           Subsidiary providing for indemnification, adjustment of purchase
           price or similar obligations, in each case, Incurred in connection
           with the acquisition or disposition of any business, assets or a
           Subsidiary of the Company in accordance with the terms of the
           Indenture, other than guarantees of Indebtedness Incurred by any
           Person acquiring all or any portion of such business, assets or
           Subsidiary for the purpose of financing such acquisition;

     (g)   Indebtedness of the Company to a Restricted Subsidiary of the
           Company; provided that any such Indebtedness is subordinated in right
           of payment to the Notes; provided further that any subsequent
           issuance or transfer of any Capital Stock or any other event which
           results in any such Restricted Subsidiary ceasing to be a Restricted
           Subsidiary of the Company or any other subsequent transfer of any
           such Indebtedness (except to the Company or another Restricted
           Subsidiary) shall be deemed, in each case, to be an Incurrence of
           such Indebtedness;

     (h)   shares of Preferred Stock of a Restricted Subsidiary issued to the
           Company or another Restricted Subsidiary of the Company; provided
           that any subsequent issuance or transfer of any Capital Stock or any
           other event which results in any such Restricted Subsidiary ceasing
           to be a Restricted Subsidiary or any other subsequent transfer of any
           such shares of Preferred Stock (except to the Company or another
           Restricted Subsidiary of the Company) shall be deemed, in each case,
           to be an issuance of shares of Preferred Stock;

     (i)   Indebtedness of a Restricted Subsidiary to the Company or another
           Restricted Subsidiary of the Company; provided that (i) any such
           Indebtedness is made pursuant to an intercompany note and (ii) if a
           Guarantor Incurs such Indebtedness to a Restricted Subsidiary that is
           not a Guarantor such Indebtedness is subordinated in right of payment
           to the Guarantee of such Guarantor; provided further that any
           subsequent issuance or transfer of any Capital Stock or any other
           event which results in any Restricted Subsidiary lending such
           Indebtedness ceasing to be a Restricted Subsidiary or any other
           subsequent transfer of any such Indebtedness (except to the Company
           or another Restricted Subsidiary of the Company) shall be deemed, in
           each case, to be an Incurrence of such Indebtedness;

     (j)   Hedging Obligations that are incurred not for speculative purposes
           (1) for the purpose of fixing or hedging interest rate risk with
           respect to any Indebtedness that is permitted by the terms of the
           Indenture to be outstanding, (2) for the purpose of fixing or hedging
           currency exchange rate risk with respect to any currency exchanges or
           (3) for the purpose of fixing or hedging commodity price risk with
           respect to any commodity purchases;

     (k)   obligations in respect of performance, bid and surety bonds and
           completion guarantees provided by the Company or any Restricted
           Subsidiary in the ordinary course of business;

     (l)   Indebtedness or Disqualified Stock of the Company and any Restricted
           Subsidiary and Preferred Stock of any Restricted Subsidiary not
           otherwise permitted hereunder in an aggregate principal amount, which
           when aggregated with the principal amount or liquidation preference
           of all other Indebtedness and Disqualified Stock then outstanding and
           classified as having been Incurred pursuant to this clause (1), does
           not exceed $     million at any one time outstanding; provided,
           however, that Indebtedness of Foreign Subsidiaries, which when
           aggregated with the principal amount of all other Indebtedness of
           Foreign Subsidiaries then outstanding and classified as having been
           Incurred pursuant to this clause (1), does not exceed $     million
           (or the equivalent thereof in any other currency) at any one time
           outstanding (it being understood that any Indebtedness Incurred under
           this clause (1) shall cease to be deemed Incurred or outstanding for
           purposes of this clause (1) but shall be deemed to be Incurred for
           purposes of the first paragraph of this covenant from and after the
           first date on which the Company could have Incurred such Indebtedness
           under the first paragraph of this covenant without reliance upon this
           clause (1));

                                       105
(m)  any guarantee by the Company or a Restricted Subsidiary of
          Indebtedness or other obligations of the Company or any of its
          Restricted Subsidiaries so long as the Incurrence of such Indebtedness
          Incurred by the Company or such Restricted Subsidiary is permitted
          under the terms of the Indenture; provided that if such Indebtedness
          is by its express terms subordinated in right of payment to the Notes
          or the Guarantee of such Restricted Subsidiary, as applicable, any
          such guarantee of any Guarantor with respect to such Indebtedness
          shall be subordinated in right of payment to such Guarantor's
          Guarantee with respect to the Notes substantially to the same extent
          as such Indebtedness is subordinated to the Notes or the Guarantee of
          such Restricted Subsidiary, as applicable;

     (n)   the Incurrence by the Company or any of its Restricted Subsidiaries
           of Indebtedness which serves to refund or refinance any Indebtedness
           Incurred as permitted under the first paragraph of this covenant and
           clauses (b) and (c) above, or any Indebtedness issued to so refund or
           refinance such Indebtedness (subject to the following proviso,
           "Refinancing Indebtedness"); provided, however, that such Refinancing
           Indebtedness:

         (i)   has a Weighted Average Life to Maturity at the time such
               Refinancing Indebtedness is Incurred which is not less than the
               remaining Weighted Average Life to Maturity of the Indebtedness
               being refunded or refinanced;

         (ii)   has a Stated Maturity which is no earlier than the Stated
                Maturity of the Indebtedness being refunded or refinanced;

         (iii)  to the extent such Refinancing Indebtedness refinances
                Indebtedness pari passu with the Notes or the Guarantees, is
                pari passu with the Notes or the Guarantees, as applicable;

         (iv)   is Incurred in an aggregate principal amount (or if issued with
                original issue discount, an aggregate issue price) that is equal
                to or less than the aggregate principal amount (or if issued
                with original issue discount, the aggregate accreted value) then
                outstanding of the Indebtedness being refinanced plus premium
                and fees Incurred in connection with such refinancing; and

         (v)   shall not include Indebtedness of a Restricted Subsidiary that is
               not a Guarantor that refinances Indebtedness of the Company;

     and provided further that subclauses (i), (ii), (iii), and (v) of this
     clause (n) will not apply to any refunding or refinancing of any Senior
     Indebtedness;

     (o)   Indebtedness, Disqualified Stock or Preferred Stock of Persons that
           are acquired by the Company or any of its Restricted Subsidiaries or
           merged into a Restricted Subsidiary in accordance with the terms of
           the Indenture; provided, however, that such Indebtedness,
           Disqualified Stock or Preferred Stock is not Incurred in
           contemplation of such acquisition or merger or to provide all or a
           portion of the funds or credit support required to consummate such
           acquisition or merger; provided further, however, that after giving
           effect to such acquisition and the Incurrence of such Indebtedness,
           Disqualified Stock or Preferred Stock either (i) the Company would be
           permitted to Incur at least $1.00 of additional Indebtedness pursuant
           to the Leverage Ratio test set forth in the first sentence of this
           covenant or (ii) the Leverage Ratio would be less than immediately
           prior to such acquisition;

     (p) Contribution Indebtedness; and

     (q) Indebtedness represented by the issuance of Additional Notes in
         connection with the issuance of shares of Class A common stock of the
         Company provided that the ratio of the aggregate principal amount of
         such Additional Notes to the number of such additional shares shall not
         exceed the equivalent ratio with respect to the IDSs outstanding prior
         to such issuance, and, in each case, the related Guarantees.

                                       106
For purposes of determining compliance with this covenant, in the event that an
item of Indebtedness meets the criteria of more than one of the categories of
permitted Indebtedness described in clauses (a) through (q) above or is entitled
to be Incurred pursuant to the first paragraph of this covenant, the Company
shall, in its sole discretion, classify or reclassify such item of Indebtedness
in any manner that complies with this covenant and such item of Indebtedness
will be treated as having been Incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. In addition, the Company may, at any
time, change the classification of an item of Indebtedness (or any portion
thereof) to any other clause or to the first paragraph hereof; provided that the
Company or Restricted Subsidiary would be permitted to incur such item of
Indebtedness (or portion thereof) pursuant to such other clause or the first
paragraph hereof, as the case may be, at such time of reclassification. Accrual
of interest, the accretion of accreted value and the payment of interest in the
form of additional Indebtedness will not be deemed to be an Incurrence of
Indebtedness for purposes of this covenant.

Limitation on Restricted Payments.  The Indenture will provide that the Company
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly:

     (i)  declare or pay any dividend or make any distribution on account of the
          Company's or any of its Restricted Subsidiaries' Equity Interests,
          including any payment made in connection with any merger or
          consolidation involving the Company (other than (A) dividends or
          distributions by the Company payable in Equity Interests (other than
          Disqualified Stock) of the Company or (B) dividends or distributions
          by a Restricted Subsidiary so long as, in the case of any dividend or
          distribution payable on or in respect of any class or series of
          securities issued by a Restricted Subsidiary other than a Wholly Owned
          Restricted Subsidiary, the Company or a Restricted Subsidiary receives
          at least its pro rata share of such dividend or distribution in
          accordance with its Equity Interests in such class or series of
          securities);

     (ii)  purchase or otherwise acquire or retire for value any Equity
           Interests of the Company or any Restricted Subsidiary; or

     (iii) make any Restricted Investment (all such payments and other actions
           set forth in this clause (iii) and in clauses (i) and (ii) above
           being collectively referred to as "Restricted Payments"),

unless, at the time of such Restricted Payment:

     (a) no Default or Event of Default shall have occurred and be continuing or
         would occur as a consequence thereof;

     (b) immediately after giving effect to such transaction on a pro forma
         basis, the Company could Incur $1.00 of additional Indebtedness under
         the provisions of the first paragraph of "Limitations on Incurrence of
         Indebtedness and Issuance of Disqualified Stock and Preferred Stock";
         and

     (c) such Restricted Payment, together with the aggregate amount of all
         other Restricted Payments made by the Company and its Restricted
         Subsidiaries after the Issue Date (including, without duplication,
         Restricted Payments permitted by clause (1), (6) and (10) of the next
         succeeding paragraph, but excluding all other Restricted Payments
         permitted by the next succeeding paragraph), is less than the sum of,
         without duplication:

        (i)     % of the Adjusted EBITDA of the Company for the period (taken as
             one accounting period) from the fiscal quarter that first begins
             after the Issue Date to the end of the Company's most recently
             ended fiscal quarter for which internal financial statements are
             available at the time of such Restricted Payment less   times the
             Consolidated Interest Expense of the Company for such period, plus

        (ii)     % of the aggregate net proceeds, including cash and the Fair
              Market Value (as determined in accordance with the next succeeding
              sentence) of property other than cash, received by the Company
              since the Issue Date from the issue or sale of Equity Interests of
              the Company (excluding Refunding Capital Stock (as defined below),
              Designated Preferred
                                       107
Stock, Excluded Contributions and Disqualified Stock), including
              Equity Interests issued upon conversion of Indebtedness,
              Disqualified Stock and Designated Preferred Stock or upon exercise
              of warrants or options (other than an issuance or sale to a
              Subsidiary of the Company or an employee stock ownership plan or
              trust established by the Company or any of its Subsidiaries), plus

        (iii)    % of the aggregate amount of contributions to the capital of
              the Company received in cash and the Fair Market Value (as
              determined in accordance with the next succeeding sentence) of
              property other than cash since the Issue Date (other than Excluded
              Contributions, Refunding Capital Stock, Designated Preferred Stock
              and Disqualified Stock), plus

        (iv)    % of the aggregate amount received in cash and the Fair Market
             Value (as determined in accordance with the next succeeding
             sentence) of property other than cash received from (A) the sale or
             other disposition (other than to the Company or a Restricted
             Subsidiary) of or on account of Restricted Investments made by the
             Company and its Restricted Subsidiaries and from repurchases and
             redemptions of such Restricted Investments from the Company and its
             Restricted Subsidiaries by any Person (other than the Company or
             any of its Subsidiaries) and from payments of interest on and
             repayments of loans or advances which constituted Restricted
             Investments, (B) the sale (other than to the Company or a
             Subsidiary) of the Capital Stock of an Unrestricted Subsidiary or
             (C) a distribution or dividend from an Unrestricted Subsidiary,
             plus

        (v)  in the event any Unrestricted Subsidiary has been redesignated as a
             Restricted Subsidiary or has been merged, consolidated or
             amalgamated with or into, or transfers or conveys its assets to, or
             is liquidated into, the Company or a Restricted Subsidiary, the
             Fair Market Value (as determined in good faith by the Board of
             Directors) of the Investment of the Company in such Unrestricted
             Subsidiary at the time of such redesignation, combination or
             transfer (or of the assets transferred or conveyed, as applicable),
             after deducting any Indebtedness associated with the Unrestricted
             Subsidiary so designated or combined or any Indebtedness associated
             with the assets so transferred or conveyed.

The Fair Market Value of property other than cash covered by clauses (ii), (iii)
and (iv) above shall be determined in good faith by the Company and (A) in the
event of property with a Fair Market Value in excess of $     million, shall be
set forth in an Officers' Certificate or (B) in the event of property with a
Fair Market Value in excess of $     million, shall be set forth in a resolution
approved by at least a majority of the Board of Directors.

The foregoing provisions will not prohibit:

     (1)  the payment of any dividend or distribution within 60 days after the
          date of declaration thereof, if at the date of declaration such
          payment would have complied with the provisions of the Indenture;

     (2)  (a) the repurchase, retirement or other acquisition of any Equity
          Interests ("Retired Capital Stock") of the Company in exchange for, or
          out of the proceeds of the substantially concurrent sale of, Equity
          Interests of the Company or contributions to the equity capital of the
          Company (other than any Disqualified Stock or any Equity Interests
          sold to a Subsidiary of the Company or to an employee stock ownership
          plan or any trust established by the Company or any of its
          Subsidiaries) (collectively, including any such contributions,
          "Refunding Capital Stock") and (b) the declaration and payment of
          accrued dividends on the Retired Capital Stock out of the proceeds of
          the substantially concurrent sale (other than to a Subsidiary of the
          Company or to an employee stock ownership plan or any trust
          established by the Company or any of its Subsidiaries) of Refunding
          Capital Stock;

     (3)  the declaration and payment of dividends or distributions to holders
          of any class or series of Disqualified Stock of the Company or any of
          its Restricted Subsidiaries issued or incurred in
                                       108
accordance with the covenant entitled "--Limitation on Incurrence of
          Indebtedness and Issuance of Disqualified Stock and Preferred Stock";

     (4)  the declaration and payment of dividends or distributions to holders
          of any class or series of Designated Preferred Stock issued after the
          Issue Date; provided, however, that (A) for the most recently ended
          four full fiscal quarters for which internal financial statements are
          available immediately preceding the date of issuance of such
          Designated Preferred Stock, after giving effect to such issuance (and
          the payment of dividends or distributions) on a pro forma basis, the
          Company would have had a Leverage Ratio of at least           to 1.00
          and (B) the aggregate amount of dividends declared and paid pursuant
          to this clause (4) does not exceed the net cash proceeds received by
          the Company from the sale of Designated Preferred Stock issued after
          the Issue Date;

     (5)  Investments in Unrestricted Subsidiaries having an aggregate Fair
          Market Value, taken together with all other Investments made pursuant
          to this clause (5) that are at that time outstanding, not to exceed
          $     million (with the Fair Market Value of each Investment being
          measured at the time made and without giving effect to subsequent
          changes in value);

     (6)  the payment of dividends on the shares of the Company's Capital Stock
          up to an aggregate amount in any fiscal quarter not to exceed the
          Quarterly Base Dividend Level; provided, that the Company may not pay
          any dividends pursuant to this clause (6) or clause (10) below if
          interest on the Notes is being deferred or, after the end of any
          Interest Deferral Period, so long as any deferred interest and
          interest on deferred interest has not been paid in full;

     (7)  Investments that are made with Excluded Contributions;

     (8)  other Restricted Payments in an aggregate amount not to exceed $
          million;

     (9)  repurchases of Equity Interests deemed to occur upon exercise of stock
          options if such Equity Interests represent a portion of the exercise
          price of such options; and

     (10) other Restricted Payments in an aggregate amount not to exceed the
          Base Dividend Restricted Payments Basket;

provided, however, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (3), (4), (5), (6), (8) and (10), no
Default or Event of Default shall have occurred and be continuing or would occur
as a consequence thereof.

As of the Issue Date, all of the Company's Subsidiaries will be Restricted
Subsidiaries. The Company will not permit any Unrestricted Subsidiary to become
a Restricted Subsidiary except pursuant to the definition of "Unrestricted
Subsidiary." For purposes of designating any Restricted Subsidiary as an
Unrestricted Subsidiary, all outstanding Investments by the Company and its
Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so
designated will be deemed to be Restricted Payments in an amount determined as
set forth in the last sentence of the definition of "Investments." Such
designation will only be permitted if a Restricted Payment in such amount would
be permitted at such time and if such Subsidiary otherwise meets the definition
of an Unrestricted Subsidiary.

Anti-Layering.  The Company will not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is contractually subordinate
or junior in right of payment to any Senior Indebtedness of the Company and
senior in right of payment to the Notes. No Guarantor will incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
contractually subordinate or junior in right of payment to the Senior
Indebtedness of such Guarantor and senior in right of payment to such
Guarantor's Guarantee. This does not apply to distinctions between categories of
Indebtedness that exist by reason of any Liens or Guarantees securing or in
favor of some but not all of such Indebtedness or securing such Indebtedness
with greater or lesser priority or with different collateral.

Dividend and Other Payment Restrictions Affecting Subsidiaries.  The Indenture
will provide that the Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or

                                       109
otherwise cause or suffer to exist or become effective any consensual
encumbrance or consensual restriction on the ability of any Restricted
Subsidiary to:

     (a)  (i) pay dividends or make any other distributions to the Company or
          any of its Restricted Subsidiaries (1) on its Capital Stock or (2)
          with respect to any other interest or participation in, or measured
          by, its profits, or (ii) pay any Indebtedness owed to the Company or
          any of its Restricted Subsidiaries;

     (b)  make loans or advances to the Company or any of its Restricted
          Subsidiaries; or

     (c)  sell, lease or transfer any of its properties or assets to the Company
          or any of its Restricted Subsidiaries;

except in each case for such encumbrances or restrictions existing under or by
reason of:

     (1)   contractual encumbrances or restrictions in effect on the Issue Date,
           including pursuant to the Credit Facilities and the other Senior
           Credit Documents;

     (2)   the Indenture and the Notes;

     (3)   applicable law or any applicable rule, regulation or order;

     (4)   any agreement or other instrument relating to Indebtedness of a
           Person acquired by the Company or any Restricted Subsidiary which was
           in existence at the time of such acquisition (but not created in
           contemplation thereof or to provide all or any portion of the funds
           or credit support utilized to consummate such acquisition), which
           encumbrance or restriction is not applicable to any Person, or the
           properties or assets of any Person, other than the Person, or the
           property or assets of the Person, so acquired;

     (5)   any restriction with respect to a Restricted Subsidiary imposed
           pursuant to an agreement entered into for the sale or disposition of
           all or substantially all the Capital Stock or assets of such
           Restricted Subsidiary pending the closing of such sale or
           disposition;

     (6)   Secured Indebtedness otherwise permitted to be Incurred pursuant to
           the covenants described under "--Limitations on Incurrence of
           Indebtedness and Issuance of Disqualified Stock and Preferred Stock"
           and "--Liens" that limit the right of the debtor to dispose of the
           assets securing such Indebtedness;

     (7)   restrictions on cash or other deposits or net worth imposed by
           customers under contracts entered into in the ordinary course of
           business;

     (8)   customary provisions in joint venture agreements and other similar
           agreements entered into in the ordinary course of business;

     (9)   customary provisions contained in leases, agreements to provide
           services and other similar agreements entered into in the ordinary
           course of business that impose restrictions of the type described in
           clause (c) above;

     (10)  other Indebtedness of Restricted Subsidiaries permitted to be
           Incurred subsequent to the Issue Date pursuant to the covenant
           described under "Limitations on Incurrence of Indebtedness and
           Issuance of Disqualified Stock and Preferred Stock"; or

     (11)  any encumbrances or restrictions of the type referred to in clauses
           (a), (b) and (c) above imposed by any amendments, modifications,
           restatements, renewals, increases, supplements, refundings,
           replacements or refinancings of the contracts, instruments or
           obligations referred to in clauses (1) through (10) above; provided
           that such amendments, modifications, restatements, renewals,
           increases, supplements, refundings, replacements or refinancings are,
           in the good faith judgment of the Board of Directors, no more
           restrictive with respect to such dividend and other payment
           restrictions than those contained in the dividend or other payment

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restrictions prior to such amendment, modification, restatement,
           renewal, increase, supplement, refunding, replacement or refinancing.

Asset Sales.  The Indenture will provide that the Company will not, and will not
permit any of its Restricted Subsidiaries to, cause or make an Asset Sale,
unless (x) the Company, or its Restricted Subsidiaries, as the case may be,
receives consideration at the time of such Asset Sale at least equal to the Fair
Market Value (as determined in good faith by the Company) of the assets sold or
otherwise disposed of and (y) except in the case of a Permitted Asset Swap, at
least 75% of the consideration therefor received by the Company, or such
Restricted Subsidiary, as the case may be, is in the form of Cash Equivalents;
provided that the amount of:

     (a)  any liabilities (as shown on the Company's or such Restricted
          Subsidiary's most recent balance sheet or in the notes thereto) of the
          Company or any Restricted Subsidiary (other than liabilities that are
          by their terms subordinated to the Notes) that are assumed by the
          transferee of any such assets;

     (b)  any notes or other obligations or other securities received by the
          Company or such Restricted Subsidiary from such transferee that are
          converted by the Company or such Restricted Subsidiary into Cash
          Equivalents within 180 days of the receipt thereof (to the extent of
          the Cash Equivalents received); and

     (c)  any Designated Noncash Consideration received by the Company or any of
          its Restricted Subsidiaries in such Asset Sale having an aggregate
          Fair Market Value, taken together with all other Designated Noncash
          Consideration received pursuant to this clause (c) that is at that
          time outstanding, not to exceed the greater of   % of Total Assets or
          $     million (with the Fair Market Value of each item of Designated
          Noncash Consideration being measured at the time received and without
          giving effect to subsequent changes in value)

shall be deemed to be Cash Equivalents for the purposes of this provision.

Within 365 days after the Company's or any Restricted Subsidiary's receipt of
the Net Proceeds of any Asset Sale, the Company or such Restricted Subsidiary
may apply the Net Proceeds from such Asset Sale, at its option:

     (i)   to repay Obligations under the Credit Facilities or other Senior
           Indebtedness or Pari Passu Indebtedness (provided that if the Company
           shall so reduce Obligations under Pari Passu Indebtedness, it will
           equally and ratably reduce Obligations under the Notes by making an
           offer (in accordance with the procedures set forth below for an Asset
           Sale Offer) to all Holders to purchase at a purchase price equal to
           100% of the principal amount thereof, plus accrued and unpaid
           interest, if any, the pro rata principal amount of Notes) or
           Indebtedness of a Restricted Subsidiary, in each case other than
           Indebtedness owed to the Company or a Restricted Subsidiary;

     (ii)   to an investment in any one or more businesses, capital expenditures
            or acquisitions of other assets in each case used or useful in a
            Similar Business; and/or

     (iii)  to make an investment in properties or assets that replace the
            properties and assets that are the subject of such Asset Sale.

Pending the application of any such Net Proceeds, the Company or such Restricted
Subsidiary may invest such Net Proceeds in Cash Equivalents or Investment Grade
Securities. The Indenture will provide that any Net Proceeds from any Asset Sale
that are not applied as provided and within the time period set forth in the
first sentence of this paragraph will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $     million, the Company
shall make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase
the maximum principal amount of Notes that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 100% of the principal
amount thereof, plus accrued and unpaid interest, if any, to but not including
the date fixed for the closing of such offer, in accordance with the procedures
set forth in the Indenture. The Company will
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commence an Asset Sale Offer with respect to Excess Proceeds within thirty
Business Days after the date that Excess Proceeds exceed $     million by
mailing the notice required pursuant to the terms of the Indenture, with a copy
to the Trustee. To the extent that the aggregate amount of Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
may use any remaining Excess Proceeds for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased in
the manner described below. Upon completion of any such Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.

The Company will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations to the extent such laws or
regulations are applicable in connection with the repurchase of the Notes
pursuant to an Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of the Indenture,
the Company will comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations described in the Indenture
by virtue thereof.

If more Notes are tendered pursuant to an Asset Sale Offer than the Company is
required to purchase, selection of such Notes for purchase will be made by the
Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which such Notes are listed, or if such Notes are not so
listed, on a pro rata basis, by lot or by such other method as the Trustee shall
deem fair and appropriate (and in such manner as complies with applicable legal
requirements).

Notices of an Asset Sale Offer shall be mailed by first class mail, postage
prepaid, at least 30 but not more than 60 days before the purchase date to each
Holder of Notes at such Holder's registered address. If any Note is to be
purchased in part only, any notice of purchase that relates to such Note shall
state the portion of the principal amount thereof that has been or is to be
purchased.

A new Note in principal amount equal to the unpurchased portion of any Note
purchased in part will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the purchase date unless the
Company defaults in payment of the purchase price, interest shall cease to
accrue on Notes or portions thereof purchased.

Transactions with Affiliates.  The Indenture will provide that the Company will
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, make any payment to, or sell, lease, transfer or otherwise dispose
of any of its properties or assets to, or purchase any property or assets from,
or enter into or make or amend any transaction or series of transactions,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate of the Company (each of the foregoing, an "Affiliate
Transaction") involving aggregate consideration in excess of $     million,
unless:

     (a)  such Affiliate Transaction is on terms that are not materially less
          favorable to the Company or the relevant Restricted Subsidiary than
          those that could have been obtained in a comparable transaction by the
          Company or such Restricted Subsidiary with an unrelated Person; and

     (b)  with respect to any Affiliate Transaction or series of related
          Affiliate Transactions involving aggregate consideration in excess of
          $     million, the Company delivers to the Trustee a resolution
          adopted by the majority of the Board of Directors of the Company,
          approving such Affiliate Transaction and set forth in an Officers'
          Certificate certifying that such Affiliate Transaction complies with
          clause (a) above.

The foregoing provisions will not apply to the following:

     (i)    transactions between or among the Company and/or any of its
            Restricted Subsidiaries;

     (ii)   Permitted Investments and Restricted Payments permitted by the
            provisions of the Indenture described above under the covenant
            "--Limitation on Restricted Payments";

     (iii)   the payment of reasonable and customary fees paid to, and indemnity
             provided on behalf of, officers, directors, employees or
             consultants of the Company or any Restricted Subsidiary;

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(iv)   transactions in which the Company or any of its Restricted
            Subsidiaries, as the case may be, delivers to the Trustee a letter
            from an Independent Financial Advisor stating that such transaction
            is fair to the Company or such Restricted Subsidiary from a
            financial point of view or meets the requirements of clause (a) of
            the preceding paragraph;

     (v)    payments or loans to employees or consultants in the ordinary course
            of business which are approved by a majority of the Board of
            Directors of the Company (or a committee thereof) in good faith;

     (vi)   any agreement as in effect as of the Issue Date or any amendment
            thereto (so long as any such amendment is not disadvantageous to the
            holders of the Notes in any material respect) or any transaction
            contemplated thereby;

     (vii)   the existence of, or the performance by the Company or any of its
             Restricted Subsidiaries of its obligations under the terms of, any
             stockholders agreement (including any registration rights agreement
             or purchase agreement related thereto) to which it is a party as of
             the Issue Date and any similar agreements which it may enter into
             thereafter, provided, however, that the existence of, or the
             performance by the Company or any of its Restricted Subsidiaries of
             its obligations under any future amendment to any such existing
             agreement or under any similar agreement entered into after the
             Issue Date shall only be permitted by this clause (vii) to the
             extent that the terms of any such amendment or new agreement are
             not otherwise disadvantageous to the Holders of the Notes in any
             material respect; and

     (viii)  transactions with customers, clients, suppliers or purchasers or
             sellers of goods or services, in each case in the ordinary course
             of business and otherwise in compliance with the terms of the
             Indenture, which are fair to the Company and its Restricted
             Subsidiaries in the reasonable determination of the Board of
             Directors or the senior management of the Company, or are on terms
             at least as favorable as might reasonably have been obtained at
             such time from an unaffiliated party.

Liens. The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, Incur or
suffer to exist any Lien on any asset or property of the Company or such
Restricted Subsidiary, or any income or profits therefrom, or assign or convey
any right to receive income therefrom, that secures any Indebtedness of the
Company or any of its Subsidiaries (other than Senior Indebtedness) unless the
Notes are equally and ratably secured with (or on a senior basis to, in the case
of Indebtedness subordinated in right of payment to the Notes) the Indebtedness
so secured or until such time as such Indebtedness is no longer secured by a
Lien. The preceding sentence will not require the Company or any Restricted
Subsidiary to secure the Notes if the Lien consists of a Permitted Lien.

The Indenture will provide that no Guarantor will directly or indirectly create,
Incur or suffer to exist any Lien on any asset or property of such Guarantor or
any income or profits therefrom, or assign or convey any right to receive income
therefrom, that secures any Indebtedness of such Guarantor (other than Senior
Indebtedness of such Guarantor) unless the Guarantee of such Guarantor is
equally and ratably secured with (or on a senior basis to, in the case of
Indebtedness subordinated on right of payment to such Guarantor's Guarantee) the
Indebtedness so secured or until such time as such Indebtedness is no longer
secured by a Lien. The preceding sentence will not require any Guarantor to
secure its Guarantee if the Lien consists of a Permitted Lien.

Reports and Other Information. The Indenture will provide that notwithstanding
that the Company may not be subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act or otherwise report on an annual and quarterly
basis on forms provided for such annual and quarterly reporting pursuant to
rules and regulations promulgated by the Commission, the Company will file with
the Commission, documents and reports that are specified in Sections 13 and
15(d) of the Exchange Act within the time periods specified therein; provided,
however, the Company shall not be so obligated to file such documents and other
reports with the Commission if the Commission does not permit such filing, in
which event the

                                       113
Company will make available such information to prospective purchasers of Notes,
in addition to providing such information to the Trustee and the Holders, in
each case within 15 days after the time the Company would be required to file
such information with the Commission if it were subject to Section 13 or 15(d)
of the Exchange Act.

Future Guarantors. The Indenture will provide that the Company will cause each
Restricted Subsidiary organized under the laws of the United States of America
or any state or territory thereof that has Total Assets of more than $500,000 to
execute and deliver to the Trustee a supplemental indenture pursuant to which
such Subsidiary will guarantee payment of the Notes. Each Guarantee will be
limited to an amount not to exceed the maximum amount that can be guaranteed by
that Subsidiary without rendering the Guarantee, as it relates to such
Subsidiary, voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer or similar laws affecting the rights of creditors generally.

MERGER, CONSOLIDATION, OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS

The Indenture will provide that the Company may not consolidate or merge with or
into or wind up into (whether or not the Company is the surviving corporation),
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions, to any Person unless (i) the Company is the surviving corporation
or the Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease, conveyance
or other disposition will have been made is a corporation, partnership or
limited liability company organized or existing under the laws of the United
States, any state thereof, the District of Columbia, or any territory thereof
(the Company or such Person, as the case may be, being herein called the
"Successor Company"); (ii) the Successor Company (if other than the Company)
expressly assumes all the obligations of the Company under the Indenture and the
Notes pursuant to a supplemental indenture or other documents or instruments in
form reasonably satisfactory to the Trustee; (iii) immediately after giving
effect to such transaction (and treating any Indebtedness which becomes an
obligation of the Successor Company or any of its Restricted Subsidiaries as a
result of such transaction as having been Incurred by the Successor Company or
such Restricted Subsidiary at the time of such transaction) no Default or Event
of Default shall have occurred and be continuing; (iv) immediately after giving
pro forma effect to such transaction, as if such transaction had occurred at the
beginning of the applicable four-quarter period, either (A) the Successor
Company would be permitted to Incur at least $1.00 of additional Indebtedness
pursuant to the Leverage Ratio test set forth in the first sentence of the
covenant described under "--Limitations on Incurrence of Indebtedness and
Issuance of Disqualified Stock and Preferred Stock" or (B) the Leverage Ratio
for the Successor Company and its Restricted Subsidiaries would be less than or
equal to such ratio for the Company and its Restricted Subsidiaries immediately
prior to such transaction; (v) each Guarantor, unless it is the other party to
the transactions described above, shall have by supplemental indenture confirmed
that its Guarantee shall apply to the Successor Company's obligations under the
Indenture and the Notes; and (vi) the Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture (if any)
comply with the Indenture. The Successor Company will succeed to, and be
substituted for, the Company under the Indenture and the Notes. Notwithstanding
the foregoing clauses (iii) and (iv), (a) any Restricted Subsidiary may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company or to another Restricted Subsidiary and (b) the Company
may merge with an Affiliate incorporated solely for the purpose of
reincorporating the Company in another state of the United States or changing
the form of organization of the Company to a corporation, partnership or limited
liability company so long as the amount of Indebtedness of the Company and its
Restricted Subsidiaries is not increased thereby.

The Indenture will further provide that, subject to certain limitations
described in the Indenture governing release of a Guarantee upon the sale or
disposition of a Guarantor, each Guarantor will not, and the Company will not
permit a Guarantor to, consolidate or merge with or into or wind up into
(whether or not such Guarantor is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, any Person unless

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(i) such Guarantor is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than such Guarantor) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
will have been made is a corporation, partnership or limited liability company
organized or existing under the laws of the United States, any state thereof,
the District of Columbia, or any territory thereof (such Guarantor or such
Person, as the case may be, being herein called the "Successor Guarantor"); (ii)
the Successor Guarantor (if other than such Guarantor) expressly assumes all the
obligations of such Guarantor under the Indenture and such Guarantor's Guarantee
pursuant to a supplemental indenture or other documents or instruments in form
reasonably satisfactory to the Trustee; (iii) immediately after giving effect to
such transaction (and treating any Indebtedness which becomes an obligation of
the Successor Guarantor or any of its Subsidiaries as a result of such
transaction as having been Incurred by the Successor Guarantor or such
Subsidiary at the time of such transaction) no Default or Event of Default shall
have occurred and be continuing; and (iv) the Guarantor shall have delivered or
caused to be delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture (if any) comply with the Indenture. Subject to certain
limitations described in the Indenture, the Successor Guarantor will succeed to,
and be substituted for, such Guarantor under the Indenture and such Guarantor's
Guarantee. Notwithstanding the foregoing clause (iii), a Guarantor may merge
with an Affiliate incorporated solely for the purpose of reincorporating such
Guarantor in another state of the United States or changing the form of
organization of the Guarantor to a corporation, partnership or limited liability
company so long as the amount of Indebtedness of the Guarantor is not increased
thereby.

DEFAULTS

An Event of Default will be defined in the Indenture as

     (i)    a default in any payment of interest on any Note when due, whether
            or not prohibited by the provisions described under--Ranking" above,
            continued for 30 days, subject to the interest deferral provisions
            contained in the Indenture; provided, however, that a default in any
            payment of interest on the Note required to be made on (x)
                      , 2009, and (y) any interest payment date after
                      , 2009, at a time when interest deferral would be
            prohibited under the Indenture shall immediately constitute an Event
            of Default (without regard to the length of time for which such
            default continues),

     (ii)   a default in the payment of principal or premium, if any, of any
            Note when due at its Stated Maturity, upon optional redemption, upon
            required repurchase, upon declaration or otherwise, whether or not
            such payment is prohibited by the provisions described under
            "--Ranking" above,

     (iii)   the failure by the Company to comply with its obligations under the
             covenant described under "--Merger, Consolidation or Sale of All or
             Substantially All Assets" above,

     (iv)   the failure by the Company to comply for 30 days after notice with
            any of its obligations under the covenants described under "--Change
            of Control" above (other than a failure to purchase Notes),

     (v)    the failure by the Company to comply for 60 days after notice with
            its other agreements contained in the Notes or the Indenture,

     (vi)   the failure by the Company or any Significant Subsidiary to pay any
            Indebtedness (other than Indebtedness owing to the Company or a
            Restricted Subsidiary) within any applicable grace period after
            final maturity or the acceleration of any such Indebtedness by the
            holders thereof because of a default if the total amount of such
            Indebtedness unpaid or accelerated exceeds $     million or its
            foreign currency equivalent (the "cross acceleration provision"),

     (vii)   certain events of bankruptcy, insolvency or reorganization of the
             Company or a Significant Subsidiary (the "bankruptcy provisions"),

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(viii)  the rendering of any judgment or decree for the payment of money
             (other than judgments which are covered by enforceable insurance
             policies issued by solvent carriers) in excess of $ million or its
             foreign currency equivalent against the Company or a Significant
             Subsidiary if (A) an enforcement proceeding thereon is commenced
             and not discharged or stayed within 60 days thereafter or (B) such
             judgment or decree remains outstanding for a period of 60 days
             following such judgment and is not discharged, waived or stayed
             (the "judgment default provision"),

     (ix)   any Guarantee ceases to be in full force and effect, except as
            contemplated by the terms thereof, or any Guarantor denies or
            disaffirms its obligations under the Indenture or any Guarantee and
            the Default continues for 10 Business Days, or

     (x)   the Company pays any dividend on shares of the Company's common stock
           (A) during any interest deferral period or so long as any deferred
           interest and accrued interest thereon has not been paid in full, or
           (B) when, based on the then-available financial statements presented
           to the board of directors, such dividend exceeds the amount available
           to be paid pursuant to clause (c) or clauses (1) through (10) of the
           "Limitation on Restricted Payments" covenant.

The foregoing will constitute Events of Default whatever the reason for any such
Event of Default and whether it is voluntary or involuntary or is effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.

However, a default under clauses (iv) or (v) will not constitute an Event of
Default until the Trustee or the Holders of 25% in principal amount of the
outstanding Notes notify the Company of the default and the Company does not
cure such default within the time specified in clauses (iv) and (v) hereof after
receipt of such notice.

If an Event of Default (other than a Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company) occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the outstanding Notes by notice to the Company may declare the principal of,
premium, if any, and accrued but unpaid interest on all the Notes to be due and
payable. Upon such a declaration, such principal, premium and interest will be
due and payable immediately. If an Event of Default relating to certain events
of bankruptcy, insolvency or reorganization of the Company occurs, the principal
of, premium, if any, and interest on all the Notes will become immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holders. Under certain circumstances, the Holders of a majority in principal
amount of the outstanding Notes may rescind any such acceleration with respect
to the Notes and its consequences.

In the event of a declaration of acceleration of the Notes because an Event of
Default has occurred and is continuing as a result of the acceleration of any
Indebtedness described in the cross acceleration provision, the declaration of
acceleration of the Notes shall be automatically annulled if the holders of all
Indebtedness described in the cross acceleration provision have rescinded the
declaration of acceleration in respect of such Indebtedness within 30 Business
Days of the date of such declaration, and if the annulment of the acceleration
of the Notes would not conflict with any judgment or decree of a court of
competent jurisdiction, and all existing Events of Default, except non-payment
of principal or interest on the Notes that became due solely because of the
acceleration of the Notes, have been cured or waived.

Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Notes unless (i) such Holder has
previously given the Trustee notice that an Event of Default is continuing, (ii)
Holders of at least 25% in principal amount of the outstanding Notes have
requested the Trustee to pursue the remedy, (iii) such Holders have offered the
Trustee reasonable security or indemnity against any loss, liability or expense,
(iv) the Trustee has not

                                       116
complied with such request within 60 days after the receipt of the request and
the offer of security or indemnity, and (v) the Holders of a majority in
principal amount of the outstanding Notes have not given the Trustee a direction
inconsistent with such request within such 60-day period. Subject to certain
restrictions, the Holders of a majority in principal amount of the outstanding
Notes are given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other Holder or that would
involve the Trustee in personal liability. Prior to taking any action under the
Indenture, the Trustee will be entitled to indemnification satisfactory to it in
its sole discretion against all losses and expenses caused by taking or not
taking such action.

The Indenture will provide that if a Default occurs and is continuing and is
actually known to the Trustee, the Trustee must mail to each Holder notice of
the Default within the earlier of 90 days after it occurs or 30 days after it is
actually known to a Trust Officer or written notice of it is received by the
Trustee. Except in the case of a Default in the payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold notice if and
so long as a committee of its Trust Officers in good faith determines that
withholding notice is in the interests of the Noteholders. In addition, the
Company is required to deliver, to the Trustee, within 120 days after the end of
each fiscal year, a certificate indicating whether the signers thereof know of
any Event of Default that occurred during the previous year. The Company also is
required to deliver to the Trustee, within 30 days after the occurrence thereof,
written notice of any event which would constitute certain Defaults, their
status and what action the Company is taking or proposes to take in respect
thereof.

AMENDMENTS AND WAIVERS

Subject to certain exceptions, the Indenture may be amended with the consent of
the Holders of a majority in principal amount of the Notes then outstanding of
all series affected by such amendment and any past default or compliance with
any provisions may be waived with the consent of the Holders of a majority in
principal amount of the Notes of all series affected by such amendment then
outstanding. However, without the consent of each Holder of an outstanding Note
affected, no amendment may, among other things, (i) reduce the amount of Notes
whose Holders must consent to an amendment, (ii) reduce the rate of or extend
the time for payment of interest on any Note, (iii) reduce the principal of or
extend the Stated Maturity of any Note, (iv) reduce the premium payable upon the
redemption of any Note or change the time at which any Note may be redeemed as
described under "Optional Redemption" above, (v) make any Note payable in money
other than that stated in the Note, (vi) make any change to the subordination
provisions of the Indenture that adversely affects the rights of any Holder,
(vii) impair the right of any Holder to receive payment of principal of,
premium, if any, and interest on such Holder's Notes on or after the due dates
therefor or to institute suit for the enforcement of any payment on or with
respect to such Holder's Notes, (viii)(A) make any change to the provisions of
the indenture that prohibit the payment of dividends while interest is being
deferred, while any previously deferred interest remains unpaid or during the
continuance of any Default or Event of Default or (B) waive an Event of Default
under clause (x) of "Defaults" (in each case except in connection with an offer
by the Company to purchase all of the Notes, in which case a majority in
principal amount of Notes will be sufficient), (ix) make any change in the
amendment provisions which require each Holder's consent or in the waiver
provisions or (x) modify the Guarantees in any manner adverse to the Holders.

Without the consent of any Holder, the Company and Trustee may amend the
Indenture to cure any ambiguity, omission, defect or inconsistency, to provide
for the assumption by a successor corporation, partnership or limited liability
company of the obligations of the Company under the Indenture, to provide for
uncertificated Notes in addition to or in place of certificated Notes (provided
that the uncertificated Notes are issued in registered form for purposes of
Section 163(f) of the Internal Revenue Code, or in a manner such that the
uncertificated Notes are described in Section l63(f)(2)(B) of the Internal
Revenue Code), to add Guarantees with respect to the Notes, to secure the Notes,
to add to the covenants of the Company for the benefit of the Holders or to
surrender any right or power conferred upon the Company,

                                       117
to make any change that does not adversely affect the rights of any Holder, to
comply with any requirement of the Commission in connection with the
qualification of the Indenture under the Trust Indenture Act of 1939 or to make
certain changes to the Indenture to provide for the issuance of Additional
Notes. However, no amendment may be made to the subordination provisions of the
Indenture that adversely affects the rights of any holder of Senior Indebtedness
then outstanding unless the holders of such Senior Indebtedness (or any group or
representative thereof authorized to give a consent) consent to such change.

The consent of the Noteholders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.

After an amendment under the Indenture becomes effective, the Company is
required to mail to Noteholders a notice briefly describing such amendment.
However, the failure to give such notice to all Noteholders, or any defect
therein, will not impair or affect the validity of the amendment.

Under the terms of the Credit Agreement, we will not be permitted to effect any
amendment or modification if the effect would be to (i) increase the interest
rate applicable to the Notes or any deferred interest on the Notes, (ii) change
to an earlier date the scheduled dates of payment on any component of principal,
interest or other amounts on the Notes, (iii) increase principal repayments or
amortization payments on the Notes, (iv) alter the redemption, prepayment or
subordination provisions of the Notes, (v) add to or alter the covenants
(including, without limitation, the financial covenants), defaults and Events of
Defaults set forth in the Indenture in a manner that would make such provisions
more onerous or restrictive to the Company, or (vi) otherwise increase the
obligations of the Company or any Guarantor in respect of the Notes, the
deferred interest on the Notes or confer additional rights upon the holders
thereof which individually or in the aggregate would be adverse to the Company,
any Guarantor or the lenders of the Senior Lender Indebtedness.

DEFEASANCE

The Company at any time may terminate all its obligations under the Notes and
the Indenture ("legal defeasance"), except for certain obligations, including
those respecting the defeasance trust and obligations to register the transfer
or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes
and to maintain a registrar and paying agent in respect of the Notes. The
Company at any time may terminate its obligations under the covenants described
under "Certain Covenants" and "Change of Control," the operation of the cross
acceleration provision, the bankruptcy provisions with respect to Subsidiaries
and the judgment default provision described under "-- Defaults" above and the
limitations contained in clause (iv) of the first paragraph under "Merger,
Consolidation or Sale of All or Substantially All Assets" above ("covenant
defeasance"). If the Company exercises its legal defeasance option or its
covenant defeasance option, each Guarantor will be released from all of its
obligations with respect to its Guarantee.

The Company may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option. If the Company exercises its legal
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iv), (vi), (vii) with respect only to
Significant Subsidiaries or (viii) with respect only to Significant Subsidiaries
under "-- Defaults" above or because of the failure of the Company to comply
with clause (iv) of the first paragraph under "-- Merger, Consolidation or Sale
of All or Substantially All Assets" above.

In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium (if any) and
interest on the Notes to redemption or maturity, as the case may be, and must
comply with certain other conditions, including (i) delivery to the Trustee of
an Opinion of Counsel to the effect that holders of the Notes will not recognize
income, gain or loss for U.S. federal income tax purposes as a result of such
deposit and defeasance and will be subject to U.S. federal income tax on the
same amount and in the same manner and at the same times as would have been the
case if such deposit
                                       118
and defeasance had not occurred (and, in the case of legal defeasance only, such
Opinion of Counsel must be based on a ruling of the Internal Revenue Service or
other change in applicable U.S. federal income tax law) and (ii) so long as, on
the date or dates the respective amounts were paid into the trust, such payments
were made with respect to the Notes without violating the subordination
provisions of the Indenture or any other material agreement binding on the
Company (except for violations of the Indenture as a result of the borrowing of
funds to be applied to such payments), including the Credit Facilities.

SATISFACTION AND DISCHARGE

The Indenture will be discharged and will cease to be of further effect as to
all Notes issued thereunder, when:

(1) either:

     (a)  all Notes that have been authenticated (except lost, stolen or
          destroyed Notes that have been replaced or paid and Notes for whose
          payment money has theretofore been deposited in trust and thereafter
          repaid to the Company) have been delivered to the Trustee for
          cancellation; or

     (b)  all Notes that have not been delivered to the Trustee for cancellation
          have become due and payable by reason of the making of a notice of
          redemption or otherwise or will become due and payable within one year
          and the Company or any Guarantor has irrevocably deposited or caused
          to be deposited with the Trustee as trust funds in trust solely for
          the benefit of the Holders, Cash Equivalents, Investment Grade
          Securities, or a combination thereof, in such amounts as will be
          sufficient without consideration of any reinvestment of interest, to
          pay and discharge the entire indebtedness on the Notes not delivered
          to the Trustee for cancellation for principal, premium and additional
          interest, if any, and accrued interest to the date of maturity or
          redemption;

(2)  no Event of Default (other than one resulting solely from the borrowing of
     funds to provide such deposit) shall have occurred and be continuing on the
     date of such deposit or shall occur as a result of such deposit and such
     deposit will not result in a breach or violation of, or constitute a
     default under, any other instrument to which the Company or any Guarantor
     is a party or by which the Company or any Guarantor is bound;

(3)  the Company or any Guarantor has paid or caused to be paid all sums payable
     by it under the Indenture; and

(4)  the Company has delivered irrevocable instructions to the Trustee under the
     Indenture to apply the deposited money toward the payment of the Notes at
     maturity or the redemption date, as the case may be.

CONCERNING THE TRUSTEE

          is to be the Trustee under the Indenture.

GOVERNING LAW

The Indenture will provide that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York.

CERTAIN DEFINITIONS

"Acquired Indebtedness" means, with respect to any specified Person:

     (i)   Indebtedness of any other Person existing at the time such other
           Person is merged with or into or becomes a Restricted Subsidiary of
           such specified Person; and

     (ii)   Indebtedness secured by a Lien encumbering any asset acquired by
            such specified Person,

                                       119
in each case, other than Indebtedness Incurred as consideration in, in
contemplation of, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a Restricted
Subsidiary or was otherwise acquired by such Person, or such asset was acquired
by such person, as applicable.

"Adjusted EBITDA" means, with respect to any Person for any period, the
Consolidated Net Income of such Person for such period plus, without
duplication:

     (i)   provision for taxes based on income or profits of such Person for
           such period deducted in computing Consolidated Net Income, plus

     (ii)   Consolidated Interest Expense (plus amortization of deferred
            financing fees) of such Person for such period to the extent the
            same was deducted in computing Consolidated Net Income, plus

     (iii)  Consolidated Depreciation and Amortization Expense of such Person
            for such period to the extent such Consolidated Depreciation and
            Amortization Expense was deducted in computing Consolidated Net
            Income, plus

     (iv)   any non-recurring fees, expenses or charges deducted in such period
            in computing Consolidated Net Income, plus

     (v)   any other non-cash charges reducing Consolidated Net Income for such
           period (excluding any such charge which requires an accrual of, or
           cash reserve for, anticipated cash charges for any future period).

Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization of, a Subsidiary of the
Company shall be added to Consolidated Net Income to compute Adjusted EBITDA
only to the extent (and in the same proportion) that the Net Income of such
Subsidiary was included in calculating Consolidated Net Income.

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.

"Asset Sale" means:

     (i)   the sale, conveyance, transfer or other disposition (whether in a
           single transaction or a series of related transactions) of property
           or assets (including by way of a Sale/Leaseback Transaction) of the
           Company or any Restricted Subsidiary not in the ordinary course of
           business (each referred to in this definition as a "disposition"); or

     (ii)  the issuance or sale of Equity Interests of any Restricted Subsidiary
           (other than to the Company or another Restricted Subsidiary) (whether
           in a single transaction or a series of related transactions), in each
           case other than:

        (1)  a disposition of Cash Equivalents or Investment Grade Securities or
             obsolete or worn out equipment in the ordinary course of business;

        (2)  the disposition of all or substantially all of the assets of the
             Company in a manner permitted pursuant to the provisions described
             above under "--Merger, Consolidation or Sale of All or
             Substantially All Assets" or any disposition that constitutes a
             Change of Control;

        (3)  any Restricted Payment or Permitted Investment that is permitted to
             be made, and is made, under the covenant described above under
             "Limitation on Restricted Payments";

                                       120
(4)  any disposition of assets with an aggregate Fair Market Value of
             less than $          million;

        (5)  any disposition of property or assets by a Restricted Subsidiary to
             the Company or by the Company or a Restricted Subsidiary to a
             Restricted Subsidiary;

        (6)  any exchange of like-kind property pursuant to Section 1031 of the
             Internal Revenue Code of 1986, as amended, for use in a Similar
             Business;

        (7)  sales of assets received by the Company upon the foreclosure on a
             Lien;

        (8)  any sale of Equity Interests in, or Indebtedness or other
             securities of, an Unrestricted Subsidiary;

        (9)  licenses of intellectual property;

        (10)  any disposition of Designated Noncash Compensation; and

        (11)  sales of inventory in the ordinary course of business consistent
              with past practices and sales of equipment upon termination of a
              contract with a client entered into in the ordinary course of
              business pursuant to the terms of such contract.

"Base Dividend Restricted Payments Basket" shall initially equal $0, provided,
however, that if during any fiscal quarter the Company has paid dividends on the
Company's Common Stock in an aggregate amount that is less than the Quarterly
Base Dividend Level for such quarter, an amount equal to the difference between
(i) the Quarterly Base Dividend Level for such quarter and (ii) the aggregate
amount of dividends actually paid on the Company's Common Stock during such
quarter shall be added to the Base Dividend Restricted Payments Basket as of the
last day of such fiscal quarter.

"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.

"Borrowing Base" means the product of (i) Adjusted EBITDA for the most recent
four fiscal quarters for which internal financial statements are available and
(ii) three.

"Business Day" means a day other than a Saturday, Sunday or other day on which
banking institutions in New York State are authorized or required by law to
close.

"Capitalized Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized and reflected as a liability on a
balance sheet (excluding the footnotes thereto) in accordance with GAAP.

"Capital Expenditures" means any expenditure required to be classified as a
capital expenditure in accordance with GAAP.

"Capital Stock" means:

     (i)   in the case of a corporation, corporate stock, including, without
           limitation, corporate stock represented by IDSs and corporate stock
           outstanding upon the separation of IDSs into the securities
           represented thereby;

     (ii)   in the case of an association or business entity, any and all
            shares, interests, participations, rights or other equivalents
            (however designated) of corporate stock;

     (iii)  in the case of a partnership or limited liability company,
            partnership or membership interests (whether general or limited);
            and

     (iv)   any other interest or participation that confers on a Person the
            right to receive a share of the profits and losses of, or
            distributions of assets of, the issuing Person.

                                       121
"Cash Equivalents" means:

     (i)    U.S. dollars and foreign currency exchanged into U.S. dollars within
            180 days;

     (ii)   securities issued or directly and fully guaranteed or insured by the
            United States government or any agency or instrumentality thereof;

     (iii)   certificates of deposit, time deposits and eurodollar time deposits
             with maturities of one year or less from the date of acquisition,
             bankers' acceptances with maturities not exceeding one year and
             overnight bank deposits, in each case with any commercial bank
             having capital and surplus in excess of $500.0 million and whose
             long-term debt is rated at least "A" or the equivalent thereof by
             Moody's or S&P;

     (iv)   repurchase obligations for underlying securities of the types
            described in clauses (ii) and (iii) above entered into with any
            financial institution meeting the qualifications specified in clause
            (iii) above;

     (v)    commercial paper issued by a corporation (other than an Affiliate of
            the Company) rated at least "A-2" or the equivalent thereof by
            Moody's or S&P and in each case maturing within one year after the
            date of acquisition;

     (vi)   investment funds investing at least 95% of their assets in
            securities of the types described in clauses (i) through (v) above;

     (vii)   readily marketable direct obligations issued by any state of the
             United States of America or any political subdivision thereof
             having one of the two highest rating categories obtainable from
             either Moody's or S&P; and

     (viii)  Indebtedness or preferred stock issued by Persons with a rating of
             "A" or higher from S&P or "A-2" or higher from Moody's.

"Company" means Valor Communications Group, Inc. until a successor replaces it
and, thereafter, means the successor and, for purposes of any provision
contained in the Indenture and required by the Trust Indenture Act, each other
obligor on the Notes.

"Consolidated Depreciation and Amortization Expense" means with respect to any
Person for any period, the total amount of depreciation and amortization expense
of such Person and its Restricted Subsidiaries for such period on a consolidated
basis and otherwise determined in accordance with GAAP.

"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum, without duplication, of: (i) consolidated interest expense of
such Person and its Restricted Subsidiaries for such period, to the extent such
expense was deducted in computing Consolidated Net Income (including
amortization of original issue discount, the interest component of Capitalized
Lease Obligations (or any financing lease which has substantially the same
economic effect as a Capitalized Lease Obligation) and net payments and receipts
(if any) pursuant to Hedging Obligations and excluding amortization of deferred
financing fees), (ii) consolidated capitalized interest of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and (iii) the
earned discount or yield with respect to the sale of receivables.

"Consolidated Net Income" means, with respect to any Person for any period, the
aggregate of the Net Income of such Person and its Restricted Subsidiaries for
such period, on a consolidated basis; provided, however, that:

     (i)  any net after-tax extraordinary gains or losses (less all fees and
          expenses relating thereto) shall be excluded;

     (ii) any increase in amortization or depreciation resulting from purchase
          accounting in relation to any acquisition that is consummated after
          the Issue Date, net of taxes, shall be excluded;

                                       122
(iii) the Net Income for such period shall not include the cumulative
           effect of a change in accounting principles during such period;

     (iv) any net after-tax income or loss from discontinued operations and any
          net after-tax gains or losses on disposal of discontinued operations
          shall be excluded;

     (v)  any net after-tax gains or losses (less all fees and expenses relating
          thereto) attributable to asset dispositions other than in the ordinary
          course of business (as determined in good faith by the Board of
          Directors) shall be excluded; and

     (vi) the Net Income for such period of any Person that is not a Subsidiary
          of such Person, or is an Unrestricted Subsidiary, or that is accounted
          for by the equity method of accounting, shall be included only to the
          extent of the amount of dividends or distributions or other payments
          paid in cash (or to the extent converted into cash) to the referent
          Person or a Restricted Subsidiary thereof in respect of such period.

"Continuing Directors" means, as of any date of determination, any member of the
Company's Board of Directors who:

     (i) was a member of the Company's Board of Directors on the date of the
         Indenture; or

     (ii) was nominated for election or elected to the Board of Directors with
          the affirmative vote of at least a majority of the Continuing
          Directors who were members of the Company's Board of Directors at the
          time of the nomination or election.

"Contribution Indebtedness" means Indebtedness of the Company in an aggregate
principal amount not greater than the amount of all Specified Cash
Contributions, provided that such Contribution Indebtedness (i) has a Stated
Maturity later than the Stated Maturity of the Notes, (ii) is Incurred
substantially concurrently with such Specified Cash Contributions, and (iii) is
so designated as Contribution Indebtedness pursuant to an Officers' Certificate
on the Incurrence date thereof.

"Credit Agreement" means the credit agreement to be dated as of           ,
2004, as amended, restated, supplemented, waived, replaced, restructured,
repaid, increased, refunded, refinanced or otherwise modified from time to time
(whether or not terminated and whether    with the original lenders or
otherwise), among the Company, the Subsidiaries of the Company named therein,
the financial institutions from time to time a party thereto and      , as
Administrative Agent, Fronting Bank and Swingline Lender, including any
successor or replacement facility extending the maturity thereof or otherwise
restructuring all or any portion of the Indebtedness under such agreement or
increasing the amount of available borrowings thereunder (except to the extent
that any such amendment, restatement, supplement, waiver, replacement,
refunding, refinancing or other modification thereto would be prohibited by the
terms of the Indenture, unless otherwise agreed to by the Holders of at least a
majority in aggregate principal amount of Notes at the time outstanding).

"Credit Facilities" means, one or more debt facilities (including, without
limitation, the Credit Agreement and indentures or debt securities) or
commercial paper facilities, in each case with banks or other institutional
lenders providing for revolving credit loans, term debt, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time, including any
refunding, replacement or refinancing thereof through the issuance of debt
securities.

"Default" means any event which is, or after notice or passage of time or both
would be, an Event of Default.

"Designated Noncash Consideration" means the Fair Market Value of noncash
consideration received by the Company or one of its Restricted Subsidiaries in
connection with an Asset Sale that is so designated as Designated Noncash
Consideration pursuant to an Officers' Certificate, setting forth the basis of
such

                                       123
valuation, less the amount of Cash Equivalents received in connection with a
subsequent sale of such Designated Noncash Consideration.

"Designated Preferred Stock" means Preferred Stock of the Company (other than
Disqualified Stock) that is issued (other than to a Subsidiary of the Company or
an employee stock ownership plan or trust established by the Company or any of
its Subsidiaries) and is so designated as Designated Preferred Stock, pursuant
to an Officers' Certificate, on the issuance date thereof, the proceeds of which
are excluded from the calculation set forth in clause (c) of the covenant
described under "--Limitation on Restricted Payments."

"Designated Senior Indebtedness" means (i) the Senior Lender Indebtedness and
(ii) any other Senior Indebtedness of the Company with a principal amount in
excess of $25 million.

"Disqualified Stock" means, with respect to any Person, any Capital Stock of
such Person which, by its terms (or by the terms of any security into which it
is convertible or for which it is redeemable or exchangeable), or upon the
happening of any event;

     (i)  matures or is mandatorily redeemable, pursuant to a sinking fund
          obligation or otherwise;

     (ii) is convertible or exchangeable for Indebtedness or Disqualified Stock;
          or

     (iii) is redeemable at the option of the holder thereof, in whole or in
           part, in each case prior to the first anniversary of the maturity
           date of the Notes;

provided, however, that only the portion of Capital Stock which so matures or is
mandatorily redeemable, is so convertible or exchangeable or is so redeemable at
the option of the holder thereof prior to such dates shall be deemed to be
Disqualified Stock; provided further, however, that if such Capital Stock is
issued to any employee or to any plan for the benefit of employees of the
Company or its Subsidiaries or by any such plan to such employees, such Capital
Stock shall not constitute Disqualified Stock solely because it may be required
to be repurchased by the Company in order to satisfy applicable statutory or
regulatory obligations or as a result of such employee's termination, death or
disability. Notwithstanding clause (iii) of this definition, any Capital Stock
that would constitute Disqualified Stock solely because the holders thereof have
the right to require the Company to repurchase such Capital Stock upon the
occurrence of a change of control or an asset sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with the covenant described above
under the caption "--Certain Covenants--Restricted Payments."

"Equity Interests" means Capital Stock and all warrants, options or other rights
to acquire Capital Stock (but excluding any debt security that is convertible
into, or exchangeable for, Capital Stock).

"Excess Cash" shall mean, with respect to any period, Adjusted EBITDA minus the
sum of (i) cash interest expense, (ii) cash income tax expense and (iii) Capital
Expenditures (except to the extent financed with an incurrence of indebtedness),
in each case, for such period.

"Excluded Contributions" means the net proceeds received by the Company after
the Issue Date from (i) contributions to its common equity capital and (ii) the
sale (other than to a Subsidiary of the Company or to any Company or Subsidiary
management equity plan or stock incentive plan or any other management or
employee benefit plan or agreement) of Capital Stock (other than Disqualified
Stock and Designated Preferred Stock) of the Company, in each case designated as
Excluded Contributions pursuant to an Officers' Certificate executed by an
Officer of the Company, the proceeds of which are excluded from the calculation
set forth in clause (c) of the first paragraph of the "--Limitation on
Restricted Payments" covenant.

"Fair Market Value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction.

                                       124
"GAAP" means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date. For the purposes of the
Indenture, the term "consolidated" with respect to any Person shall mean such
Person consolidated with its Restricted Subsidiaries, and shall not include any
Unrestricted Subsidiary, but the interest of such Person in an Unrestricted
Subsidiary will be accounted for as an Investment.

"guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness or other obligations.

"Guarantee" means any guarantee of the obligations of the Company under the
Indenture and the Notes by any Person in accordance with the provisions of the
Indenture.

"Guarantor" means any Person that Incurs a Guarantee; provided that upon the
release or discharge of such Person from its Guarantee in accordance with the
Indenture, such Person ceases to be a Guarantor.

"Hedging Obligations" means, with respect to any Person, the obligations of such
Person under (i) currency exchange, interest rate or commodity swap agreements,
currency exchange, interest rate or commodity cap agreements and currency
exchange, interest rate or commodity collar agreements and (ii) other agreements
or arrangements designed to protect such Person against fluctuations in currency
exchange, interest rates or commodity prices.

"Holder" or "Noteholder" means the Person in whose name a Note is registered on
the Registrar's books.

"IDS" means the Company's Income Deposit Securities, whether currently
outstanding or as may be issued from time to time.

"Incur" means issue, assume, guarantee, incur or otherwise become liable for;
provided, however, that any Indebtedness or Capital Stock of a Person existing
at the time such person becomes a Subsidiary (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be Incurred by such person at the
time it becomes a Subsidiary.

"Indebtedness" means, with respect to any Person:

     (i)  the principal and premium (if any) of any indebtedness of such Person,
          whether or not contingent:

     (1)  in respect of borrowed money;

     (2)  evidenced by bonds, notes, debentures or similar instruments or
          letters of credit or bankers' acceptances (or, without duplication,
          reimbursement agreements in respect thereof);

     (3)  representing the deferred and unpaid purchase price of any property,
          except any such balance that constitutes a trade payable or similar
          obligation to a trade creditor or an accrued expense;

     (4)  in respect of Capitalized Lease Obligations; or

     (5)  representing any Hedging Obligations,

if and to the extent that any of the foregoing Indebtedness (other than letters
of credit and Hedging Obligations) would appear as a liability on a balance
sheet (excluding the footnotes thereto) of such Person prepared in accordance
with GAAP;

     (ii)   to the extent not otherwise included, any obligation of such Person
            to be liable for, or to pay, as obligor, guarantor or otherwise, on
            the Indebtedness of another Person (other than by endorsement of
            negotiable instruments for collection in the ordinary course of
            business); and

                                       125
(iii)  to the extent not otherwise included, Indebtedness of another Person
            secured by a Lien on any asset owned by such Person (whether or not
            such Indebtedness is assumed by such Person); provided, however,
            that the amount of such Indebtedness will be the lesser of (a) the
            Fair Market Value of such asset at such date of determination and
            (b) the amount of such Indebtedness of such other Person; provided,
            further, that any obligation of the Company or any Restricted
            Subsidiary in respect of (i) minimum guaranteed commissions, or
            other similar payments, to clients, minimum returns to clients or
            stop loss limits in favor of clients or indemnification obligations
            to clients, in each case pursuant to contracts to provide services
            to clients entered into in the ordinary course of business, and (ii)
            account credits to participants under the LTIP or any successor or
            similar compensation plan, shall be deemed not to constitute
            Indebtedness.

"Independent Financial Advisor" means an accounting, appraisal or investment
banking firm or consultant to Persons engaged in a similar business of
nationally recognized standing that is, in the good faith determination of the
Company, qualified to perform the task for which it has been engaged.

"Investment Grade Securities" means:

     (i)   securities issued or directly and fully guaranteed or insured by the
           United States government or any agency or instrumentality thereof
           (other than Cash Equivalents);

     (ii)   debt securities or debt instruments with a rating of BBB- or higher
            by S&P or Baa3 or higher by Moody's or the equivalent of such rating
            by such rating organization, or if no rating of S&P or Moody's then
            exists, the equivalent of such rating by any other nationally
            recognized securities rating agency, but excluding any debt
            securities or instruments constituting loans or advances among the
            Company and its Subsidiaries; and

     (iii)  investments in any fund that invests exclusively in investments of
            the type described in clauses (i) and (ii) which fund may also hold
            cash.

"Investments" means, with respect to any Person, all investments by such Person
in other Persons (including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding accounts receivable,
trade credit and advances to customers and commission, travel and similar
advances to officers, employees and consultants made in the ordinary course of
business), purchases or other acquisitions for consideration (including
agreements providing for the adjustment of purchase price) of Indebtedness,
Equity Interests or other securities issued by any other Person and investments
that are required by GAAP to be classified on the balance sheet of the Company
in the same manner as the other investments included in this definition to the
extent such transactions involve the transfer of cash or other property.

For purposes of the definition of "Unrestricted Subsidiary" and the covenant
described under "Limitation on Restricted Payments":

     (i)   "Investments" shall include the portion (proportionate to the
           Company's equity interest in such Subsidiary) of the Fair Market
           Value of the net assets of a Subsidiary of the Company at the time
           that such Subsidiary is designated an Unrestricted Subsidiary;
           provided, however, that upon a redesignation of such Subsidiary as a
           Restricted Subsidiary, the Company shall be deemed to continue to
           have a permanent "Investment" in an Unrestricted Subsidiary equal to
           an amount (if positive) equal to (x) the Company's "Investment" in
           such Subsidiary at the time of such redesignation less (y) the
           portion (proportionate to the Company's equity interest in such
           Subsidiary) of the Fair Market Value of the net assets of such
           Subsidiary at the time of such redesignation; and

     (ii)  any property transferred to or from an Unrestricted Subsidiary shall
           be valued at its Fair Market Value at the time of such transfer, in
           each case as determined in good faith by the Board of Directors.

"Issue Date" means the date on which the Notes are authenticated.
                                       126
"Leverage Ratio" means, with respect to any Person for any period, the ratio of
Net Debt of such Person at the end of such period to the Adjusted EBITDA of such
Person for such period. In the event that the Company or any of its Restricted
Subsidiaries Incurs or redeems any Indebtedness or issues or redeems Preferred
Stock subsequent to the end of the period for which the Leverage Ratio is being
calculated but prior to the event for which the calculation of the Leverage
Ratio is made (the "Calculation Date"), then the Leverage Ratio shall be
calculated giving pro forma effect to such Incurrence or redemption of
Indebtedness, or such issuance or redemption of Preferred Stock, as if the same
had occurred at the end of the applicable four-quarter period.

For purposes of making the computation referred to above, Investments,
acquisitions, dispositions, mergers, consolidations and discontinued operations
(as determined in accordance with GAAP), in each case with respect to an
operating unit of a business, that have been made by the Company or any of its
Restricted Subsidiaries during the four-quarter reference period or subsequent
to such reference period and on or prior to or simultaneously with the
Calculation Date shall be calculated on a pro forma basis assuming that all such
Investments, acquisitions, dispositions, discontinued operations, mergers and
consolidations (and the reduction of any associated interest coverage
obligations and the change in Adjusted EBITDA resulting therefrom) had occurred
on the first day of the four-quarter reference period. If since the beginning of
such period any Person (that subsequently became a Restricted Subsidiary or was
merged with or into the Company or any Restricted Subsidiary since the beginning
of such period) shall have made any Investment, acquisition or disposition, have
discontinued any operation, or have engaged in merger or consolidation, in each
case with respect to an operating unit of a business, that would have required
adjustment pursuant to this definition, then the Leverage Ratio shall be
calculated giving pro forma effect thereto for such period as if such
Investment, acquisition, disposition, discontinued operation, merger or
consolidation had occurred at the beginning of the applicable four-quarter
period.

For purposes of this definition, whenever pro forma effect is to be given to any
transaction, the pro forma calculations shall be made in good faith by a
responsible financial or accounting officer of the Company. Any such pro forma
calculation may include adjustments appropriate, in the reasonable determination
of the Company as set forth in an Officers' Certificate, to reflect operating
expense reductions reasonably expected to result from any acquisition or merger.

"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction); provided that in
no event shall an operating lease be deemed to constitute a Lien.

"LTIP" means any long-term incentive or similar compensation plan maintained by
the Company or its Restricted Subsidiaries.

"Moody's" means Moody's Investors Service, Inc.

"Net Debt" means, with respect to the Company, on a consolidated basis at any
time, the actual outstanding amount of funded indebtedness, plus, without
duplication, the principal component of all Capitalized Lease Obligations and,
without duplication, other Indebtedness of the Company and its Restricted
Subsidiaries at such time, less (i) any early termination payments that would be
owed to the Company and its Subsidiaries if all outstanding Hedging Obligations
were terminated, and (ii) the amount of cash and Cash Equivalents of the Company
and its Subsidiaries on the balance sheet as of the date of determination.

"Net Income" means, with respect to any Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect
of Preferred Stock dividends or other dividends.

"Net Proceeds" means the aggregate cash proceeds received by the Company or any
of its Restricted Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received in respect of or upon the sale or other
disposition of any Designated Noncash Consideration received in any Asset Sale
                                       127
and any cash payments received by way of deferred payment of principal pursuant
to a note or installment receivable or otherwise, but only as and when received,
but excluding the assumption by the acquiring person of Indebtedness relating to
the disposed assets or other considerations received in any other noncash form),
net of the direct costs relating to such Asset Sale and the sale or disposition
of such Designated Noncash Consideration (including, without limitation, legal,
accounting and investment banking fees, and brokerage and sales commissions),
and any relocation expenses Incurred as a result thereof, taxes paid or payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements related thereto), amounts required
to be applied to the repayment of principal, premium (if any) and interest on
Indebtedness required (other than pursuant to clause (i) of the second paragraph
of the covenant described under "--Asset Sales") to be paid as a result of such
transaction, and any deduction of appropriate amounts to be provided by the
Company as a reserve in accordance with GAAP against any liabilities associated
with the asset disposed of in such transaction and retained by the Company after
such sale or other disposition thereof, including, without limitation, pension
and other post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with
such transaction.

"Notes" means the   % senior subordinated notes of the Company, including any
Additional Notes unless expressly provided otherwise.

"Obligations" means any principal, interest, penalties, fees, indemnifications,
reimbursements (including, without limitation, reimbursement obligations with
respect to letters of credit and bankers' acceptances), damages and other
liabilities payable under the documentation governing any Indebtedness; provided
that Obligations with respect to the Notes shall not include fees or
indemnifications in favor of the Trustee and other third parties other than the
Holders of the Notes.

"Officer" means the Chairman of the Board, the President, the Chief Financial
Officer, any Executive Vice President, Senior Vice President or Vice President,
the Treasurer or the Secretary of the Company.

"Officers' Certificate" means a certificate signed on behalf of the Company by
two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company that meets the requirements set forth in the
Indenture.

"Opinion of Counsel" means a written opinion from legal counsel. The counsel may
be an employee of or counsel to the Company.

"Pari Passu Indebtedness" means (i) with respect to the Company, the Notes and
any other Indebtedness of the Company, other than Senior Indebtedness, Secured
Indebtedness or Subordinated Indebtedness of the Company and (ii) with respect
to any Guarantor, its Guarantee and any other Indebtedness of such Guarantor,
other than Senior Indebtedness, Secured Indebtedness and Subordinated
Indebtedness of such Guarantor.

"Permitted Asset Swap" means any one or more transactions in which the Company
or any Restricted Subsidiary exchanges assets for consideration consisting of
(i) assets used or useful in a Similar Business and (ii) any cash or Cash
Equivalents, provided that such cash or Cash Equivalents will be considered Net
Proceeds from an Asset Sale.

"Permitted Holders" means Welsh, Carson Anderson & Stowe and Vestar Capital
Partners and their respective Affiliates.

"Permitted Investments" means:

     (i)     any Investment in the Company or any Restricted Subsidiary;

     (ii)    any Investment in Cash Equivalents or Investment Grade Securities;

     (iii)   any Investment by the Company or any Restricted Subsidiary of the
             Company in a Person that is primarily engaged in a Similar Business
             if as a result of such Investment (a) such Person becomes a
             Restricted Subsidiary or (b) such Person, in one transaction or a
             series of related transactions, is merged, consolidated or
             amalgamated with or into, or transfers or
                                       128
conveys substantially all of its assets to, or is liquidated into,
             the Company or a Restricted Subsidiary;

     (iv)    any Investment in securities or other assets not constituting Cash
             Equivalents and received in connection with an Asset Sale made
             pursuant to the provisions of "--Asset Sales" or any other
             disposition of assets not constituting an Asset Sale;

     (v)    any Investment existing on the Issue Date;

     (vi)   advances to employees not in excess of $10 million outstanding at
            any one time in the aggregate;

     (vii)   any Investment acquired by the Company or any of its Restricted
             Subsidiaries (a) in exchange for any other Investment or accounts
             receivable held by the Company or any such Restricted Subsidiary in
             connection with or as a result of a bankruptcy, workout,
             reorganization or recapitalization of the issuer of such other
             Investment or accounts receivable or (b) as a result of a
             foreclosure by the Company or any of its Restricted Subsidiaries
             with respect to any secured Investment or other transfer of title
             with respect to any secured Investment in default;

     (viii)  Hedging Obligations;

     (ix)    additional Investments having an aggregate Fair Market Value, taken
             together with all other Investments made pursuant to this clause
             (ix) that are at that time outstanding, not to exceed the greater
             of   % of Total Assets or $     million at the time of such
             Investment (with the Fair Market Value of each Investment being
             measured at the time made and without giving effect to subsequent
             changes in value);

     (x)    loans and advances to officers, directors and employees for
            business-related travel expenses, moving expenses and other similar
            expenses, in each case Incurred in the ordinary course of business,
            and account credits and payments to participants under the LTIP or
            any successor or similar compensation plan;

     (xi)    Investments the payment for which consists of Equity Interests of
             the Company (other than Disqualified Stock); provided, however,
             that such Equity Interests will not increase the amount available
             for Restricted Payments under clause (c) of the "--Limitation on
             Restricted Payments" covenant;

     (xii)   any transaction to the extent it constitutes an Investment that is
             permitted by and made in accordance with the provisions of the
             second paragraph of the covenant described under "--Transactions
             with Affiliates" (except transactions described in clauses (ii),
             (iii) and (vi) of such paragraph);

     (xiii)  Investments consisting of the licensing or contribution of
             intellectual property pursuant to joint marketing arrangements with
             other Persons;

     (xiv)  Guarantees issued in accordance with "Limitations on Incurrence of
            Indebtedness and Issuance of Disqualified Stock and Preferred
            Stock";

     (xv)   any Investment by Restricted Subsidiaries in other Restricted
            Subsidiaries and Investments by Subsidiaries that are not Restricted
            Subsidiaries in other Subsidiaries that are not Restricted
            Subsidiaries;

     (xvi)  Investments consisting of purchases and acquisitions of inventory,
            supplies, materials and equipment or purchases of contract rights or
            licenses or leases of intellectual property, in each case in the
            ordinary course of business.

"Permitted Junior Securities" shall mean debt or equity securities of the
Company or any successor corporation issued pursuant to a plan of reorganization
or readjustment of the Company that are subordinated to the payment of all
then-outstanding Senior Indebtedness of the Company at least to the
                                       129
same extent that the Notes are subordinated to the payment of all Senior
Indebtedness of the Company on the Issue Date, so long as to the extent that any
Senior Indebtedness of the Company outstanding on the date of consummation of
any such plan of reorganization or readjustment is not paid in full in cash on
such date, either (a) the holders of any such Senior Indebtedness not so paid in
full in cash have consented to the terms of such plan of reorganization or
readjustment or (b) such holders receive securities which constitute Senior
Indebtedness and which have been determined by the relevant court to constitute
satisfaction in full in cash of any Senior Indebtedness not paid in full in
cash.

"Permitted Liens" means, with respect to any Person:

     (a)   pledges or deposits by such Person under workmen's compensation laws,
           unemployment insurance laws or similar legislation, or good faith
           deposits in connection with bids, tenders, contracts (other than for
           the payment of Indebtedness) or leases to which such Person is a
           party, or deposits to secure public or statutory obligations of such
           Person or deposits of cash or United States government bonds to
           secure surety or appeal bonds to which such Person is a party, or
           deposits as security for contested taxes or import duties or for the
           payment of rent, in each case Incurred in the ordinary course of
           business;

     (b)   Liens imposed by law, such as carriers', warehousemen's and
           mechanics' Liens, in each case for sums not yet due or being
           contested in good faith by appropriate proceedings or other Liens
           arising out of judgments or awards against such Person with respect
           to which such Person shall then be proceeding with an appeal or other
           proceedings for review;

     (c)   Liens for taxes, assessments or other governmental charges not yet
           due or payable or subject to penalties for nonpayment or which are
           being contested in good faith by appropriate proceedings;

     (d)   Liens in favor of issuers of performance and surety bonds or bid
           bonds or completion guarantees or with respect to other regulatory
           requirements or letters of credit issued pursuant to the request of
           and for the account of such Person in the ordinary course of its
           business;

     (e)   minor survey exceptions, minor encumbrances, easements or
           reservations of, or rights of others for, licenses, rights-of-way,
           sewers, electric lines, telegraph and telephone lines and other
           similar purposes, or zoning or other restrictions as to the use of
           real properties or Liens incidental to the conduct of the business of
           such Person or to the ownership of its properties which were not
           Incurred in connection with Indebtedness and which do not in the
           aggregate materially adversely affect the value of said properties or
           materially impair their use in the operation of the business of such
           Person;

     (f)   Liens securing Indebtedness permitted to be incurred pursuant to
           clause (d) of the second paragraph of the covenant described under
           "--Limitations on Incurrence of Indebtedness and Issuance of
           Disqualified Stock and Preferred Stock";

     (g)   Liens to secure Indebtedness permitted pursuant to clause (a) of the
           second paragraph of the covenant described under "--Limitations on
           Incurrence of Indebtedness and Issuance of Disqualified Stock and
           Preferred Stock";

     (h)   Liens existing on the Issue Date;

     (i)   Liens on property or shares of stock of a Person at the time such
           Person becomes a Subsidiary; provided, however, such Liens are not
           created or Incurred in connection with, or in contemplation of, such
           other Person becoming such a Subsidiary; provided further, however,
           that such Liens may not extend to any other property owned by the
           Company or any Restricted Subsidiary;

                                       130
(j)   Liens on property at the time the Company or a Restricted Subsidiary
           acquired the property, including any acquisition by means of a merger
           or consolidation with or into the Company or any Restricted
           Subsidiary; provided further, however, that such Liens are not
           created or Incurred in connection with, or in contemplation of, such
           acquisition; provided further, however, that the Liens may not extend
           to any other property owned by the Company or any Restricted
           Subsidiary;

     (k)   Liens securing Indebtedness or other obligations of a Restricted
           Subsidiary owing to the Company or another Restricted Subsidiary
           permitted to be incurred in accordance with the covenant described
           under "--Limitations on Incurrence of Indebtedness and Issuance of
           Disqualified Stock and Preferred Stock";

     (l)   Liens securing Hedging Obligations so long as the related
           Indebtedness is, and is permitted to be under the Indenture, secured
           by a Lien on the same property securing such Hedging Obligations;

     (m)  Liens on specific items of inventory or other goods and proceeds of
          any Person securing such Person's obligations in respect of bankers'
          acceptances, issued or created for the account of such Person to
          facilitate the purchase, shipment or storage of such inventory or
          other goods;

     (n)   leases and subleases of real property which do not materially
           interfere with the ordinary conduct of the business of the Company or
           any of its Restricted Subsidiaries;

     (o)   Liens arising from Uniform Commercial Code financing statement
           filings regarding operating leases entered into by the Company and
           its Restricted Subsidiaries in the ordinary course of business;

     (p)   Liens in favor of the Company;

     (q)   Liens on equipment of the Company granted in the ordinary course of
           business to the Company's client at which such equipment is located;

     (r)   Liens encumbering deposits made in the ordinary course of business to
           secure obligations arising from statutory, regulatory, contractual or
           warranty requirements, including rights of offset and set-off;

     (s)   Liens on the Equity Interests of Unrestricted Subsidiaries securing
           obligations of Unrestricted Subsidiaries not otherwise prohibited by
           the Indenture;

     (t)   Liens to secure Indebtedness permitted by clause (1) of the second
           paragraph of the covenant described under "--Limitations on
           Incurrence of Indebtedness and Issuance of Disqualified Stock and
           Preferred Stock"; and

     (u)   Liens to secure any refinancing, refunding, extension, renewal or
           replacement (or successive refinancings, refundings, extensions,
           renewals or replacements) as a whole, or in part, of any Indebtedness
           secured by any Lien referred to in the foregoing clauses (f), (g),
           (h), (i), (j), (k), (1) and (t); provided, however, that (x) such new
           Lien shall be limited to all or part of the same property that
           secured the original Lien (plus improvements on such property) and
           (y) the Indebtedness secured by such Lien at such time is not
           increased to any amount greater than the sum of (A) the outstanding
           principal amount or, if greater, committed amount of the Indebtedness
           described under clauses (f), (g), (h), (i), (j), (k), (1) or (t) at
           the time the original Lien became a Permitted Lien under the
           Indenture and (B) an amount necessary to pay any fees and expenses,
           including premiums, related to such refinancing, refunding,
           extension, renewal or replacement.

                                       131
"Person" means any individual, corporation, partnership, business trust, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

"Preferred Stock" means any Equity Interest with preferential right of payment
of dividends or upon liquidation, dissolution, or winding up.

"Quarterly Base Dividend Level" means, for any fiscal quarter,   % of the
Company's Excess Cash for the 12-month period ending on the last day of the
Company's then most recently ended fiscal quarter for which internal financial
statements are available at the time such dividend is declared and paid divided
by four (4).

"Representative" means the trustee, agent or representative (if any) for an
issue of Senior Indebtedness.

"Restricted Investment" means an Investment other than a Permitted Investment.

"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.

"Sale/Leaseback Transaction" means an arrangement relating to property now owned
or hereafter acquired by the Company or a Restricted Subsidiary whereby the
Company or a Restricted Subsidiary transfers such property to a Person and the
Company or such Restricted Subsidiary leases it from such Person, other than
leases between the Company and a Wholly Owned Subsidiary or between Wholly Owned
Subsidiaries.

"Secured Indebtedness" means any Indebtedness of the Company or any Subsidiary
secured by a Lien.

"S&P" means Standard and Poor's Ratings Group.

"Senior Credit Documents" means the collective reference to the Credit
Facilities, the notes issued pursuant thereto and the guarantees thereof, and
the collateral documents relating thereto.

"Senior Lender Indebtedness" means any and all amounts payable under or in
respect of the Credit Facilities, the Senior Credit Documents with respect
thereto and any Refinancing Indebtedness with respect thereto, as amended from
time to time, including principal, premium (if any), interest (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company or any Guarantor, as applicable, whether
or not a claim for post-filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement obligations, guarantees and all other amounts
payable thereunder or in respect thereof.

"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.

"Similar Business" means a business, the majority of whose revenues are derived
from providing telecommunications services.

"Specified Cash Contributions" means the aggregate amount of cash contributions
(other than Excluded Contributions) made to the capital of the Company which are
designated as "Specified Cash Contributions" pursuant to an Officers'
Certificate.

"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the final payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).

"Subordinated Indebtedness" means, any Indebtedness of the Company or any
Guarantor, the instrument under which such Indebtedness is incurred expressly
provides that it is subordinated in right of payment to the Notes or any
Guarantee.
                                       132
"Subsidiary" means, with respect to any Person:

     (i)   any corporation, association or other business entity (other than a
           partnership, joint venture or limited liability company) of which
           more than 50% of the total voting power of shares of Capital Stock
           entitled (without regard to the occurrence of any contingency) to
           vote in the election of directors, managers or trustees thereof is at
           the time of determination owned or controlled, directly or
           indirectly, by such Person or one or more of the other Subsidiaries
           of that Person or a combination thereof; and

     (ii)  any partnership, joint venture or limited liability company of which
           (x) more than 50% of the capital accounts, distribution rights, total
           equity and voting interests or general and limited partnership
           interests, as applicable, are owned or controlled, directly or
           indirectly, by such Person or one or more of the other Subsidiaries
           of that Person or a combination thereof, whether in the form of
           membership, general, special or limited partnership interests or
           otherwise and (y) such Person or any Wholly Owned Restricted
           Subsidiary of such Person is a controlling general partner or
           otherwise controls such entity.

"Total Assets" means the total consolidated assets of the Company and its
Restricted Subsidiaries, as shown on the most recent balance sheet of the
Company.

"Trustee" means the party named as such in the Indenture until a successor
replaces it and, thereafter, means the successor, and if at any time there is
more than one such party, "Trustee" as used with respect to the securities of
any series shall mean the trustee with respect to securities of that series.

"Trust Officer" means (i) any officer within the corporate trust department of
the Trustee, including any vice president, assistant vice president, assistant
secretary, assistant treasurer, trust officer or any other officer of the
Trustee who customarily performs functions similar to those performed by the
Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of such person's knowledge of and
familiarity with the particular subject and (ii) who shall have direct
responsibility for the administration of the Indenture.

"Unrestricted Subsidiary" means:

     (i)   any Subsidiary of the Company that at the time of determination shall
           be designated an Unrestricted Subsidiary by the Board of Directors in
           the manner provided below; and

     (ii)  any Subsidiary of an Unrestricted Subsidiary.

The Board of Directors may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary of the Company) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Equity Interests or Indebtedness of, or owns or holds any Lien on any
property of, the Company or any other Subsidiary of the Company that is not a
Subsidiary of the Subsidiary to be so designated; provided, however, that the
Subsidiary to be so designated and its Subsidiaries do not at the time of
designation have and do not thereafter Incur any Indebtedness pursuant to which
the lender has recourse to any of the assets of the Company or any of its
Restricted Subsidiaries; provided further, however, that either (a) the
Subsidiary to be so designated has total consolidated assets of $1,000 or less
or (b) if such Subsidiary has consolidated assets greater than $1,000, then such
designation would be permitted under the covenant entitled "--Limitation on
Restricted Payments."

The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that immediately after giving effect
to such designation (x)(1) the Company could Incur $1.00 of additional
Indebtedness pursuant to the Leverage Ratio test described under "--Limitations
on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred
Stock" or (2) the Leverage Ratio for the Company and its Restricted Subsidiaries
would be greater than such ratio for the Company and its Restricted Subsidiaries
immediately prior to such designation, in each case on a pro forma basis taking
into account such designation and (y) no Default shall have occurred and be
continuing. Any such

                                       133
designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.

"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.

"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

"Weighted Average Life to Maturity" means, when applied to any Indebtedness or
Disqualified Stock, as the case may be, at any date, the quotient obtained by
dividing (i) the sum of the products of the number of years from the date of
determination to the date of each successive scheduled principal payment of such
Indebtedness or redemption or similar payment with respect to such Disqualified
Stock multiplied by the amount of such payment, by (ii) the sum of all such
payments.

"Wholly Owned Restricted Subsidiary" is any Wholly Owned Subsidiary that is a
Restricted Subsidiary.

"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person 100%
of the outstanding Capital Stock or other ownership interests of which (other
than directors' qualifying shares) shall at the time be owned by such Person
and/or by one or more Wholly Owned Subsidiaries of such Person.

                                       134
IDSS ELIGIBLE FOR FUTURE SALE

Future sales or the availability for sale of substantial amounts of IDSs or
shares of our common stock or a significant principal amount of our senior
subordinated notes in the public market could adversely affect prevailing market
prices and could impair our ability to raise capital through future sales of our
securities. Upon completion of this offering, we will have      IDSs
outstanding, in respect of           shares of our Class A common stock in the
aggregate and $     million aggregate principal amount of our senior
subordinated notes. All of these IDSs and securities represented thereby will be
freely tradable without restriction or further registration under the Securities
Act or securities legislation in all the provinces of Canada, unless the IDSs or
securities represented thereby are owned by "affiliates" as that term is defined
in Rule 144 under the Securities Act. Upon completion of this offering, the
existing equity holders will own, as part of the IDSs, shares of Class A common
stock representing an aggregate      % ownership interest in us after the
offering, or      % if the underwriters' over-allotment option is exercised in
full. In addition, our equity sponsors will hold      shares of Class B common
stock, which following the second anniversary of the consummation of this
offering may be exchanged, subject to certain conditions, for
IDSs in connection with the sale of such Class B common stock. The existing
equity holders will have demand and piggyback registration rights for their
shares of Class A common stock, which may be sold in the form of IDSs as well as
for their shares of Class B common stock and the IDSs for which they may be
exchanged. In addition, certain members of management will have piggyback
registration rights for their IDSs. See "Related Party
Transactions--Registration Rights." Collectively, our existing equity holders
will be issued           IDSs in this offering. Registration rights may not be
exercised during the lock-up period.

We may issue shares of our common stock or senior subordinated notes, which may
be in the form of IDSs, or other securities from time to time as consideration
for future acquisitions and investments. In the event any such acquisition or
investment is significant, the number of shares of our common stock or senior
subordinated notes, which may be in the form of IDSs, or other securities that
we may issue may in turn be significant. In addition, we may also grant
registration rights covering those shares of our common stock or senior
subordinated notes and IDSs, if applicable, or other securities in connection
with any such acquisitions and investments.

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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following discussion, insofar as it relates to matters of United States
federal income tax law (and, to the extent specified, United States federal
estate tax law) or legal conclusions with respect thereto, constitutes the
opinion of our counsel, Kirkland & Ellis LLP, as to the material United States
federal income tax considerations to a United States holder or, as the case may
be, a non-United States holder, in each case as defined below, arising from the
purchase, ownership and disposition of IDSs, senior subordinated notes or Class
A common stock. This discussion is based on the provisions of the United States
Internal Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder, judicial authority, published administrative positions
of the Internal Revenue Service (the "IRS") and other applicable authorities,
all as in effect on the date of this prospectus, and all of which are subject to
change or differing interpretations, possibly on a retroactive basis. No
statutory, administrative or judicial authority directly addresses the treatment
of IDSs or instruments similar to IDSs for United States federal income tax
purposes, and we have not sought any ruling from the IRS with respect to the
statements made and the conclusions reached in the following discussion. As a
result, we cannot assure you that the IRS or the courts will agree with the tax
consequences described herein. A different treatment from that discussed below
could adversely affect the amount, timing and character of income and gain
realized by a holder in respect of an investment in IDSs, senior subordinated
notes or Class A common stock. In the case of non-United States holders, a
different treatment could subject such holders to the same United States federal
withholding tax or estate tax consequences with respect to the senior
subordinated notes as they will be subject to with respect to the Class A common
stock. Payments to non-United States holders will not be grossed up for or in
respect of any such tax. In addition, a different treatment could result in our
losing all or part of the deduction for interest that we pay on the senior
subordinated notes.

This discussion deals only with holders that purchase IDSs or senior
subordinated notes at their original issuance at their original issue price and
that will hold IDSs, senior subordinated notes and Class A common stock as
"capital assets" (within the meaning of Section 1221 of the Code). This summary
does not purport to deal with all aspects of United States federal income
taxation that might be relevant to particular holders, in light of their
personal investment circumstances or status, such as banks, insurance companies,
certain other financial institutions, tax-exempt organizations, S corporations,
partnerships or other pass-through entities, real estate investment trusts,
regulated investment companies, dealers or traders in securities or currencies,
and taxpayers subject to the alternative minimum tax. This discussion also does
not address IDSs, senior subordinated notes or Class A common stock held as part
of a hedge, straddle, integrated, synthetic security or conversion transaction,
or situations in which the "functional currency" of a United States holder (as
defined below) is not the United States dollar. Moreover, except to the extent
specified with respect to United States federal estate tax, the effect of any
applicable United States federal estate or gift, state, local or non-United
States tax laws is not discussed.

THE FOLLOWING DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT A
SUBSTITUTE FOR CAREFUL TAX PLANNING AND ADVICE. INVESTORS CONSIDERING THE
PURCHASE OF IDSS, SENIOR SUBORDINATED NOTES OR CLASS A COMMON STOCK SHOULD
CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED
STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS, AS WELL AS ANY
TAX CONSEQUENCES ARISING UNDER THE ESTATE OR GIFT TAX LAWS OR THE LAWS OF ANY
STATE, LOCAL OR NON-UNITED STATES TAXING JURISDICTION OR UNDER ANY APPLICABLE
TAX TREATY.

The term "United States holder" means a holder of IDSs, senior subordinated
notes or Class A common stock that is, for United States federal income tax
purposes:

          (1) An individual who is a citizen or resident of the United States;

          (2) a corporation, or other entity taxable as a corporation for United
     States federal income tax purposes, created or organized under the laws of
     the United States or of any political subdivision thereof; or

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(3) an estate or trust, the income of which is subject to United
     States federal income taxation regardless of its source.

The term "non-United States holder" means a holder of IDSs, senior subordinated
notes or Class A common stock that is, for United States federal income tax
purposes:

          (1) a nonresident alien individual;

          (2) a foreign corporation; or

          (3) a foreign estate or trust.

In the case of a holder of IDSs, senior subordinated notes or Class A common
stock that is classified as a partnership for United States federal income tax
purposes, the tax treatment of the IDSs, senior subordinated notes or Class A
common stock to a partner of the partnership generally will depend upon the tax
status of the partner and the activities of the partnership. If you are a
partner of a partnership holding IDSs, senior subordinated notes or Class A
common stock, then you should consult your own tax advisors.

UNITED STATES HOLDERS

  IDSS

  Allocation of Purchase Price

Your acquisition of an IDS should be treated as an acquisition of separate
securities, the share of our Class A common stock and the senior subordinated
note represented by the IDS, rather than as a purchase of a single integrated
security, and, by purchasing the IDS, you will agree to that treatment. If that
treatment is not respected, then the acquisition of IDSs may be treated as an
acquisition only of our stock, in which case the senior subordinated notes would
be treated in effect as stock rather than as debt for United States federal
income tax purposes. See "--Senior Subordinated Notes--Characterization." The
remainder of this discussion assumes that the acquisition of IDSs will be
treated as an acquisition of shares of our Class A common stock and the senior
subordinated notes, rather than as a purchase of a single integrated security.

The purchase price of each IDS will be allocated between the share of Class A
common stock and the senior subordinated note comprising the IDS in proportion
to their respective fair market values at the time of purchase. This allocation
will establish your initial tax basis in each of the share of Class A common
stock and the senior subordinated note. We will report the initial fair market
value of each share of Class A common stock as $     and the initial fair market
value of each $     principal amount of senior subordinated notes as $     , and
by purchasing an IDS, you will agree to that allocation. If this allocation is
not respected by the IRS or the courts, then it is possible that the senior
subordinated notes will be treated as having been issued with original issue
discount or amortizable bond premium. You generally would have to include
original issue discount in income in advance of the receipt of cash attributable
to that income, and would be able to elect to amortize bond premium over the
remaining term of the senior subordinated notes. The remainder of this
discussion assumes that the allocation of the purchase price of the IDSs
described above will be respected.

  Separation and Recombination

If you separate your IDSs into the shares of Class A common stock and senior
subordinated notes represented thereby or recombine the applicable number of
shares of Class A common stock and principal amount of senior subordinated notes
to form IDSs, then you will not recognize gain or loss upon the separation or
recombination. You will continue to take into account items of income or
deduction otherwise includible or deductible with respect to the shares of Class
A common stock and the senior subordinated notes, and your tax basis in and
holding period with respect to the shares of Class A common stock and the senior
subordinated notes will not be affected by the separation or recombination.

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SENIOR SUBORDINATED NOTES

  Characterization

Our counsel, Kirkland & Ellis LLP, is of the opinion that the senior
subordinated notes should be treated as separate from the Class A common stock
and as debt for United States federal income tax purposes, and based upon that
opinion, we believe that the senior subordinated notes should be so treated. In
addition, the lead underwriters have received an opinion from their counsel,
Skadden, Arps, Slate, Meagher & Flom LLP, to the effect that the senior
subordinated notes should be treated as separate from the Class A common stock
and as debt for United States federal income tax purposes. These opinions are
based on certain representations and determinations, which are discussed in more
detail in the following paragraphs. These opinions are not binding on the IRS or
the courts, which could disagree. We will treat the senior subordinated notes as
debt for United States federal income tax purposes, and, by acquiring senior
subordinated notes, directly or in the form of an IDS, you agree likewise to
treat the senior subordinated notes as our indebtedness for all purposes.

The determination as to whether an instrument is treated as debt or as equity
for United States federal income tax purposes is based on all of the facts and
circumstances. There is no clear statutory definition of debt and the
characterization of an instrument as debt or as equity is governed by principles
developed in the case law, which analyzes numerous factors that are intended to
identify the formal characteristics of, and the economic substance of, the
holder's interest in the issuer. Our determination that the senior subordinated
notes should be treated as separate from the Class A common stock and as debt
for United States federal income tax purposes, and the opinions of counsel to
this effect referred to above, rely upon certain representations and
determinations made by us, the lead underwriters and independent appraisal
firms, including representations and determinations substantially to the effect
that:

   --  after 45 days from the closing of this offering, an investor holding IDSs
       may separate the Class A common stock and senior subordinated notes
       composing the IDSs without material market impediment;

   --  the term, interest rate and other material provisions of the senior
       subordinated notes, including, inter alia, restrictions on incurrence of
       debt and payment of dividends, are commercially reasonable and are
       substantially similar to those terms to which an unrelated third party
       lender not otherwise owning equity in Valor, bargaining at arm's length
       with Valor, would reasonably agree;

   --  taking this offering and our reorganization into account, on a pro forma
       basis, the aggregate amount of our indebtedness in relation to the
       aggregate fair market value of our equity is commercially reasonable
       under the circumstances and is comparable to similarly situated corporate
       bond issuers;

   --  taking this offering and our reorganization into account, on a pro forma
       basis, the ratio of (i) the sum of all of our outstanding indebtedness to
       (ii) the fair market value of our equity does not exceed approximately
                 to 1; and

   --  based on our detailed financial forecasts (and assuming without verifying
       that those forecasts are correct), Valor should be able to repay the
       principal amount of the senior subordinated notes at their maturity and
       it is likely that such repayment would be made with accumulated cash
       and/or by refinancing with short term (five years or less) unsubordinated
       debt, or a combination thereof.

In light of the representations and determinations described above and their
relevance to several of the factors analyzed in the case law, and taking into
account the facts and circumstances relating to the issuance of the senior
subordinated notes (including the separate issuance of senior subordinated notes
in this offering), we (and our counsel) are of the view that the senior
subordinated notes should be treated as separate from the Class A common stock
and as debt for United States federal income tax purposes. However, there is no
authority that directly addresses the tax treatment of instruments with terms
substantially similar to the senior subordinated notes or offered under
circumstances such as this offering (that is, senior subordinated notes offered
as a unit with common stock). In light of this absence of direct authority,
neither we nor our counsel can conclude with certainty that the senior
subordinated notes will be treated as debt for United States federal income tax
purposes. The consequences to United States holders and non-United States
holders described

                                       138
below assume that the senior subordinated notes will be respected as debt.
However, no ruling on this issue has been requested from the IRS and, thus,
there can be no assurance that the classification of the senior subordinated
notes as debt will not be challenged by the IRS or will be sustained if
challenged.

If the senior subordinated notes were treated as equity rather than as debt for
United States federal income tax purposes, then stated interest paid on the
senior subordinated notes generally would be treated as a dividend to the extent
paid out of our current or accumulated earnings and profits, as determined under
United States federal income tax principles, but those dividends likely would
not qualify for the special 15% rate described below. We would not be permitted
to deduct interest on the senior subordinated notes for United States federal
income tax purposes. In addition, as discussed below under "--Non-United States
Holders--Class A Common Stock," non-United States holders could be subject to
withholding or estate taxes with respect to the senior subordinated notes in the
same manner as they will be with respect to the Class A common stock. Our
inability to deduct interest on the senior subordinated notes could materially
increase our taxable income and, thus, our United States federal income tax
liability. This would reduce our after-tax cash flow and could materially and
adversely impact our ability to make interest and dividend payments on the
senior subordinated notes and the Class A common stock.

In addition, there can be no assurance that the IRS will not challenge the
determination that the interest rate on the senior subordinated notes represents
an arm's length interest rate. If the IRS were successful in such a challenge,
then any excess of the interest paid on the senior subordinated notes over the
deemed arm's length amount would not be deductible by us and could be
recharacterized as a dividend payment instead of an interest payment for United
States federal income tax purposes. In such case, our taxable income and, thus,
our United States federal income tax liability could be materially increased. In
addition, as discussed below under "--Non-United States Holders--Class A Common
Stock," non-United States holders could be subject to withholding taxes with
respect to the excess amount paid on the senior subordinated notes in the same
manner as they will be with respect to dividends paid on the Class A common
stock. If the interest rate paid on the senior subordinated notes were
determined to be less than the arm's length rate, then the senior subordinated
notes could be treated as issued with original issue discount, which original
issue discount you would be required to include in income over the term of the
senior subordinated notes.

  Payments of Interest; Deferral of Interest

Subject to the discussion of deferred interest immediately below, stated
interest on the senior subordinated notes will be taxable to you as ordinary
income, at the time it is paid or accrued in accordance with your method of
accounting for United States federal income tax purposes.

Under applicable Treasury regulations, a "remote" contingency that stated
interest will not be timely paid will be ignored in determining whether a debt
instrument is issued with original issue discount, referred to as OID. Although
there is no authority that directly describes when a contingency such as the
interest deferral option described in "Description of the Senior Subordinated
Notes--Terms of the Notes--Interest Deferral" should be considered "remote",
based on our financial forecasts, we believe that the likelihood of deferral of
interest payments on the senior subordinated notes is remote within the meaning
of the Treasury regulations relating to OID. Based on the foregoing, although
the matter is not free from doubt because of the lack of direct authority, the
option to defer interest should not cause the senior subordinated notes to be
considered to be issued with OID at the time of their original issuance.

Under the Treasury regulations, if the option to defer any payment of interest
on the senior subordinated notes were determined not to be a "remote"
contingency, or if, as discussed above, the interest rate on the senior
subordinated notes was determined to be less than the arm's length interest rate
by more than a de minimis amount, or if any payment of interest actually were
deferred, then the senior subordinated notes would be treated as issued with OID
at the time of issuance or at the time of such occurrence, as the case may be.
At such time, all stated interest on the senior subordinated notes thereafter
would be treated as OID as long as the senior subordinated notes remained
outstanding. In such event:

   --  you would be required to include the yield on the senior subordinated
       notes in income as OID on an economic accrual basis over the term of the
       senior subordinated notes, possibly before the receipt of the cash
       attributable to the OID, and without regard to your overall method of tax
       accounting;
                                       139
--  actual payments of stated interest would not be reported as taxable
       income;

   --  any amount of OID included in your gross income (whether or not during a
       deferral period) with respect to the senior subordinated notes would
       increase your tax basis in the senior subordinated notes; and

   --  the amount of payments in respect of such accrued OID would reduce your
       tax basis in the senior subordinated notes.

Consequently, during a deferral period, a United States holder would be required
to continue to include OID in gross income as it accrued, even though we would
not make any actual cash payments on the senior subordinated notes.

No rulings or other interpretations have been issued by the IRS that address the
meaning of the term "remote" as used in the Treasury regulations relating to
OID, and it is possible that the IRS could take a position contrary to our
position.

  Sale, Exchange or Retirement

Upon the sale, exchange, retirement or other taxable disposition of an IDS, you
will be treated as having sold, exchanged, retired or disposed of the senior
subordinated note that constitutes a portion of the IDS. Upon the sale,
exchange, retirement or other taxable disposition of a senior subordinated note,
you will recognize gain or loss in an amount equal to the difference between the
portion of the proceeds allocable to, or received for, the senior subordinated
note (less amounts received in respect of accrued and unpaid interest, which
will be treated as a payment of interest for United States federal income tax
purposes) and your adjusted tax basis in the senior subordinated note. As
described above under "--United States Holders--IDSs--Allocation of Purchase
Price," your tax basis in the senior subordinated note generally will be the
portion of the purchase price of your IDS allocable to the senior subordinated
note or your purchase price of the note, as the case may be. Such gain or loss
will be capital gain or loss and will be long-term capital gain or loss if you
have held the IDSs for more than one year. The deductibility of capital losses
is subject to limitations.

  Additional Issuances

The indenture governing the senior subordinated notes will permit us, from time
to time, to issue additional senior subordinated notes having terms that are
substantially identical to those of the senior subordinated notes offered
hereby. Such subsequently issued senior subordinated notes may be issued with
OID if they are issued at a discount to their face value (for example, as a
result of changes in prevailing interest rates). The United States federal
income tax consequences to you of the subsequent issuance of senior subordinated
notes with OID (or any issuance of senior subordinated notes thereafter) are
unclear. The indenture governing the senior subordinated notes and the
agreements with DTC will provide that, in the event that there is a subsequent
issuance of senior subordinated notes having terms substantially identical to
the senior subordinated notes offered hereby, each holder of senior subordinated
notes or IDSs, as the case may be, agrees that a portion of such holder's senior
subordinated notes will be automatically exchanged for a portion of the senior
subordinated notes acquired by the holders of such subsequently issued senior
subordinated notes. Consequently, immediately following each such subsequent
issuance and exchange, each holder of subsequently issued senior subordinated
notes, held either as part of IDSs or separately, and each holder of existing
senior subordinated notes or IDSs, as the case may be, will own an inseparable
unit composed of notes of each separate issuance in the same proportion as each
other holder. Because a subsequent issuance will affect the senior subordinated
notes in the same manner, regardless of whether those senior subordinated notes
are held as part of IDSs or separately, the combination of senior subordinated
notes and shares of Class A common stock to form IDSs, or the separation of
IDSs, should not affect your tax treatment.

The aggregate stated principal amount of senior subordinated notes owned by each
holder will not change as a result of such subsequent issuance and exchange.
However, under applicable law, it is possible that the holders of subsequently
issued senior subordinated notes (to the extent issued with OID) will not be
entitled to a claim for the portion of their principal amount that represents
unaccrued OID in the event of an acceleration of the senior subordinated notes
or a bankruptcy proceeding occurring prior to the maturity

                                       140
of the senior subordinated notes. Whether the receipt of subsequently issued
senior subordinated notes in exchange for previously issued senior subordinated
notes in this automatic exchange constitutes a taxable exchange for United
States federal income tax purposes depends on whether the subsequently issued
senior subordinated notes are viewed as differing materially from the senior
subordinated notes exchanged. Due to a lack of applicable guidance, it is
unclear whether the subsequently issued senior subordinated notes would be
viewed as differing materially from the previously issued senior subordinated
notes for this purpose. Consequently, it is unclear whether an exchange of
senior subordinated notes for subsequently issued senior subordinated notes
results in a taxable exchange for United States federal income tax purposes, and
it is possible that the IRS might successfully assert that such an exchange
should be treated as a taxable exchange.

If the IRS successfully asserted that an automatic exchange following a
subsequent issuance of senior subordinated notes is a taxable exchange, then an
exchanging holder generally would recognize gain or loss in an amount equal to
the difference between the fair market value of the subsequently issued senior
subordinated notes received and such holder's adjusted tax basis in the senior
subordinated notes exchanged. See "--Senior Subordinated Notes--Sale, Exchange
or Retirement." It is also possible that the IRS might successfully assert that
any such loss should be disallowed under the wash sale rules, in which case the
holder's basis in the subsequently issued senior subordinated notes would be
increased to reflect the amount of the disallowed loss. In the case of a taxable
exchange, a holder's initial tax basis in the subsequently issued senior
subordinated notes received in the exchange would be the fair market value of
such senior subordinated notes on the date of exchange (adjusted to reflect any
disallowed loss) and a holder's holding period in such senior subordinated notes
would begin on the day after such exchange.

Regardless of whether the exchange is treated as a taxable event, such exchange
may result in an increase in the amount of OID, if any, that you are required to
accrue with respect to senior subordinated notes. Following any subsequent
issuance of senior subordinated notes with OID (or any issuance of senior
subordinated notes thereafter) and resulting exchange, we (and our agents) will
report any OID on any subsequently issued senior subordinated notes ratably
among all holders of senior subordinated notes and IDSs, and each holder of
senior subordinated notes and IDSs will, by purchasing senior subordinated notes
or IDSs, as the case may be, agree to report OID in a manner consistent with
this approach. Consequently, holders that acquire senior subordinated notes in
this offering may be required to report OID as a result of a subsequent issuance
(even though they purchased senior subordinated notes having no OID). This will
generally result in such holders reporting more interest income over the term of
the senior subordinated notes than they would have reported had no such
subsequent issuance and exchange occurred, and any such additional interest
income will be reflected as an increase in the tax basis of the senior
subordinated notes, which will generally result in a capital loss (or reduced
capital gain) upon a sale, exchange or retirement of the senior subordinated
notes. However, the IRS may assert that any OID should be reported only to the
persons that initially acquired such subsequently issued senior subordinated
notes (and their transferees). In such case, the IRS might further assert that,
unless a holder can establish that it is not such a person (or a transferee
thereof), all of the senior subordinated notes held by such holder will have
OID. Any of these assertions by the IRS could create significant uncertainties
in the pricing of IDSs and senior subordinated notes and could adversely affect
the market for IDSs and senior subordinated notes.

It is possible that senior subordinated notes that we issue in a subsequent
issuance will be issued at a discount to their face value and, accordingly, may
have "significant OID" and thus be classified as "applicable high yield discount
obligations." If any senior subordinated notes were so classified, then a
portion of the OID on those senior subordinated notes could be nondeductible by
us and the remainder would be deductible only when paid. This treatment would
have the effect of increasing our taxable income and may adversely affect our
cash flow available for interest payments and distributions to our
equityholders.

Due to the complexity and uncertainty surrounding the United States federal
income tax treatment of subsequent issuances and exchanges of senior
subordinated notes, prospective investors are urged to consult their tax
advisors regarding the applicable tax consequences to them in light of their
particular circumstances.

                                       141
CLASS A COMMON STOCK

  Dividends

The gross amount of dividends paid to you on our Class A common stock will be
treated as dividend income to you, to the extent paid out of our current or
accumulated earnings and profits (as determined under United States federal
income tax principles). To the extent, if any, that the amounts of dividends
paid to you on a share of our Class A common stock exceed our current and
accumulated earnings and profits, the excess will be treated first as a tax-free
return of your tax basis in the shares of Class A common stock and thereafter as
capital gain. Pursuant to recently enacted legislation, if you are an
individual, then dividends that we pay to you through 2008 will be subject to
tax at long-term capital gain rates (up to 15%), provided that certain holding
period and other requirements are satisfied.

 Sale or Exchange

Upon the sale, exchange or other taxable disposition of an IDS, you will be
treated as having sold, exchanged or disposed of the share of Class A common
stock constituting a portion of the IDS. Upon the sale, exchange or other
taxable disposition of a share of our Class A common stock (other than, in some
circumstances, a sale of shares to us), you will recognize gain or loss in an
amount equal to the difference between the portion of the proceeds allocable to
your share of Class A common stock and your tax basis in the share of Class A
common stock. As described above under "--United States Holders--IDSs--
Allocation of Purchase Price," your tax basis in the share of Class A common
stock generally will be the portion of the purchase price of your IDS allocable
to the share of Class A common stock. Such gain or loss will be capital gain or
loss, and will be long-term capital gain or loss if you have held the Class A
common stock for more than one year. The deductibility of capital losses is
subject to limitations.

  INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

In general, we, our paying agents and certain other intermediaries must report
certain information to the IRS with respect to payments of principal and
interest on the senior subordinated notes, payments of dividends on the Class A
common stock, and payments of the proceeds of the sale of senior subordinated
notes, Class A common stock or IDSs to certain non-corporate United States
holders. The payor (which may be us or an intermediary) will be required to
impose backup withholding tax, currently at a rate of 28%, if (i) the payee
fails to furnish a taxpayer identification number ("TIN") to the payor or
otherwise to establish an exemption from backup withholding tax, (ii) the IRS
notifies the payor that the TIN furnished by the payee is incorrect, (iii) there
has been a notified payee underreporting described in Section 3406(c) of the
Code or (iv) the payee has not certified under penalties of perjury that it has
furnished a correct TIN and that the IRS has not notified the payee that it is
subject to backup withholding tax under the Code. Any amounts withheld under the
backup withholding tax rules from a payment to a United States holder will be
allowed as a credit against that holder's United States federal income tax
liability and may entitle the holder to a refund, provided that the required
information is furnished to the IRS.

NON-UNITED STATES HOLDERS

The following discussion applies only to non-United States holders, and assumes
that no item of income, gain, deduction or loss derived by the non-United States
holder in respect of the senior subordinated notes, Class A common stock or IDSs
at any time is effectively connected with the conduct of a United States trade
or business. Special rules may apply to certain non-United States holders, such
as:

   --  United States expatriates,

   --  controlled foreign corporations,

   --  passive foreign investment companies,

   --  foreign personal holding companies,

   --  corporations that accumulate earnings to avoid United States federal
       income tax,

   --  investors in pass-through entities that are subject to special treatment
       under the Code, and

                                       142
--  non-United States holders that are engaged in the conduct of a United
       States trade or business.

Such non-United States holders should consult their own tax advisors to
determine the United States federal, state, local and other tax consequences
that may be relevant to them.

  SENIOR SUBORDINATED NOTES

  Characterization

As discussed above under "--United States Holders--Senior Subordinated
Notes--Characterization," we believe that the senior subordinated notes should
be treated as debt for United States federal income tax purposes. However, no
ruling on this issue has been requested from the IRS and thus there can be no
assurance that this position will be sustained if challenged by the IRS. If the
senior subordinated notes were treated as equity rather than as debt for United
States federal income tax purposes, then the senior subordinated notes would be
treated in the same manner as shares of Class A common stock are treated, as
described below under "--Non-United States Holders--Class A Common
Stock--Dividends," and, in particular, payments of interest on the senior
subordinated notes would be subject to United States federal withholding tax at
rates up to 30%. Payments to non-United States holders will not be grossed-up on
account of any such taxes. The remainder of this discussion assumes that the
characterization of the senior subordinated notes as debt for United States
federal income tax purposes will be respected.

  Stated Interest

Generally, subject to the discussion of backup withholding tax below, interest
paid on the senior subordinated notes to a non-United States holder will be
exempt from United States withholding tax under the "portfolio interest
exemption;" provided that (i) the holder does not actually or constructively own
10% or more of the combined voting power of all classes of our stock entitled to
vote, (ii) the holder is not a controlled foreign corporation related to us
actually or constructively through stock ownership, (iii) the holder is not a
bank that acquired the senior subordinated notes in consideration for an
extension of credit made pursuant to a loan agreement entered into in the
ordinary course of business and (iv) either (a) the holder provides an
applicable IRS Form W-8 (or a suitable substitute form) signed under penalties
of perjury that includes its name and address and certifies as to its non-United
States status in compliance with applicable law and regulations or (b) a
securities clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business holds the
senior subordinated notes and provides a statement to us or our agent under
penalties of perjury in which it certifies that an applicable Form W-8 (or a
suitable substitute) has been received by it from the non-United States holder
or qualifying intermediary and furnishes a copy to us or our agent. The
statement requirement referred to in the preceding sentence may be satisfied
with other documentary evidence in the case of a senior subordinated note held
in an offshore account or through certain foreign intermediaries.

  Sale, Exchange or Retirement

Upon the sale, exchange, retirement or other taxable disposition of an IDS, you
will be treated as having sold, exchanged, retired or disposed of the senior
subordinated note that constitutes a portion of the IDS. Any gain realized upon
the sale, exchange, retirement or other disposition of senior subordinated notes
generally will not be subject to United States federal income tax, unless you
are an individual, you are present in the United States for 183 days or more in
the taxable year of such sale, exchange, retirement or other disposition and
certain other conditions are met.

 United States Federal Estate Tax

Senior subordinated notes beneficially owned by an individual who at the time of
death is a non-United States holder should not be subject to United States
federal estate tax, provided that any payment of interest to such individual on
the notes would be eligible for exemption from the United States federal
withholding tax under the rules described above under "--Non-United States
Holders--Senior Subordinated Notes--Stated Interest" without regard to the
statement requirement described therein.

                                       143
CLASS A COMMON STOCK

  Dividends

Dividends paid to you generally will be subject to withholding of United States
federal income tax at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty. If you wish to claim the benefit of an applicable
treaty rate for dividends (and to avoid backup withholding tax as discussed
below), you will be required to:

   --  complete the applicable IRS Form W-8 (or suitable substitute form) and
       certify, under penalties of perjury, that you are not a United States
       person, or

   --  if the shares of our Class A common stock are held through certain
       foreign intermediaries, satisfy the relevant certification requirements
       of applicable Treasury regulations.

Special certification and other requirements apply to certain non-United States
holders that are entities rather than individuals. If you are eligible for a
reduced rate of United States withholding tax pursuant to an income tax treaty,
you may obtain a refund of any excess amounts withheld by filing an appropriate
claim for refund with the IRS.

 Sale or Exchange

Upon the sale, exchange or other taxable disposition of an IDS, you will be
treated as having sold, exchanged or disposed of the share of Class A common
stock constituting a portion of the IDS. You generally will not be subject to
United States federal income tax with respect to gain recognized on a sale or
other disposition of shares of our Class A common stock, unless:

   --  if you are an individual, you are present in the United States for 183 or
       more days in the taxable year of the sale or other disposition and
       certain other conditions are met, or

   --  we are or have been a United States real property holding corporation for
       United States federal income tax purposes.

We believe that we are not, and we do not anticipate becoming, a United States
real property holding corporation for United States federal income tax purposes.

  United States Federal Estate Tax

Shares of our Class A common stock held by an individual non-United States
holder at the time of death will be included in such holder's gross estate for
United States federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise.

  INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

The amount of interest and dividends paid to you and the amount of tax, if any,
withheld with respect to such payments will be reported annually to the IRS.
Copies of the information returns reporting such interest, dividends and
withholding of tax may also be made available to the tax authorities in the
country in which you reside under the provisions of an applicable income tax
treaty. Backup withholding tax may be required with respect to payments made by
us or any paying agent to you, unless the statement described in "Non-United
States Holders--Senior Subordinated Notes--Stated Interest" has been received
(and we or the paying agent do not have actual knowledge or reason to know that
you are a United States person).

Information reporting and, depending on the circumstances, backup withholding
tax will apply to the proceeds of a sale of IDSs, senior subordinated notes or
Class A common stock within the United States or conducted through United
States-related financial intermediaries unless the statement described in
"Non-United States Holders--Senior Subordinated Notes--Stated Interest" has been
received (and we or the paying agent do not have actual knowledge or reason to
know that you are a United States person) or you otherwise establish an
exemption. Any amounts withheld under the backup withholding tax rules will be
allowed as a refund or a credit against your United States federal income tax
liability, provided that the required information is furnished to the IRS.

                                       144
CERTAIN ERISA CONSIDERATIONS

The following is a summary of certain considerations associated with the
purchase of the IDSs by employee benefit plans that are subject to Title I of
the U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
plans, individual retirement accounts and other arrangements that are subject to
Section 4975 of the Code or provisions under any federal, state, local, non-U.S.
or other laws or regulations that are similar to such provisions of the Code or
ERISA (collectively, "Similar Laws"), and entities whose underlying assets are
considered to include "plan assets" of such plans, accounts and arrangements
(each, a "Plan").

  General Fiduciary Matters

ERISA and the Code impose certain duties on persons who are fiduciaries or other
interested parties of a Plan subject to Title I of ERISA or Section 4975 of the
Code and prohibit certain transactions involving the assets of a Plan and its
fiduciaries or other interested parties. Under ERISA and the Code, any person
who exercises any discretionary authority or control over the administration of
such a Plan or the management or disposition of the assets of such a Plan, or
who renders investment advice for a fee or other compensation to such a Plan, is
generally considered to be a fiduciary of the Plan.

In considering an investment in the IDSs or the separate senior subordinated
notes of a portion of the assets of any Plan, a fiduciary should determine
whether the investment is in accordance with the documents and instruments
governing the Plan and the applicable provisions of ERISA, the Code or any
Similar Law relating to a fiduciary's duties to the Plan including, without
limitation, the prudence, diversification, delegation of control and prohibited
transaction provisions of ERISA, the Code and any other applicable Similar Laws.

  Prohibited Transaction Issues

Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans from
engaging in specified transactions involving plan assets with persons or
entities who are "parties in interest," within the meaning of Section 406 of
ERISA, or "disqualified persons," within the meaning of Section 4975 of the
Code, unless an exemption is available. A party in interest or disqualified
person who engaged in a non-exempt prohibited transaction may be subject to
excise taxes and other penalties and liabilities under ERISA and the Code.

Whether or not our underlying assets are deemed to include "plan assets," as
described below, the acquisition and/or holding of the IDSs or the separate
senior subordinated notes by a Plan with respect to which we, the underwriter,
the trustee or the guarantor is considered a party in interest or a disqualified
person may constitute or result in a direct or indirect prohibited transaction
under Section 406 of ERISA and/or Section 4975 of the Code, unless the
investment is acquired and is held in accordance with an applicable statutory,
class or individual prohibited transaction exemption. In this regard, the U.S.
Department of Labor (the "DOL") has issued prohibited transaction class
exemptions, or "PTCEs," that may apply to the acquisition and holding of the
IDSs or the separate senior subordinated notes. These class exemptions include,
without limitation, PTCE 84-14 respecting transactions determined by independent
qualified professional asset managers, PTCE 90-1 respecting insurance company
pooled separate accounts, PTCE 91-38 respecting bank collective investment
funds, PTCE 95-60 respecting insurance company general accounts and PTCE 96-23
respecting transactions determined by in-house asset managers, although there
can be no assurance that and or all of the conditions of any such exemptions
will be satisfied.

Because of the foregoing, the IDSs or the separate senior subordinated notes
should not be purchased or held by any person investing "plan assets" of any
Plan, unless such purchase and holding will not constitute a non-exempt
prohibited transaction under ERISA and the Code or similar violation of any
applicable Similar Laws.

  Representation

Accordingly, by acceptance of the IDSs or the separate senior subordinated
notes, each purchaser and subsequent transferee of the IDSs or the separate
senior subordinated notes, as applicable, will be deemed to have represented and
warranted that either (i) no portion of the assets used by such purchaser or
transferee to acquire and hold the IDSs or the separate senior subordinated
notes constitutes assets of any Plan or (ii) the purchase and holding of the
IDSs or the separate senior subordinated notes by such
                                       145
purchaser or transferee will not constitute a non-exempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code or similar violation
under any applicable Similar Laws.

The foregoing discussion is general in nature and is not intended to be
all-inclusive. Due to the complexity of these rules and the penalties that may
be imposed upon persons involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries, or other persons considering purchasing
the IDSs or the separate senior subordinated notes on behalf of, or with the
assets of, any Plan, consult with their counsel regarding the potential
applicability of ERISA, Section 4975 of the Code and any Similar Laws to such
investment and whether an exemption would be applicable to the purchase and
holding of the IDSs or the separate senior subordinated notes.

  Plan Asset Issues

ERISA and the Code do not define "plan assets." However, regulations (the "Plan
Asset Regulations") promulgated under ERISA by the DOL generally provide that
when a Plan acquires an equity interest in an entity that is an "operating
company", or the equity interest is a "publicly-offered security" (in each case
as defined in the Plan Asset Regulations), such equity interest will be deemed a
"plan asset," but the underlying assets of the entity will not be deemed "plan
assets." The Plan Asset Regulations define an "equity interest" as any interest
in an entity, other than an instrument that is treated as indebtedness under
applicable local law and which has no substantial equity features. Therefore, we
anticipate that shares of our common stock would be considered an equity
interest and our notes should be treated as indebtedness. Under the Plan Asset
Regulations, an "operating company" is defined as "an entity that is primarily
engaged, directly or through a majority owned subsidiary or subsidiaries, in the
production or sale of a product or service other than the investment of
capital." We believe that we are an "operating company" for purposes of the Plan
Asset Regulations, although no assurance can be given in this regard.

Alternatively, under the Plan Asset Regulations, a "publicly offered security"
is a security that is (a) "freely transferable", (b) part of a class of
securities that is "widely held," and (c)(i) sold to the Plan as part of an
offering of securities to the public pursuant to an effective registration
statement under the Securities Act of 1933, as amended, and the class of
securities to which such security is a part is registered under the Securities
Exchange Act of 1934, as amended, within 120 days after the end of the fiscal
year of the issuer during which the offering of such securities to the public
has occurred, or (ii) is part of a class of securities that is registered under
Section 12(b) or 12(g) of the Exchange Act. In connection with this offering, we
are effecting such a registration of the IDSs and the separate senior
subordinated notes under the Securities Act and Securities Exchange Act. The
Plan Asset Regulations provide that a security is "widely held" only if it is
part of a class of securities that is owned by 100 or more investors independent
of the issuer and one another. A security will not fail to be "widely held"
because the number of independent investors falls below 100 subsequent to the
initial offering thereof as a result of events beyond the control of the issuer.
It is anticipated that the IDSs and the separate senior subordinated notes will
be "widely held" within the meaning of the Plan Asset Regulations, although no
assurance can be given in this regard. The Plan Asset Regulations provide that
whether a security is "freely transferable" is a factual question to be
determined on the basis of all the relevant facts and circumstances. It is
anticipated that the IDSs and the separate senior subordinated notes will be
"freely transferable" within the meaning of the Plan Asset Regulations, although
no assurance can be given in this regard.

  Plan Asset Consequences

If we cease to be an operating company for purposes of the Plan Asset
Regulations and the IDSs or the separate senior subordinated notes cease to be
publicly-offered securities within the meaning of the Plan Asset Regulations,
our assets could be deemed to be "plan assets" under ERISA, unless, at such
time, another exemption is available under the Plan Asset Regulations. This
would result, among other things, in (i) the application of the prudence and
other fiduciary responsibility standards of ERISA to investments made by us, and
(ii) the possibility that certain transactions in which we might seek to engage
could constitute "prohibited transactions" under ERISA and the Code.

                                       146
UNDERWRITING

We and the selling securityholders will enter into an underwriting agreement,
dated           , 2004 (the "U.S. Underwriting Agreement") with the underwriters
named in the table below (the "U.S. Underwriters"). CIBC World Markets Corp.,
Merrill Lynch, Pierce Fenner & Smith Incorporated and Lehman Brothers Inc. are
acting as representatives of the U.S. Underwriters (the "U.S. Representatives").
We will also enter into an underwriting agreement, dated           , 2004 (the
"Canadian Underwriting Agreement" and, together with the U.S. Underwriting
Agreement, the "Underwriting Agreements"), with CIBC World Markets Inc. and
Merrill Lynch Canada Inc. (collectively, the "Canadian IDS Underwriters" and,
together with the U.S. Underwriters, the "Underwriters"). CIBC World Markets
Inc. and Merrill Lynch Canada Inc. are acting as representatives of the Canadian
IDS Underwriters (the "Canadian Representatives" and, together with the U.S.
Representatives, the "Representatives"). Subject to the terms and conditions
described in the Underwriting Agreements, we will agree to sell to the IDS
Underwriters (as defined below), and the selling securityholders have agreed to
sell to the U.S. Underwriters (such underwriters, the "U.S. IDS Underwriters"
and, together with the Canadian IDS Underwriters, the "IDS Underwriters") and
the IDS Underwriters severally have agreed to purchase from us, and the U.S. IDS
Underwriters severally have agreed to purchase from the selling securityholders,
the number of IDSs listed opposite their names below. In addition, subject to
the terms and conditions described in the U.S. Underwriting Agreement, certain
U.S. Underwriters (such U.S. Underwriters, the "Note Underwriters") severally
have also agreed to purchase $     million aggregate principal amount of our   %
senior subordinated notes due 2014 (not in the form of IDSs). (References to
Underwriters in the table below include, where applicable, in respect of the
offering under the Canadian Underwriting Agreement, the respective affiliated
Canadian IDS Underwriter.)
NUMBER OF   NUMBER OF
                                                    IDSS        IDSS
                                                    UNDER       UNDER       TOTAL        SENIOR
                                                    U.S.      CANADIAN    NUMBER OF   SUBORDINATED
   UNDERWRITERS                                   OFFERING    OFFERING      IDSS         NOTES
   ------------                                   ---------   ---------   ---------   ------------
CIBC World Markets Corp. ....................
   Merrill Lynch, Pierce Fenner & Smith
               Incorporated.....................
   Lehman Brothers Inc. ........................
   Banc of America Securities LLC...............
   J.P. Morgan Securities Inc. .................
                                                  --------    --------    --------      --------
     Total......................................
                                                  ========    ========    ========      ========
The offering of the IDSs is conditioned upon the offering of our      % senior
subordinated notes due 2014 (not in the form of IDSs). Under the Underwriting
Agreements, we and, in the case of the U.S. Underwriting Agreement, the selling
securityholders, will agree to sell and the Underwriters will agree to purchase
the IDSs offered under this offering at a price of $     and the Note
Underwriters will agree to purchase the senior subordinated notes offered under
this offering at a price of $     , in each case payable in cash to us and the
selling securityholders, as the case may be, against delivery.

The offerings in the United States and Canada are conditioned upon each other.
The IDS Underwriters will agree to purchase all of the IDSs and the Note
Underwriters will agree to purchase all of the senior subordinated notes sold
separately under the respective Underwriting Agreements if any of the IDSs or
senior subordinated notes sold separately thereunder, as applicable, are
purchased. Under each Underwriting Agreement, if an Underwriter defaults in its
commitment to purchase the IDSs or senior subordinated notes sold separately, as
applicable, the commitments of non-defaulting Underwriters thereunder may be
increased or the applicable Underwriting Agreement may be terminated, depending
on the circumstances. Under the Underwriting Agreements, the Underwriters will
purchase IDSs and the senior subordinated notes sold separately directly from us
or, in the case of the U.S. Underwriting Agreement, the selling securityholders,
as applicable.

                                       147
The IDSs and senior subordinated notes sold separately should be ready for
delivery on or about           , 2004, but in any event no later than
          , 2004 against payment in immediately available funds. The
Underwriters are offering the IDSs and senior subordinated notes sold
separately, as applicable, in their respective jurisdictions subject to various
parallel conditions and may reject all or part of any order. The Underwriting
Agreements provide that the obligations of the Underwriters to purchase the IDSs
or senior subordinated notes sold separately, as applicable, in this offering
are subject to approval of legal matters by counsel and to other conditions. The
U.S. Representatives have advised us that the U.S. Underwriters and the Note
Underwriters propose to offer the IDSs and the senior subordinated notes sold
separately, respectively, directly to the public at the public offering price
that appears on the cover page of this prospectus. The Canadian Representatives
have advised us that the Canadian IDS Underwriters propose to offer IDSs
directly to the public at the public offering price that appears on the cover
page of the Canadian prospectus. In addition, the Representatives may offer some
of the IDSs to other securities dealers at such price less a concession of
$     per IDS (or C$     per IDS, in the case of the Canadian offering). The IDS
Underwriters may also allow, and such dealers may reallow, a concession not in
excess of $     per IDS (or C$     per IDS, in the case of the Canadian
offering) to other dealers. In addition, the Note Underwriters may offer some of
the senior subordinated notes sold separately to other securities dealers at the
price that appears on the cover page of this prospectus less a concession of
$     per senior subordinated note and such dealers may reallow a concession not
in excess of $     per senior subordinated note. After the IDSs and the senior
subordinated notes sold separately are released for sale to the public, the
Representatives and the Note Underwriters, as applicable, may change the
offering price and other selling terms at various times. The IDSs and senior
subordinated notes sold separately are being offered in the United States in
U.S. dollars and the IDSs are being offered in Canada in Canadian dollars, at
the same offering price and underwriting discounts and commissions calculated
based on the noon buying rate on the date of this prospectus as quoted by the
Federal Reserve Bank of New York.

The selling securityholders have granted the U.S. IDS Underwriters an
over-allotment option, exercisable for 30 days from the date of this prospectus,
to purchase up to           additional IDSs at the public offering price that
appears on the cover page of this prospectus, less the underwriting discount. No
over-allotment option has been granted to the Canadian IDS Underwriters or to
the Note Underwriters. The U.S. IDS Underwriters may exercise the option solely
for the purpose of covering over-allotments, if any, in connection with the U.S.
offering. The U.S. IDS Underwriters have severally agreed that, to the extent
the over-allotment option is exercised, they will each purchase a number of
additional IDSs proportionate to the U.S. IDS Underwriters' initial amount
reflected in the foregoing table.

Pursuant to both the Underwriting Agreements and the agreement between the U.S.
IDS Underwriters and the Canadian IDS Underwriters relating to the two
offerings, each of the U.S. IDS Underwriters has agreed that, as part of the
distribution of the IDSs offered by this prospectus and subject to certain
exceptions, it will not offer, sell and deliver the IDSs to investors in Canada,
and each of the Canadian IDS Underwriters has agreed that it will not sell or
deliver IDSs in the United States or to any U.S. persons. For such purposes,
"United States" means the United States, its territories, possessions and other
areas subject to its jurisdiction, and "U.S. persons" means (a) any individual
who is a resident of the United States or (b) any corporation, partnership or
other entity organized in or under the laws of the Unites States or any
political subdivision thereof and whose office most directly involved with the
purchase is located in the United States. Subject to applicable law, the IDS
Underwriters may offer the IDSs outside of the United States and Canada.

                                       148
The following table shows the underwriting discounts and commissions that we and
the selling securityholders will pay to the Underwriters in connection with the
offerings. These amounts are shown assuming both no exercise and, in the case of
the U.S. offering, full exercise of the U.S. IDS Underwriters' option to
purchase additional IDSs:
CANADIAN
                                                           U.S. OFFERING                               OFFERING
                                     ----------------------------------------------------------   -------------------
                                                                          SENIOR SUBORDINATED
                                               IDS OFFERING                 NOTES OFFERING
                                     --------------------------------   -----------------------
                                                  TOTAL       TOTAL
                                                 WITHOUT    WITH FULL
                                                EXERCISE    EXERCISE
                                                OF OVER-    OF OVER-     PER SENIOR
                                                ALLOTMENT   ALLOTMENT   SUBORDINATED
UNDERWRITING DISCOUNT TO BE PAID BY  PER IDS     OPTION      OPTION         NOTE        TOTAL     PER IDS     TOTAL
-----------------------------------  --------   ---------   ---------   ------------   --------   --------   --------
Valor Communications Group, Inc. ..  $          $           $             $            $          C$         C$
Selling Securityholders...........
                                     --------   --------    --------      --------     --------   --------   --------
Total.............................   $          $           $             $            $          C$         C$
                                     ========   ========    ========      ========     ========   ========   ========
We estimate that our total expenses of this offering, excluding the underwriting
discount, will be approximately $          .

We and the selling security holders have agreed to indemnify the underwriters
against certain liabilities, including liabilities under the Securities Act.

We, our executive officers and all significant existing equity investors will
agree to a 180-day "lock up," subject to certain exceptions, with respect to all
IDSs and shares of our common stock, including securities that are convertible
into such securities and securities that are exchangeable or exercisable for
such securities, which we may issue or they own prior to this offering or
purchase in or after this offering, as the case may be. This means that for a
period of 180 days following the date of this prospectus, we and such persons
may not offer, sell, pledge or otherwise dispose of any of these securities or
request or demand that we file a registration statement related to any of these
securities without the prior written consent of the Representatives, subject to
specified exceptions.

The Representatives have informed us that they do not expect discretionary sales
by the IDS Underwriters to exceed 5% of the IDSs offered by both offerings.

There is no established trading market for the shares of our common stock, the
senior subordinated notes or the IDSs. The offering price for the IDSs will be
determined by us and the Representatives, and the offering price of the senior
subordinated notes sold separately will be determined by us and the Note
Underwriters based, in each case, on the following factors:

   --  prevailing market and general economic conditions;

   --  our financial information;

   --  our history and prospects;

   --  the history of and prospects for the industry in which we compete;

   --  an assessment of our management, our past and present operations, and the
       prospects for, and timing of, our future revenues; and

   --  the above factors in relation to market values and various valuation
       measures of other companies engaged in activities similar to ours.

We will apply to list the IDSs on the      under the trading symbol "     " and
on the Toronto Stock Exchange under the trading symbol "     ". We will apply to
list our shares of class A common stock on the Toronto Stock Exchange under the
trading symbol "     ". The Note Underwriters have advised us that they intend
to make a market in the senior subordinated notes as permitted by applicable
law.

Rules of the SEC may limit the ability of (i) the U.S. IDS Underwriters to bid
for or purchase IDSs and (ii) the Note Underwriters to bid for or purchase the
senior subordinated notes sold separately, before the

                                       149
distribution of the IDSs or the senior subordinated notes sold separately, as
applicable, is completed. However, the U.S. IDS Underwriters or the Note
Underwriters, as applicable, may engage in the following activities in
accordance with the rules:

   --  Stabilizing transactions--The Representatives and the Note Underwriters
       may make bids or purchases for the purpose of pegging, fixing or
       maintaining the price of the IDSs or the senior subordinated notes sold
       separately, so long as stabilizing bids do not exceed a specified
       maximum.

   --  Over-allotment and syndicate covering transactions--The U.S. IDS
       Underwriters and the Note Underwriters may sell more IDSs or senior
       subordinated notes, as applicable, in connection with this offering than
       the number of such securities that they have committed to purchase. This
       over-allotment creates a short position for the applicable Underwriters.
       This short sales position may involve, in the case of the U.S. IDS
       Underwriters, either "covered" short sales or "naked" short sales and, in
       the case of the Note Underwriters, "naked" short sales. Covered short
       sales are short sales made in an amount not greater than the U.S. IDS
       Underwriters' over-allotment option to purchase additional IDSs in this
       offering described above. The U.S. IDS Underwriters may close out any
       covered short position either by exercising their over-allotment option
       or by purchasing IDSs in the open market. To determine how they will
       close the covered short position, the U.S. IDS Underwriters will
       consider, among other things, the price of IDSs available for purchase in
       the open market as compared to the price at which they may purchase IDSs
       through the over-allotment option. Naked short sales are, in the case of
       the U.S. IDS Underwriters, short sales in excess of the over-allotment
       option and, in the case of the Note Underwriters, in excess of the
       principal amounts of senior subordinated notes to be purchased by the
       Note Underwriters. The U.S. IDS Underwriters and the Note Underwriters
       must close out any naked short position by purchasing IDSs or senior
       subordinated notes, as applicable, in the open market. A naked short
       position is more likely to be created if such Underwriters are concerned
       that, in the open market after pricing, there may be downward pressure on
       the price of the IDSs or senior subordinated notes, as applicable, that
       could adversely affect investors who purchase IDSs or senior subordinated
       notes, as applicable, in this offering.

   --  Penalty bids--If the U.S. Representatives purchase IDSs in the open
       market in a stabilizing transaction or syndicate covering transaction,
       they may reclaim a selling concession from the U.S. IDS Underwriters and
       selling group members who sold those IDSs as part of the U.S. offering.
       If the U.S. Representatives purchase senior subordinated notes in the
       open market in a stabilizing transaction or syndicate covering
       transaction, they may reclaim a selling concession from the Note
       Underwriters and selling group members who sold those senior subordinated
       notes as part of the U.S. offering.

In accordance with policy statements of the L'Agence nationale d'encadrement du
secteur financier and the Ontario Securities Commission, the Canadian IDS
Underwriters may not, throughout the period of distribution, bid for or purchase
the IDSs. Such restriction is subject to certain exceptions, provided that the
bid or purchase was not engaged in for the purpose of creating actual or
apparent active trading in, or raising the price of the IDSs, including: (1) a
bid or purchase permitted under the by-laws and rules of the Toronto Stock
Exchange relating to market stabilization and passive market activities; and (2)
a bid or purchase made for and on behalf of a customer where the order was not
solicited during the period of the distribution. Under the first mentioned
exemption, in connection with this offering, the Canadian IDS Underwriters may
over-allot or effect transactions which stabilize or maintain the market price
of the IDSs at a level other than that which might otherwise prevail in the open
market. Such transactions, if commenced, may be discontinued at any time.

Similar to other purchase transactions, the purchases by the U.S. IDS
Underwriters or the Note Underwriters to cover their short sales or to stabilize
the market price of the IDSs or the senior subordinated notes sold separately,
as applicable, or the imposition of penalty bids may have the effect of raising
or maintaining the market price of the IDSs or the senior subordinated notes
sold separately, as applicable, or preventing or mitigating a decline in the
market price of the IDSs or the senior subordinated notes sold separately, as
applicable. As a result, the price of the IDSs or the senior subordinated notes
sold separately, as applicable, may be higher than the price that might
otherwise exist in the open market. The

                                       150
imposition of a penalty bid might also have an effect on the price of the IDSs
or the senior subordinated notes sold separately, as applicable, if it
discourages resales of such securities.

Neither we nor the relevant Underwriters make any representation or prediction
as to the effect that the transactions described above may have on the price of
the IDSs or the senior subordinated notes sold separately, as applicable. If
such transactions are commenced, they may be discontinued without notice at any
time. These transactions with respect to the IDSs may occur on the           ,
the Toronto Stock Exchange or otherwise.

We were advised by the U.S. Representatives that the Notes Underwriters
currently intend to facilitate a secondary market in the senior subordinated
notes sold separately and, upon the separation of the IDSs, the notes and the
Class A common stock, which means that they will make commercially reasonable
attempts to match buyers of such securities with sellers of such securities, in
each case, as between persons the Notes Underwriters have knowledge that they
are potential buyers or sellers of securities, considering, when doing so, any
relevant credit issues they deem appropriate. However, the Notes Underwriters
are not obligated to facilitate a secondary market and may discontinue any such
facilitation, if commenced, at any time and without notice. Moreover, if and to
the extent that the Notes Underwriters facilitate any market for such
securities, there can be no assurance that such market would provide sufficient
liquidity for any holder of any such securities.

A prospectus in electronic format may be made available on the websites
maintained by one or more of the U.S. Underwriters. The Representatives may
agree to allocate a number of IDSs to U.S. IDS Underwriters for sale to their
online brokerage account holders. The Representatives will allocate IDSs to U.S.
IDS Underwriters that may make Internet distributions on the same basis as other
allocations. Other than the prospectus in electronic format, the information on
any of these websites and any other information contained on a website
maintained by an Underwriter or syndicate member is not part of this prospectus.

An automatic exchange described elsewhere in this prospectus should not impair
the rights any holder would otherwise have to assert a claim against us, the
selling securityholders or the underwriters, with respect to the full amount of
notes purchased by such holder.

Banc of America Securities LLC and CIBC World Markets Corp. are the joint lead
arrangers and joint book-managers of the new credit facility. In addition, Banc
of America Securities LLC acted as the collateral agent and administrative agent
and CIBC World Markets Corp. acted as syndication agent under our existing
senior credit facilities. The underwriters have provided, and may continue to
provide, from time to time investment banking, commercial banking, advisory and
other services to us and the existing equity investors for customary fees and
expenses in the ordinary course of their business.

                                 LEGAL MATTERS

The validity of the issuance of the IDSs offered hereby and the shares of our
common stock and senior subordinated notes represented thereby, the validity of
the separate issuance of senior subordinated notes not in the form of IDSs and
the validity of the issuance of the subsidiary guarantees by the Delaware
subsidiary guarantors, will be passed upon for us by Kirkland & Ellis LLP, New
York, New York. The validity of the issuance of the subsidiary guarantees by the
Texas subsidiary guarantors will be passed upon for us by Cynthia Ayers, Esq.,
Senior Attorney for Valor. Certain legal matters relating to this offering will
be passed upon for the underwriters by Skadden, Arps, Slate, Meagher & Flom LLP,
New York, New York.

                                       151
EXPERTS

The financial statements as of December 31, 2002 and 2003 and for each of the
three years in the period ended December 31, 2003 included in this prospectus
and the related financial statement schedule included elsewhere in the
registration statement have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports appearing herein (which reports express an
unqualified opinion and include an explanatory paragraph relating to the
adoption of the provisions of Statement of Financial Accounting Standards
("SFAS") No. 142, "Goodwill and Other Intangible Assets" as of January 1, 2002
and SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended, as of January 1, 2001) and have been so included in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.

                      WHERE CAN YOU FIND MORE INFORMATION

We have filed a Registration Statement on Form S-1 with the SEC regarding this
offering. This prospectus, which is part of the registration statement, does not
contain all of the information included in the registration statement, and you
should refer to the registration statement and its exhibits to read that
information. As a result of the effectiveness of the registration statement, we
are subject to the informational reporting requirements of the Exchange Act of
1934 and, under that Act, we will file reports, proxy statements and other
information with the Commission. You may read and copy the registration
statement, the related exhibits and the reports, proxy statements and other
information we file with the SEC at the SEC's public reference facilities
maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. You can also request copies of those documents, upon payment of a
duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference rooms. The SEC
also maintains an Internet site that contains reports, proxy and information
statements and other information regarding issuers that file with the SEC. The
site's Internet address is www.sec.gov.

Upon completion of this offering, Valor will become subject to the information
and periodic reporting requirements of the Securities Exchange Act of 1934, and,
in accordance with the requirements of the Securities Exchange Act of 1934, will
file periodic reports, proxy statements and other information with the SEC.
These periodic reports, proxy statements and other information will be available
for inspection and copying at the regional offices, public reference facilities
and web site of the SEC referred to above.

You may also request a copy of these filings, at no cost, by writing or
telephoning us at:

                        VALOR COMMUNICATIONS GROUP, INC.
                    201 E. John Carpenter Freeway, Suite 200
                              Irving, Texas 75062
                                 (972) 373-1000

                                       152
VALOR TELECOMMUNICATIONS, LLC

                         INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report................................  F-2
Consolidated Balance Sheets as of December 31, 2002 and
  2003......................................................  F-3
Consolidated Statements of Operations and Comprehensive Loss
  for the years ended December 31, 2001, 2002 and 2003......  F-4
Consolidated Statements of Cash Flows for the years ended
  December 31, 2001, 2002 and 2003..........................  F-5
Consolidated Statements of Changes in Common Owners' Equity
  for the years ended December 31, 2001, 2002 and 2003......  F-6
Notes to Consolidated Financial Statements..................  F-7
F-1
VALOR TELECOMMUNICATIONS, LLC

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
Valor Telecommunications, LLC
Irving, TX

We have audited the accompanying consolidated balance sheets of Valor
Telecommunications, LLC and subsidiaries (the "Company") as of December 31, 2002
and 2003 and the related consolidated statements of operations and comprehensive
income (loss), changes in common owners' equity, and cash flows for the three
years ended December 31, 2003. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2002
and 2003, and the results of its operations and its cash flows for the three
years ended December 31, 2003 in conformity with accounting principles generally
accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, effective
January 1, 2002, the Company changed its method of accounting for goodwill and
other intangible assets to conform to Statement of Financial Accounting
Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets" and effective
January 1, 2001, the Company changed its method of accounting for derivative
financial instruments to conform to SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended.

/s/ DELOITTE & TOUCHE LLP

Dallas, Texas
March 2, 2004

                                       F-2
VALOR TELECOMMUNICATIONS, LLC

                          CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)
2002          2003
                                                              ----------    ----------
ASSETS
CURRENT ASSETS
  Cash and cash equivalents.................................  $    1,289    $    1,414
  Accounts receivable:
     Customers, net of allowance for doubtful accounts of
      $3,997 and $2,672, respectively.......................      31,501        26,550
     Carriers and other, net of allowance for doubtful
      accounts of $793 and $652, respectively...............      36,294        34,223
  Materials and supplies, at average cost...................       1,990         1,922
  Other current assets......................................       7,893         9,052
                                                              ----------    ----------
     TOTAL CURRENT ASSETS...................................      78,967        73,161
                                                              ----------    ----------
NET PROPERTY, PLANT AND EQUIPMENT...........................     779,758       769,570
INVESTMENTS AND OTHER ASSETS
  Goodwill..................................................   1,057,007     1,057,007
  Other.....................................................     146,672       139,305
                                                              ----------    ----------
     TOTAL OTHER ASSETS.....................................   1,203,679     1,196,312
                                                              ----------    ----------
     TOTAL ASSETS...........................................  $2,062,404    $2,039,043
                                                              ==========    ==========
                                LIABILITIES AND EQUITY
CURRENT LIABILITIES
  Current maturities of long-term debt......................  $   25,152    $   37,318
  Accounts payable..........................................      21,126        14,458
  Notes payable.............................................       1,175         6,687
  Accrued expenses and other current liabilities:
     Taxes..................................................      12,843        11,983
     Salaries and benefits..................................      11,891        14,372
     Interest...............................................       3,591         3,190
     Other..................................................      15,684        14,405
  Advance billings and customer deposits....................      16,820        16,958
                                                              ----------    ----------
     TOTAL CURRENT LIABILITIES..............................     108,282       119,371
                                                              ----------    ----------
LONG-TERM DEBT..............................................   1,519,133     1,426,655
DEFERRED CREDITS AND OTHER LIABILITIES......................      49,032        48,072
REDEEMABLE PREFERRED INTERESTS..............................     370,231       370,231
                                                              ----------    ----------
     TOTAL LIABILITIES......................................   2,046,678     1,964,329
                                                              ----------    ----------
MINORITY INTERESTS..........................................      21,284        24,852
COMMITMENTS AND CONTINGENCIES (SEE NOTE 12)
COMMON OWNERS' EQUITY
  Class A common interests, no par or stated value,
     500,000,000 interests authorized, 65,568,694 issued and
     65,534,944 outstanding.................................      64,633        64,633
  Class B common interests, no par or stated value,
     5,184,255 interests authorized, 5,056,755 issued and
     outstanding............................................           -             -
  Class C interests, no par or stated value, 50,000,000
     interests authorized, 46,000,000 issued and
     outstanding............................................      46,000        46,000
  Treasury stock............................................         (34)          (34)
  Accumulated other comprehensive loss......................      (4,558)       (7,371)
  Accumulated deficit.......................................    (111,599)      (53,366)
                                                              ----------    ----------
     Total common owners' equity............................      (5,558)       49,862
                                                              ----------    ----------
TOTAL LIABILITIES AND EQUITY................................  $2,062,404    $2,039,043
                                                              ==========    ==========
See accompanying notes to consolidated financial statements
                                       F-3
VALOR TELECOMMUNICATIONS, LLC

          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
             (Dollars in thousands, except per owner unit amounts)
YEARS ENDED DECEMBER 31,
                                                            ---------------------------------
                                                              2001        2002        2003
                                                            ---------   ---------   ---------
OPERATING REVENUES........................................  $ 424,916   $ 479,883   $ 497,334
                                                            ---------   ---------   ---------
OPERATING EXPENSES
  Cost of service (exclusive of depreciation and
     amortization shown separately below).................    105,357     113,891     106,527
  Selling, general and administrative.....................    105,418     133,468     126,896
  Depreciation and amortization...........................    110,843      73,273      81,638
                                                            ---------   ---------   ---------
     Total operating expenses.............................    321,618     320,632     315,061
                                                            ---------   ---------   ---------
OPERATING INCOME..........................................    103,298     159,251     182,273
OTHER INCOME (EXPENSE)
  Interest expense........................................   (133,156)   (127,365)   (119,185)
  Loss on interest rate hedging arrangements..............    (14,292)    (12,348)     (2,113)
  Earnings from unconsolidated cellular partnerships......          -       2,757       3,258
  Other income and expense, net...........................        358        (268)        (62)
                                                            ---------   ---------   ---------
     Total other income (expense).........................   (147,090)   (137,224)   (118,102)
                                                            ---------   ---------   ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME
  TAXES, MINORITY INTEREST AND CUMULATIVE EFFECT OF CHANGE
  IN ACCOUNTING PRINCIPLE.................................    (43,792)     22,027      64,171
Income tax expense........................................          -       1,649       2,478
                                                            ---------   ---------   ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE MINORITY
  INTEREST AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
  PRINCIPLE...............................................    (43,792)     20,378      61,693
Minority interest.........................................      3,595        (615)     (3,568)
                                                            ---------   ---------   ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE CUMULATIVE
  EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE................    (40,197)     19,763      58,125
Discontinued operations...................................     (8,443)     (3,461)        108
                                                            ---------   ---------   ---------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN
  ACCOUNTING PRINCIPLE....................................    (48,640)     16,302      58,233
Cumulative effect of change in accounting principle.......     (4,715)          -           -
                                                            ---------   ---------   ---------
NET (LOSS) INCOME.........................................    (53,355)     16,302      58,233
OTHER COMPREHENSIVE LOSS:
Minimum pension liability adjustment......................          -      (4,558)     (2,813)
                                                            ---------   ---------   ---------
COMPREHENSIVE (LOSS) INCOME...............................  $ (53,355)  $  11,744   $  55,420
                                                            =========   =========   =========
EARNINGS PER OWNERS' UNIT:
Basic and diluted (loss) income from continuing
  operations:
  Class A and B common interests..........................  $    (.58)  $     .22   $     .73
  Class C interests.......................................  $       -   $     .09   $     .15
Basic and diluted net (loss) income:
  Class A and B common interests..........................  $    (.77)  $     .17   $     .73
  Class C interests.......................................  $       -   $     .09   $     .15
See accompanying notes to consolidated financial statements

                                       F-4
VALOR TELECOMMUNICATIONS, LLC

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
YEARS ENDED DECEMBER 31,
                                                           ----------------------------------
                                                             2001        2002         2003
                                                           --------    ---------    ---------
OPERATING ACTIVITIES
  Net (loss) income......................................  $(53,355)   $  16,302    $  58,233
  Adjustments to reconcile net income (loss) to net cash
     provided by operating activities:
  Depreciation and amortization..........................   110,843       73,273       81,638
  Deferred income taxes..................................         -           93          450
  Loss (income) from discontinued operations.............     8,443        3,461         (108)
  Cumulative effect of change in accounting principle....     4,715            -            -
  Amortization of debt issuance costs....................     5,735        6,801        8,105
  Non-cash interest expense..............................    29,025       32,612       17,788
  Non-cash unrealized loss (gain) on interest rate
     hedging arrangements................................     9,892        2,748       (8,487)
  Earnings from unconsolidated cellular partnerships.....         -       (2,757)      (3,258)
  Provision for doubtful accounts receivable.............    11,378       11,393        3,298
  Minority interest......................................    (3,595)         615        3,568
  Changes in current assets and current liabilities:
     Accounts receivable.................................       206       (5,147)       3,786
     Accounts payable....................................   (15,818)       3,235       (6,668)
     Accrued interest....................................   (17,196)      (1,466)        (401)
     Other current assets and current liabilities, net...     2,885        6,669        3,316
  Other, net.............................................     7,143        2,551        4,805
                                                           --------    ---------    ---------
  Net cash provided by operating activities from
     continuing operations...............................   100,301      150,383      166,065
                                                           --------    ---------    ---------
INVESTING ACTIVITIES
  Acquisition, net of cash acquired......................         -     (128,135)           -
  Additions to property, plant and equipment.............  (107,869)     (89,527)     (69,850)
  Distributions from unconsolidated cellular
     partnerships........................................         -        1,939        3,507
  Other, net.............................................     1,255       (1,050)          44
                                                           --------    ---------    ---------
  Net cash used in investing activities from continuing
     operations..........................................  (106,614)    (216,773)     (66,299)
                                                           --------    ---------    ---------
FINANCING ACTIVITIES
  Proceeds from issuance of debt.........................    51,500      116,500       61,500
  Repayments of long-term debt...........................   (53,743)     (77,304)    (161,549)
  Notes payable, net.....................................    10,197      (11,497)       1,742
  Proceeds from issuance of common interests.............         -       46,000            -
  Proceeds from issuance of minority interests...........       163          110            -
  Payments of debt issuance costs........................         -       (2,794)      (1,158)
                                                           --------    ---------    ---------
  Net cash provided by (used in) financing activities
     from continuing operations..........................     8,117       71,015      (99,465)
                                                           --------    ---------    ---------
Net increase in cash and cash equivalents from continuing
  operations.............................................     1,804        4,625          301
Net cash used in discontinued operations (See Note 4)....    (8,373)      (3,662)        (176)
                                                           --------    ---------    ---------
Net (decrease) increase in cash and cash equivalents.....    (6,569)         963          125
Cash and cash equivalents at beginning of year...........     6,895          326        1,289
                                                           --------    ---------    ---------
Cash and cash equivalents at end of year.................  $    326    $   1,289    $   1,414
                                                           ========    =========    =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITY:
Cash paid for interest...................................  $126,850    $ 102,895    $ 109,368
Income taxes paid........................................         -        1,780        2,390
Debt issued for capitalized leases.......................     1,995        3,057        1,949
Note payable issued for insurance policies...............         -        2,475        3,770
Minimum pension liability adjustment.....................         -        4,650        3,054
See accompanying notes to consolidated financial statements

                                       F-5
VALOR TELECOMMUNICATIONS, LLC

                       CONSOLIDATED STATEMENTS OF CHANGES
                            IN COMMON OWNERS' EQUITY
                FOR YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003
OWNER UNITS                                                                  OWNERS' INTERESTS
  --------------------------                                                --------------------------------------
  CLASS A  CLASS B                                                          CLASS A   CLASS B             TREASURY
  COMMON   COMMON    CLASS C                                                COMMON    COMMON    CLASS C    STOCK
  -------  -------   -------                                                -------   -------   -------   --------
                                                                                    (Dollars in thousands)
65,535   3,984         -    Balance, January 1, 2001...................  $64,633   $    -    $     -     $(34)
        -       -         -    Net loss...................................        -        -          -        -
  -------   -----    ------                                                 -------   ------    -------     ----
   65,535   3,984         -    Balance, December 31, 2001.................  $64,633   $    -    $     -     $(34)
        -   1,073    46,000    Issuance of common interests...............        -        -     46,000        -
        -       -         -    Minimum pension liability, net of tax......        -        -          -        -
        -       -         -    Net income.................................        -        -          -        -
  -------   -----    ------                                                 -------   ------    -------     ----
   65,535   5,057    46,000    Balance, December 31, 2002.................  $64,633   $    -    $46,000     $(34)
        -       -         -    Minimum pension liability, net of tax......        -        -          -        -
        -       -         -    Net income.................................        -        -          -        -
  -------   -----    ------                                                 -------   ------    -------     ----
   65,535   5,057    46,000    Balance, December 31, 2003.................  $64,633   $    -    $46,000     $(34)
  =======   =====    ======                                                 =======   ======    =======     ====
OWNER UNITS
  --------------------------                                               ACCUMULATED OTHER                  COMMON
  CLASS A  CLASS B                                                           COMPREHENSIVE     ACCUMULATED   OWNERS'
  COMMON   COMMON    CLASS C                                                     LOSS            DEFICIT      EQUITY
  -------  -------   -------                                               -----------------   -----------   --------
                                                                                     (Dollars in thousands)
65,535   3,984         -    Balance, January 1, 2001..................       $     -         $ (74,546)   $ (9,947)
        -       -         -    Net loss..................................             -           (53,355)    (53,355)
  -------   -----    ------                                                     -------         ---------    --------
   65,535   3,984         -    Balance, December 31, 2001................       $     -         $(127,901)   $(63,302)
        -   1,073    46,000    Issuance of common interests..............             -                 -      46,000
        -       -         -    Minimum pension liability, net of tax.....        (4,558)                -      (4,558)
        -       -         -    Net income................................             -            16,302      16,302
  -------   -----    ------                                                     -------         ---------    --------
   65,535   5,057    46,000    Balance, December 31, 2002................       $(4,558)        $(111,599)   $ (5,558)
        -       -         -    Minimum pension liability, net of tax.....        (2,813)                -      (2,813)
        -       -         -    Net income................................             -            58,233      58,233
  -------   -----    ------                                                     -------         ---------    --------
   65,535   5,057    46,000    Balance, December 31, 2003................       $(7,371)        $ (53,366)   $ 49,862
  =======   =====    ======                                                     =======         =========    ========
See accompanying notes to consolidated financial statements

                                       F-6
VALOR TELECOMMUNICATIONS, LLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              (Dollars in thousands except per owner unit amounts)

1.  BACKGROUND AND BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Valor
Telecommunications, LLC (VTC) and its majority-owned subsidiaries (collectively,
the Company). All significant intercompany transactions have been eliminated.
The parent of VTC is Valor Communications Group, Inc. (Valor). Valor is a
holding company and has no direct operations. Valor's principle assets are the
direct and indirect equity interests of its subsidiaries.

The Company was created in 1999 for the purpose of acquiring three groups of
rural local telephone exchange properties clustered in New Mexico, Oklahoma,
Arkansas and Texas from GTE Southwest Corporation (GTE). The Company purchased
all of the GTE access lines in Oklahoma and New Mexico, and approximately 15% of
GTE's access lines in Texas. A portion of the access lines acquired in Texas is
physically located in Texarkana, Arkansas. In addition to local exchange
services, the Company also offers long distance and Internet access service
through other subsidiaries. On January 31, 2002, the Company acquired Kerrville
Communications Corporation, Inc. (KCC), a local telephone company serving
Kerrville, Texas, and has included the operating results of KCC in its
consolidated results since the date of acquisition.

VTC's lead equity investor is Welsh, Carson, Anderson & Stowe (WCAS), one of the
largest private equity firms in the country. Other equity sponsors include
Vestar Capital Partners, (Vestar) and Citicorp Venture Capital (CVC)
(collectively, the Sponsors). WCAS, Vestar and CVC made their equity investment
into VTC, which has as its primary asset, its membership interest in two
majority-owned subsidiaries, Valor Telecommunications Southwest, LLC (Southwest)
and Valor Telecommunications Southwest II, LLC (Southwest II). A group of
prominent Hispanic investors made a direct equity investment in Southwest and
Southwest II. WCAS and the other Sponsors also made a Senior Subordinated Debt
investment in Southwest. See Note 8 for additional information.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES--The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

REVENUE RECOGNITION--Revenue is recognized when evidence of an arrangement
exists, the earnings process is complete and collectibility is reasonably
assured. The prices for most services are filed in tariffs with the appropriate
regulatory bodies that exercise jurisdiction over the various services.

Basic local services, enhanced calling features such as caller ID, special
access circuits, long distance flat rate calling plans, and most data services
are billed one month in advance. Revenue for these services is recognized in the
month services are rendered. The portion of advance-billed revenue associated
with services that will be delivered in a subsequent period is deferred and
recorded as a current liability under "Advance billings and customer deposits"
in the Consolidated Balance Sheets.

Amounts billed to customers for activating service are deferred and recognized
over the average life of the customer. The costs associated with activating such
services are deferred and recognized as an operating expense over the same
period. Costs in excess of revenues are recognized as expense in the period in
which activation occurs.

                                       F-7
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Revenues for providing usage based services, such as per-minute long distance
service and access charges billed to long distance companies for originating and
terminating long distance calls on the Company's network, are billed in arrears.
Revenues for these services are recognized in the month services are rendered.

Universal Service revenues are government-sponsored support received in
association with providing service in mostly rural, high-cost areas. These
revenues are typically based on information provided by the Company and are
calculated by the government agency responsible for administering the support
program. Revenues are recognized in the period the service is provided.

CASH AND CASH EQUIVALENTS--For purposes of reporting cash flows, the Company
considers all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents. Cash equivalents are stated at
cost, which approximates fair value.

PROPERTY, PLANT AND EQUIPMENT--Telephone property, plant and equipment are
recorded at original cost of acquisition or construction and related costs,
including payroll and other direct and indirect costs related to construction
activity. Major replacements and improvements are capitalized. Repairs are
charged to operating expense as incurred. Depreciation on telephone plant is
based on the estimated remaining lives of the various classes of depreciable
property and is calculated using straight-line composite rates. This method
provides for the recovery of the remaining net investment in telephone plant,
less salvage value, over the remaining asset lives. The composite depreciation
rates range from 2.5% to 33%. Normal retirements are charged to accumulated
depreciation, and any gain or loss on dispositions is amortized over the
remaining asset lives of the remaining net investment in telephone plant.

Non-telephone property is depreciated on a straight-line basis. When these
assets are retired or otherwise disposed of, the related cost and accumulated
depreciation are removed and any gains or losses on disposition are recognized
in income.

Property, plant and equipment, as well as other long-lived assets, are evaluated
for impairment in accordance with Statement of Financial Accounting Standards
(SFAS) No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets"
whenever events or circumstances indicate that the carrying value may not be
recoverable.

INCOME TAXES--VTC has elected to be taxed as a partnership for federal income
tax purposes. VTC is not an operating entity itself, but is the direct majority
interest owner of Southwest and Southwest II. Since VTC has elected partnership
tax treatment, there are no federal income taxes to be reflected in the
financial statements for this entity's operations.

Southwest is taxed as a partnership for federal income tax purposes. Therefore,
the taxable income or loss from this entity flows directly into the VTC tax
return via the Form K-1 received from Southwest. For Southwest, each legal
operating entity owned directly or indirectly by Southwest is legally formed as
either a limited liability company or a limited partnership.

However, each of these entities is considered a disregarded entity (a division
of a corporation) for federal income tax purposes and for state income tax
purposes in each state in which the entity operates, except for Texas. Since
Southwest has elected partnership tax treatment, there are no federal income
taxes to be reflected in the financial statements for this entity.

Southwest II has elected to be taxed as a corporation for federal income tax
purposes. Each legal operating entity owned directly or indirectly by Southwest
II is legally formed as either a limited liability company, a limited
partnership, or a corporation. However, each of these entities is treated for
federal income tax purposes either as a corporation or a disregarded entity.
Operations for all entities directly or

                                       F-8
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

indirectly owned by Southwest II are included in a consolidated federal income
tax return filed by Southwest II.

The financial statement provision for Southwest II's income taxes includes
federal income taxes currently payable and those deferred due to temporary
differences between the financial statement and tax bases of assets and
liabilities. These differences result from the use of different accounting
methods for financial and tax reporting purposes with respect principally to
depreciable assets, materials and supplies, revenue recognition, income tax
related regulatory liabilities and pension cost.

The Second Amended and Restated Limited Liability Company Agreement for VTC
dated January 31, 2002, requires profits and losses to be allocated to the
members of VTC based upon specific ordering rules. For the years ended December
31, 2001, 2002 and 2003, tax losses are allocated based on the owner's
respective capital account ratio. This capital account ratio is adjusted to
reflect changes in the capital accounts on specific dates due to additional
capital contributions, interest transfers, and taxable income or loss allocable
to each partner for the applicable time period.

As noted above, in most states VTC will be treated as a partnership for state
income tax purposes just as it is for federal income tax purposes. Therefore,
for these states, there are no state income taxes to be reflected in the
financial statements. However, those operating legal entities which are
organized as limited liability companies and have operations in Texas are
subject to Texas Franchise Tax on a separate legal entity basis. For the years
ended December 31, 2001 and 2002, there are no amounts to report as state income
tax for Texas Franchise Tax. For the year ended December 31, 2003, Southwest
paid state income tax for Texas Franchise Tax in the amount of $3.

SEGMENT REPORTING--The Company has two operating segments, rural local exchange
carrier, or RLEC, and Other.

As an RLEC, the Company provides regulated telecommunications services to
customers in its service areas. These services include local calling services to
residential and business customers, as well as providing interexchange carriers
(IXC) with call origination and termination services, on both a flat-rate and
usage-sensitive basis, allowing them to complete long distance calls for their
customers who reside in the Company's service areas.

In Other, the Company provides unregulated telecommunications services to
customers throughout its RLEC service areas. These services include long
distance and Internet services. Long distance is provided through resale
agreements with national long distance carriers.

The Company has considered the aggregation criteria in SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information" and
determined that these operating segments are similar in respect to:

   --  The nature of the services;

   --  Their processes;

   --  The type or class of customer for these services;

   --  The methods used to provide these services; and

   --  The nature of the overall regulatory environment.

                                       F-9
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Based on the above criteria, the Company believes the economic characteristics
of the two operating segments, as well as their expected future performance, to
be similar, and accordingly, has aggregated the two operating segments into a
single reportable segment.

EQUITY METHOD INVESTMENTS--Investments in companies in which the Company owns 20
percent to 50 percent of the voting common stock or otherwise exercises
significant influence over operating and financial policies of the company are
accounted for under the equity method.

STOCK COMPENSATION--The Company accounts for its employee stock compensation
plan in accordance with Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees" as allowed by SFAS No. 123,
"Accounting for Stock-Based Compensation". As permitted by SFAS No. 123, the
Company measures compensation using the intrinsic value based method as
prescribed by APB Opinion No. 25, but is required to make pro forma disclosures
in the footnotes to the financial statements as if the measurement provisions of
SFAS No. 123 and SFAS No. 148 "Accounting for Stock-Based
Compensation-Transition and Disclosure--an Amendment of SFAS No. 123" had been
adopted. Under the intrinsic value method, compensation is measured as the
difference between the market value of the stock on the grant date, less the
amount required to be paid for the stock. The difference, if any, is charged to
expense over the vesting period of the options. No stock-based employee
compensation cost is reflected in net income (loss), since options granted under
the plan had an exercise price equal to the market value of the underlying
common stock on the date of grant. See Note 15 for additional information. If
compensation cost for the options had been determined in accordance with SFAS
No. 123, the Company's net income (loss) and per owner unit amounts would have
been as follows:
2001      2002      2003
                                                                 --------   -------   -------
Net (loss) income as reported:..............................  $(53,355)  $16,302   $58,233
   Deduct: Total stock-based employee compensation expense
     determined under fair value based method..................      (361)     (417)     (447)
   Add: Total stock-based employee compensation expense
     determined under intrinsic value based method.............
                                                                 --------   -------   -------
   Pro forma net (loss) income.................................  $(53,716)  $15,885   $57,786
                                                                 ========   =======   =======
   Earnings per owners' unit:
     Basic and diluted net (loss) income as reported:
        Class A and B common interests.........................  $   (.77)  $   .17   $   .73
        Class C interests......................................  $      -   $   .09   $   .15
     Basic and diluted net (loss) income pro forma:
        Class A and B common interests.........................  $   (.77)  $   .17   $   .72
        Class C interests......................................  $      -   $   .09   $   .15
REGULATORY ACCOUNTING--Certain of the Company's operating subsidiaries,
specifically the telephone operations of Southwest II, prepare their financial
statements in accordance with the provisions of SFAS No. 71, "Accounting for the
Effects of Certain Types of Regulation". The provisions of SFAS No. 71 require,
among other things, that regulated enterprises reflect rate actions of
regulators in their financial statements, when appropriate. These rate actions
can provide reasonable assurance of the existence of an asset, reduce or
eliminate the value of an asset, or impose a liability on a regulated
enterprise. The Company periodically reviews its position as to the
applicability of SFAS No. 71 based on the current regulatory and competitive
environment.

DERIVATIVE FINANCIAL INSTRUMENTS--Effective January 1, 2001, the Company adopted
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", as
amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB
                                       F-10
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Statement No. 133", and SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities". SFAS No. 133, as amended, requires
that all derivative instruments, such as interest rate swap and interest rate
collar agreements, be recognized on the balance sheet at fair value, regardless
of the purpose or intent of holding them. In addition, SFAS No. 133 provides
that for derivative instruments that qualify for hedge accounting, changes in
the fair value will either be offset against the change in fair value of the
hedged assets, liabilities, or firm commitments through earnings or recognized
in owners' equity as a component of accumulated other comprehensive income
(loss) until the hedged item is recognized in earnings, depending on whether the
derivative is being used to hedge changes in fair value or cash flows. The
ineffective portion of a derivative's change in fair value will be immediately
recognized in earnings.

During 2000, the Company entered into an interest rate swap and interest rate
collar agreement, which did not meet the criteria for hedge accounting upon
adoption of SFAS No. 133 on January 1, 2001. The transitional unrealized loss of
$4,715 is reflected as a "Cumulative effect of change in accounting principle"
in the Consolidated Statements of Operations, while all settlements and
subsequent adjustments to fair value are recorded in "Loss on interest rate
hedging arrangements". See Note 8 for additional information.

The Company does not have any other derivative financial instruments, nor does
it use such instruments for speculative purposes.

GOODWILL AND INTANGIBLES--In June 2001, the Financial Accounting Standards Board
(FASB) issued two new statements, SFAS No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 requires that the
purchase method be used for all business combinations initiated after June 30,
2001. SFAS No. 142 requires that goodwill no longer be amortized to earnings,
but instead be reviewed for impairment. The Company adopted SFAS No. 142, on
January 1, 2002. See Note 7 for additional information.

ASSET RETIREMENT OBLIGATIONS--On January 1, 2003, the Company adopted SFAS No.
143, "Accounting for Asset Retirement Obligations". SFAS No. 143 addresses
financial accounting and reporting for legal obligations associated with the
retirement of tangible long-lived assets and the related asset retirement costs.
SFAS No. 143 requires that companies recognize the fair value of a liability for
an asset retirement obligation in the period in which it is incurred and
capitalize the expected retirement costs as part of the book value of the
long-lived asset. The Company generally has had no legal obligation to remove
assets and therefore, has not accrued a liability for anticipated removal costs.
Removal costs are expensed as they are incurred. The telephone operations of the
Company's subsidiary, Southwest II, are subject to SFAS No. 71 and therefore,
have historically included a component for removal costs in excess of the
related estimated salvage value even though there is no legal obligation to
remove the assets. Notwithstanding the adoption of SFAS No. 143, SFAS No. 71
requires the Company to continue to reflect this accumulated liability for
removal costs in excess of salvage value even though there is no legal
obligation to remove the assets. As a result, the adoption of SFAS No. 143 did
not have a material effect on the Company's financial statements.

RECENT ACCOUNTING PRONOUNCEMENTS--In June 2002, the FASB issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities". This
Statement addresses financial accounting and reporting for costs associated with
exit or disposal activities and nullifies Emerging Issues Task Force Issue No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." The provisions of this Statement are effective for exit or
disposal activities that are initiated after December 31, 2002. The Company
adopted

                                       F-11
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

this Statement on January 1, 2003. The adoption of this standard did not have a
material impact on the Company's financial position or the results of
operations.

Financial Accounting Standards Board Interpretation (FIN) No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others--an Interpretation of FASB Statements No.
5, 57, and 107 and Rescission of FIN No. 34" was issued in November 2002 and
became effective for disclosures made in December 31, 2002 financial statements.
The interpretation requires expanded disclosures of guarantees. In addition, the
interpretation requires recording the fair value of guarantees upon issuance or
modification after January 1, 2003. While the Company has various guarantees
included in contracts in the normal course of business, these guarantees do not
represent significant commitments or contingent liabilities related to the
indebtedness of others.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities, an Interpretation of Accounting Research Bulletin No. 51 (ARB 51)",
which clarifies the consolidation accounting guidance in ARB 51, "Consolidated
Financial Statements," as it applies to certain entities in which equity
investors who do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entities to finance
their activities without additional subordinated financial support from other
parties. Such entities are known as variable interest entities (VIEs). FIN No.
46 requires that the primary beneficiary of a VIE consolidates the VIE. FIN No.
46 also requires new disclosures for significant relationships with VIEs,
whether or not consolidation accounting is used or anticipated. In December
2003, the FASB revised and re-released FIN No. 46 as "FIN No. 46(R)." The
provisions of FIN No. 46(R) are effective for periods ending after March 15,
2004. However, the Company has elected to adopt FIN No. 46(R) as of December 31,
2003. The adoption of FIN No. 46(R) did not have a material impact on the
Company's financial position or the results of operations.

In May 2003, the FASB issued SFAS No. 150 "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." This Statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability because that financial instrument embodies an obligation of the
issuer. This Statement is effective for periods beginning after June 15, 2003.
The Company has included the redeemable preferred interests as part of total
liabilities at December 31, 2002 and 2003.

In January 2004, FASB Staff Position (FSP) No. 106-1, "Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003" was issued. FSP No. 106-1 permits the deferral of
recognizing the effects of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the Act) in the accounting for post-retirement health
care plan under SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions," and in providing disclosures related to the plan required
by SFAS No. 132 (revised 2003), "Employers' Disclosures about Pensions and Other
Postretirement Benefits." The deferral of the accounting for the Act continues
to apply until authoritative guidance is issued on the accounting for the
federal subsidy provided by the Act or until certain other events requiring plan
remeasurement. We have elected the deferral provided by this FSP and are
evaluating the magnitude of the potential favorable impact of this FSP on our
results of operations and financial position. See Note 11 for further discussion
of postretirement benefits.

3.  ACQUISITION

On January 31, 2002, the Company purchased all the outstanding common stock,
preferred stock and common stock equivalents of KCC in a transaction accounted
for as a purchase business combination. As

                                       F-12
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

a result of this acquisition, the Company also acquired a 32% general partner
interest in CGKC&H Rural Cellular Limited Partnership (CGKC&H) and CGKC&H #2
Rural Cellular Limited Partnership (CGKC&H #2) which provide wireless telephone
service to certain rural service areas in Texas.

The purchase price allocation in accordance with SFAS No. 141, "Business
Combinations", for the January 31, 2002 purchase business combination is as
follows:
Consideration given--cash paid to former owners.............  $126,375
   Consideration received--fair value of net tangible assets
     and identified intangible assets purchased................   (55,712)
   Transaction costs--cash paid for transaction costs..........     2,471
                                                                 --------
   Goodwill....................................................  $ 73,134
                                                                 ========
The following unaudited financial information assumes that the KCC acquisition
that was consummated during the year ended December 31, 2002 had occurred on
January 1, 2001. The pro forma information is not necessarily indicative of the
operating results that would have occurred if the acquisitions had been
consummated as of January 1, 2001 nor is it necessarily indicative of future
operating results.
2001        2002
                                                                 --------    --------
Revenue.....................................................  $451,948    $482,195
   (Loss) income before cumulative effect of a change in
     accounting principle......................................   (44,072)     16,587
   Net (loss) income...........................................   (48,486)     16,587
   Basic and diluted net (loss) income per owners' unit:
     Class A and B common interests............................  $  (0.77)   $   0.17
     Class C interests.........................................  $   0.11    $   0.10
4.  DISCONTINUED OPERATIONS

As a result of the Company's sale of its competitive local exchange business in
Texas in 2002, the results of such operations have been reflected as
discontinued operations in the Company's financial statements in accordance with
SFAS No. 144.

The following table provides the components of the Company's discontinued
operations for the years ended December 31, 2001, 2002 and 2003:
2001       2002       2003
                                                                -------    -------    -------
Revenue....................................................  $   570    $   563    $     -
   Net (loss) income..........................................  $(8,443)   $(3,461)   $   108
In connection with the discontinued operations in 2002, the Company recorded a
liability of approximately $2,000 related to certain employee termination
benefits and other exit costs, including a non-cancelable lease. As of December
31, 2002 and 2003, approximately $400 and $100, respectively, of the $2,000 had
not been paid. These amounts have been classified as current liabilities in the
Consolidated Balance Sheets. Income from discontinued operations of $108 in 2003
represents a revision to the estimates made in 2002 for recording certain
employee termination benefits and other exit costs.

                                       F-13
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5.  OTHER CURRENT ASSETS

Other current assets consist of the following:
DECEMBER 31,
                                                                 ----------------
                                                                  2002      2003
                                                                 ------    ------
Deferred service activation costs...........................  $5,058    $5,208
   Other.......................................................   2,835     3,844
                                                                 ------    ------
   Total.......................................................  $7,893    $9,052
                                                                 ======    ======
6.  PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:
WEIGHTED
                                                            AVERAGE          DECEMBER 31,
                                                              LIFE      ----------------------
                                                            IN YEARS      2002         2003
                                                            --------    ---------    ---------
Land...................................................      -       $   4,723    $   4,686
   Buildings and leasehold improvements...................     29          81,688       83,858
   Central office equipment...............................      9         269,820      301,737
   Outside communications plant...........................     18         514,414      540,202
   Furniture, vehicles and other equipment................      6          43,486       50,269
   Construction in progress...............................      -          10,380        9,436
                                                                        ---------    ---------
                                                                          924,511      990,188
   Less accumulated depreciation..........................               (144,753)    (220,618)
                                                                        ---------    ---------
   Property, plant and equipment, net.....................              $ 779,758    $ 769,570
                                                                        =========    =========
The above table references the weighted average depreciable life of the
Company's property, plant and equipment. For the majority of its property, plant
and equipment, the Company calculates depreciation expense based on its estimate
of the useful life of the assets. Certain of the Company's total property, plant
and equipment are accounted for under the requirements of SFAS No. 71. SFAS No.
71 allows the Company to depreciate its assets over useful lives as prescribed
by regulatory authorities, which can exceed the actual useful lives of the
assets.

Included in the furniture, vehicles and other equipment amount at December 31,
2002 and 2003 is $5,024 and $6,918, respectively, for vehicles under capital
leases. The related accumulated depreciation for these leases is $1,039 and
$2,389 at December 31, 2002 and 2003, respectively.

Depreciation expense, excluding discontinued operations, was $56,943, $73,273
and $81,638 for the years ended December 31, 2001, 2002 and 2003, respectively,
and is included in "Depreciation and amortization" in the Company's Consolidated
Statements of Operations. Depreciation expense for 2001, 2002 and 2003 includes
$128, $911 and $1,350, respectively, related to assets acquired under capital
lease obligations.

                                       F-14
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

7.  INVESTMENTS AND OTHER ASSETS

Investments and other assets consist of the following:
DECEMBER 31,
                                                                 -----------------------
                                                                    2002         2003
                                                                 ----------   ----------
Goodwill....................................................  $1,057,007   $1,057,007
   RTFC equity certificates....................................      61,822       62,318
   Unamortized debt issuance costs.............................      61,311       54,364
   Investment in cellular partnerships.........................      18,234       17,986
   Other.......................................................       5,305        4,637
                                                                 ----------   ----------
   Total.......................................................  $1,203,679   $1,196,312
                                                                 ==========   ==========
The Company's goodwill represents the excess price paid by the Company over the
fair value of the tangible and intangible assets and liabilities of the
telephone operating properties purchased in Oklahoma, New Mexico, Arkansas and
Texas, on the date of acquisition net of accumulated amortization of $74,429. In
accordance with SFAS No. 142, the goodwill balance is no longer amortized, but
instead will be subject to an annual assessment of impairment by applying a
fair-value based test.

The Company will evaluate the carrying value of goodwill in the third quarter of
each year. As part of the evaluation, the Company compares the carrying value of
the goodwill with its fair value to determine whether an impairment exists. The
Company discounts future cash flow projections to determine if the goodwill can
be recovered. Cash flow projections, although subject to a degree of
uncertainty, are based on trends of historical performance and management's
estimate of future performance, giving consideration to existing and anticipated
competitive and economic conditions. Upon completion of its initial assessments
and its annual assessment in the third quarters of 2002 and 2003, the Company
determined that no write-down in the carrying value of the goodwill was
required.

The following financial information is presented as if SFAS No. 142 was adopted
at the beginning of the year ended January 1, 2001:
2001      2002      2003
                                                                 --------   -------   -------
Reported net (loss) income..................................  $(53,355)  $16,302   $58,233
   Goodwill amortization.......................................    53,900         -         -
                                                                 --------   -------   -------
   Adjusted net income.........................................  $    545   $16,302   $58,233
                                                                 --------   -------   -------
   EARNINGS PER OWNERS' UNIT:
   Basic and diluted net (loss) income as reported:
     Class A and B common interests............................  $   (.77)  $   .17   $   .73
     Class C interests.........................................  $      -   $   .09   $   .15
   Basic and diluted net income adjusted:
     Class A and B common interests............................  $    .01   $   .17   $   .73
     Class C interests.........................................  $      -   $   .09   $   .15
In accordance with the terms of the Rural Telephone Finance Cooperative (RTFC)
loans, the Company was required to purchase an equity certificate in RTFC equal
to 10% of the total amount borrowed from the RTFC. RTFC provided a loan to
finance the purchase of the equity certificate. The funds invested in this
equity certificate will be refunded to the Company upon repayment of the
outstanding loan balance. The RTFC certificate is not marketable and is carried
at cost. As a member of RTFC, the Company receives non-cash patronage capital
certificates based on RTFC earnings. During the year ended December 31, 2002 and
2003, the Company recorded patronage capital certificates with a present value
of

                                       F-15
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

$324 and $430, respectively. These non-cash patronage capital certificates will
accrue interest on a monthly basis and will be redeemed for approximately $1,234
and $1,360 in the years 2017 and 2018, respectively.

As a result of amending the terms of its revolving credit facility in 2003, the
Company expensed $555 of its debt issuance costs related to the original debt
due to the reduced borrowing capacity of the facility upon execution of the
amendment. In addition, the Company deferred an additional $1,158 of new debt
issuance costs incurred as a result of this same amendment. See Note 8 for
additional information. Debt issuance costs are amortized utilizing the
effective interest rate method over the term of the related debt.

Investments in cellular partnerships represent the Company's 32% ownership in
both CGKC&H and CGKC&H #2. The Company accounts for its investments using the
equity method of accounting. Income taxes on the Company's equity in earnings of
the partnerships are included in the Company's provision for federal income
taxes.

The Company leases telecommunications equipment to customers usually over
five-year terms. These long-term receivables are included in "Investments and
other assets" on the Consolidated Balance Sheets. Future minimum rentals to be
received under sales-type leases in effect at December 31, 2002 and 2003 are as
follows:
YEAR                                                          2002    2003
   ----                                                          -----   -----
2003........................................................  $ 168   $   -
   2004........................................................    141     198
   2005........................................................     86     130
   2006........................................................     71     107
   2007........................................................     58      92
   2008........................................................      -      62
   Thereafter..................................................     68      23
                                                                 -----   -----
   Total minimum lease payments................................    592     612
   Less current portion........................................   (168)   (198)
                                                                 -----   -----
   Long-term portion...........................................  $ 424   $ 414
                                                                 =====   =====
8.  LONG-TERM DEBT

Long-term debt outstanding is as follows:
DECEMBER 31,
                                                                 -----------------------
                                                                    2002         2003
                                                                 ----------   ----------
6.2%* Senior Credit Facilities, due in installments through
     2013......................................................  $1,244,016   $1,145,383
   10.0% Senior Subordinated Debt, due 2010....................     296,469      314,257
   5.4%* Leases, due in installments through 2008..............       3,800        4,333
                                                                 ----------   ----------
   Total long-term debt........................................   1,544,285    1,463,973
   Less current maturities.....................................     (25,152)     (37,318)
                                                                 ----------   ----------
   Long-term debt, excluding current maturities................  $1,519,133   $1,426,655
                                                                 ==========   ==========
---------------------------
* weighted average interest rate at December 31, 2003

The Senior Credit Facilities consist of revolving credit agreements
(collectively, the Revolver) and Tranches A, B, C and D. These Tranches are
related borrowings with varying interest rates, due dates and payment schedules.
The Senior Credit Facilities are charged interest based upon the following:
$553,821

                                       F-16
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

for Tranches A, B and the Revolver are charged interest based upon the
applicable Eurodollar rate plus 2.0% to 4.0%, or at applicable base rate plus
0.75% to 3.0%, with the interest rate spread adjusted based upon certain
financial ratios; $591,562 for Tranches C and D are charged interest at the
RTFC's current standard long-term variable rate plus 1.18%. As a member of RTFC,
the Company receives cash distributions based on RTFC earnings. During the year
ended December 31, 2002 and 2003, the Company recorded $2,879 and $3,173,
respectively, of cash distributions from the RTFC as a reduction of interest
expense.

At December 31, 2002 and 2003, the weighted average interest rate of the Senior
Credit Facilities was 6.9% and 6.2%, respectively.

On October 3, 2003, the Company amended the Amended and Restated Credit
Agreement dated August 31, 2000 (the Credit Agreement). Included in the
revisions to the Credit Agreement was a reduction of the amount available for
borrowings under the Revolver and an increase in permitted investments. In
addition, there were revisions related to the use of additional borrowings and
the maintenance of certain financial ratios. The amount of borrowing available
to the Company under the Revolving credit facility (Revolver) is generally based
upon achieving certain levels of operating performance. At December 31, 2003,
the Company had an aggregate of $150,900 in available borrowings under the
Revolver, for which the Company pays a commitment fee of 0.375% to 0.500% based
upon certain financial tests.

Borrowings under the Senior Credit Facilities are collateralized by the
operating assets of Southwest and Southwest II. These agreements limit, among
other things, additional borrowings, transactions with affiliates, capital
expenditures and the payment of dividends by those operating companies. The
agreements also require maintenance of certain financial ratios including debt
to cash flow ratios, interest coverage and fixed charge coverage.

The Company is allowed to pay cash interest on the Senior Subordinated Debt at a
rate of 10% per year unless prohibited by the terms of the Senior Credit
Facilities. The Senior Credit Facilities contain provisions requiring the
Company to achieve a pro forma fixed charge coverage equal to or greater than
one to one for that particular measurement period prior to paying cash interest
on the Senior Subordinated Debt. If the Company is prohibited from paying cash
interest, the debt accrues interest at 12.0% and the Company converts this
non-cash interest into additional note principal. Once the required pro forma
fixed charge is achieved, the interest rate drops to 10% for that particular
semi-annual interest period and the Company is allowed to make a cash interest
payment. During the years ended December 31, 2001, 2002 and 2003, the Company
converted $29,025, $32,612 and $17,788, respectively, of interest into
additional note principal. For the measurement period ending September 30, 2003,
the Company achieved the required pro forma fixed charge coverage. As a result,
the interest rate on the Senior Subordinated Debt decreased to 10.0% and the
semi-annual interest of $15,713 due December 31, 2003 was paid in cash. If the
pro forma fixed charge coverage is less than one to one during the measurement
period prior to the semi-annual interest payment date, the interest rate returns
to 12.0% and the Company is required to convert the interest into additional
note principal for that semi-annual period.

The approximate annual debt maturities for the five years subsequent to December
31, 2003 are as follows: $37,318 in 2004; $47,786 in 2005; $64,656 in 2006;
$226,596 in 2007; and $292,408 in 2008.

During the year ended December 31, 2001, 2002 and 2003, the Company capitalized
$3,372, $1,116 and $997, respectively, of interest expense related to
construction projects.

During 2000, the Company entered into two interest rate hedge contracts, an
interest rate swap and an interest rate collar agreement, to adjust the interest
rate profile of its debt obligations. In addition, the

                                       F-17
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Company's credit arrangements include provisions that require interest rate
protection (hedge agreements) for a portion of its variable rate debt. The
Company entered into interest rate hedging agreements with certain financial
institutions to reduce the financial impact of changes in interest rates on its
debt. The Company's interest rate swap and collar agreement do not qualify for
hedge accounting under SFAS No. 133, therefore, they are carried at fair market
value and are included in "Deferred credits and other liabilities" on the
Consolidated Balance Sheets. The transitional unrealized loss on the interest
rate hedging arrangements at January 1, 2001 is reflected as the "Cumulative
effect of change in accounting principle" on the Consolidated Statement of
Operations. Changes in the fair market value and settlements are recorded as
"Loss on interest rate hedging arrangements" each reporting period.

The swap agreement effectively converts a portion of the Company's variable-rate
debt to fixed-rate debt, thereby reducing the risk of incurring higher interest
costs due to rising interest rates. The interest rate collar includes a floor
and a cap. For any reset that the three month London InterBank Offered Rate
(LIBOR) is less than or equal to 5.43% (Floor Knock-in), the LIBOR that the
Company pays for that three month period is 6.76% (Cap). For any reset that the
three month LIBOR is greater than 6.76%, but less than 8.25%, the rate that the
Company pays is 6.76%.

As a further hedge against rising interest rates, the Company selected fixed
rate options available under certain of the Senior Credit Facilities. For the
year ended December 31, 2000, the Company fixed $275,000 of the Tranche C debt
for a period of five years at the rate of 9.28%. During the year ended December
31, 2002, the Company fixed $44,000 under Tranche B for a period of three years
at the rate of 8.39%. During the year ended December 31, 2003, the Company fixed
$210,000 of the Tranche C debt for three years at a rate of 6.68% and $61,111 of
the Tranche D debt for a period of four years at a rate of 6.38%.

The counterparties to the hedge agreements are major financial institutions.
These financial institutions have been accorded high ratings by major rating
agencies. While the Company may be exposed to credit losses due to
non-performance of the counterparties, the Company considers the risk to be
remote. The Company does not utilize derivative financial instruments for
trading or speculative purposes.
INTEREST RATE SWAP
     Notional amount...........................................      $100,000
     Receive rate..............................................   3 month LIBOR
     Pay rate..................................................       6.19%
     Maturity..................................................  November 9, 2004
   INTEREST RATE COLLAR
     Notional amount...........................................      $100,000
     Maturity..................................................  November 9, 2004
     Cap rate..................................................       6.76%
     Cap knock-out rate........................................       8.25%
     Floor knock-in rate.......................................       5.43%
F-18
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9.  DEFERRED CREDITS AND OTHER LIABILITIES

Deferred credits and other liabilities were composed of the following:
2002       2003
                                                                 -------    -------
Accrued pension costs (see Note 11).........................  $10,230    $15,074
   Accrued postretirement medical and life benefit costs (see
     Note 11)..................................................   10,198     11,205
   Interest rate swap (see Note 8).............................    8,159      4,189
   Interest rate collar (see Note 8)...........................    9,195      4,678
   Deferred revenue............................................    4,591      3,558
   Deferred federal income taxes (see Note 10).................    4,882      5,354
   Deferred investment tax credit (see Note 10)................      305        259
   Other.......................................................    1,472      3,755
                                                                 -------    -------
   Total.......................................................  $49,032    $48,072
                                                                 =======    =======
Deferred revenue represents revenues billed to customers for activating
services. This revenue is recognized over the average life of the customers
along with the costs associated with activating such services. See Note 2 for
additional information.

10.  INCOME TAXES

Southwest II has elected to be taxed as a corporation for federal income tax
purposes. Each legal operating entity owned directly or indirectly by Southwest
II is legally formed as either a limited liability company, a limited
partnership, or a corporation. However, each of these entities is treated for
federal income tax purposes either as a corporation or a disregarded entity (a
division of a corporation). Operations for all entities directly or indirectly
owned by Southwest II are included in a consolidated federal income tax return
filed by Southwest II. Since Southwest II is the only operating entity organized
as a corporation for tax purposes, the income tax expense and the deferred tax
liabilities reported in the consolidated results of operations are computed
based solely on the Southwest II operations.

The Company accounts for income taxes under SFAS No. 109, "Accounting for Income
Taxes". The Company records its net deferred income tax liability for all
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes,
computed based on provisions of the enacted tax law.

                                       F-19
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The components of the Company's net deferred tax liability are as follows at
December 31, 2002 and 2003:
DECEMBER 31,
                                                                 ----------------
                                                                  2002      2003
                                                                 ------    ------
Deferred tax assets:
     Capitalized costs on self constructed assets..............  $1,366    $1,474
     Reserves and accruals.....................................     313       421
     Other.....................................................   1,913       984
                                                                 ------    ------
                                                                  3,592     2,879
                                                                 ------    ------
   Deferred tax liabilities:
     Property and equipment....................................   6,823     7,466
     Other.....................................................   1,651       767
                                                                 ------    ------
                                                                  8,474     8,233
                                                                 ------    ------
     Net deferred tax liability................................  $4,882    $5,354
                                                                 ======    ======
Income tax expense for the years ended December 31, was as follows:
2001      2002      2003
                                                                 ------    ------    ------
Current expense.............................................  $    -    $1,556    $2,028
   Deferred expense............................................       -        93       450
                                                                 ------    ------    ------
   Total income tax expense....................................  $    -    $1,649    $2,478
                                                                 ======    ======    ======
There was no income tax expense associated with the discontinued operations.

The differences between the federal income tax statutory rate and the Company's
effective income tax rate is as follows:
2001     2002     2003
                                                                 -----    -----    -----
Statutory federal income tax rate...........................   34.0%    34.0%    34.0%
   Income not subject to federal income taxes..................  (34.0)   (25.3)   (29.6)
   Other--net..................................................    0.0      0.5     (0.3)
                                                                 -----    -----    -----
   Effective income tax rate...................................    0.0%     9.2%     4.1%
                                                                 =====    =====    =====
Prior to 1988, KCC purchased assets that entitled it to an investment tax credit
as a reduction against its federal income tax liability. For financial reporting
purposes, this credit was deferred and is being amortized to income over the
useful lives of the assets acquired. Amortization of deferred amounts was
approximately $41 and $46 in 2002 and 2003, respectively.

11.  PENSION AND EMPLOYEE BENEFITS

The Company sponsors a qualified pension plan and a postretirement benefit plan
for the union employees. The pension plan is noncontributory. The Company's
postretirement health care plans are generally contributory and include a limit
on the Company's share of the cost for recent and future retirees. The Company
accrues the costs, as determined by an actuary, of the pension and the
postretirement benefits over the period from the date of hire until the date the
employee becomes fully eligible for benefits.

                                       F-20
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The following tables provide a reconciliation of the changes in the plans'
benefit obligations and fair value of plan assets for the years ended December
31, 2001, 2002 and 2003 and a statement of funded status as of December 31,
2001, 2002 and 2003:
PENSION BENEFITS          OTHER POSTRETIREMENT BENEFITS
                                 -----------------------------   -----------------------------
                                  2001       2002       2003      2001       2002       2003
                                 -------   --------   --------   -------   --------   --------
CHANGE IN PROJECTED BENEFIT
     OBLIGATION:
   Benefit obligation at
     January 1.................  $33,095   $ 34,541   $ 45,168   $ 7,997   $  9,188   $ 12,751
   Benefit obligation assumed
     as part of the KCC
     acquisition...............        -      3,449          -         -          -          -
   Service cost................    1,676      2,363      3,027       210        349        394
   Interest cost...............    2,471      2,764      2,883       603        739        882
   Actuarial loss..............    2,583      6,058      8,601       407      2,177      1,602
   Effect of special
     termination benefits......        -        669          -         -        532          -
   Benefits paid...............   (5,284)    (4,676)    (3,697)      (29)      (234)      (243)
                                 -------   --------   --------   -------   --------   --------
   Projected benefit obligation
     at December 31............  $34,541   $ 45,168   $ 55,982   $ 9,188   $ 12,751   $ 15,386
                                 =======   ========   ========   =======   ========   ========
   CHANGE IN PLAN ASSETS:
   Fair value of plan assets at
     January 1.................  $32,273   $ 25,479   $ 21,649   $     -   $      -   $      -
   Plan assets acquired as part
     of the KCC acquisition....        -      3,505          -         -          -          -
   Actual return on plan
     assets....................   (1,510)    (2,975)     4,096         -          -          -
   Employer contributions......        -        316      2,700        29        234        243
   Benefits paid...............   (5,284)    (4,676)    (3,697)      (29)      (234)      (243)
                                 -------   --------   --------   -------   --------   --------
   Fair value of plan assets at
     December 31...............  $25,479   $ 21,649   $ 24,748   $     -   $      -          -
                                 =======   ========   ========   =======   ========   ========
   Funded status as of December
     31........................  $(9,062)  $(23,519)  $(31,234)  $(9,188)  $(12,751)  $(15,386)
   Unrecognized net actuarial
     loss......................    6,233     17,939     23,864       378      2,553      4,181
   Adjustment required to
     recognize additional
     minimum liability.........        -     (4,650)    (7,704)        -          -          -
                                 -------   --------   --------   -------   --------   --------
   Accrued benefit cost........  $(2,829)  $(10,230)  $(15,074)  $(8,810)  $(10,198)  $(11,205)

                                 =======   ========   ========   =======   ========   ========
The accumulated benefit obligation for the pension plan was $23,499, $31,869 and
$39,813 as of December 31, 2001, 2002 and 2003, respectively.

The accrued benefit cost is reflected in "Deferred credits and other
liabilities" on the Company's Consolidated Balance Sheet (see Note 9). The
Company's investment policy is to invest 55-75% of the pension assets in equity
funds with the remainder being invested in fixed income funds and cash
equivalents. Effective January 1, 2003, the Company selected a new Trustee and
Investment Manager for the pension plan.

                                       F-21
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The following table shows the asset allocations at December 31, 2002 and 2003,
by asset category:
ASSET CATEGORY                                                2002   2003
   --------------                                                ----   ----
Broad Market Stock Index Fund...............................    -     61%
   International Stock Index Fund..............................    -     11
   Bond Index Fund.............................................    -     28
   Domestic Equity Mutual Funds................................   45%     -
   International Equity Mutual Funds...........................   11      -
   Fixed Income Mutual Funds...................................   44      -
                                                                 ---    ---
   Total.......................................................  100%   100%
                                                                 ===    ===
The following table provides an estimate of the benefit payments expected to be
paid during the years ended December 31:
OTHER
                                                                                    POSTRETIREMENT
   YEAR                                                          PENSION BENEFITS      BENEFITS
   ----                                                          ----------------   --------------
2004........................................................      $ 1,574            $  579
   2005........................................................      $ 2,246            $  703
   2006........................................................      $ 2,953            $  842
   2007........................................................      $ 3,210            $  953
   2008........................................................      $ 3,709            $1,044
   2009-2013...................................................      $28,270            $6,544
The Company expects to contribute $4,694 to its pension plan and $579 to its
other postretirement benefits plan in 2004.

The following table provides the components of net periodic benefit cost for the
years ended December 31, 2001, 2002 and 2003:
PENSION BENEFITS          OTHER POSTRETIREMENT BENEFITS
                                          ---------------------------   -------------------------------
                                           2001      2002      2003      2001       2002        2003
                                          -------   -------   -------   -------   ---------   ---------
Service cost.........................  $ 1,676   $ 2,363   $ 3,027    $210      $  349      $  394
   Interest cost........................    2,471     2,764     2,883     603         739         882
   Expected return on plan assets.......   (2,724)   (2,693)   (2,159)      -           -           -
   Amortization of loss.................        -        20       738       -          31         155
   Special termination benefits.........        -       669         -       -         532           -
   Early retirement window true-up......        -         -         -       -           -        (180)
   Settlement loss......................      640         -         -       -           -           -
                                          -------   -------   -------    ----      ------      ------
   Net periodic benefit cost............  $ 2,063   $ 3,123   $ 4,489    $813      $1,651      $1,251
                                          =======   =======   =======    ====      ======      ======
The weighted-average assumptions used in measuring the Company's benefit
obligations as of December 31, 2002 and 2003, respectively, are as follows:
OTHER
                                                                                  POSTRETIREMENT
                                                              PENSION BENEFITS       BENEFITS
                                                              -----------------   ---------------
                                                               2002      2003      2002     2003
                                                              -------   -------   ------   ------
Discount rate............................................   6.50%     6.05%     6.50%    6.05%
   Expected return on plan assets...........................   8.50%     8.50%        -        -
   Rate of compensation increase............................   4.50%     4.50%        -        -
F-22
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The assumed health care cost trend rate is 10.0% and 9.0% in 2003 and 2004,
respectively, and is assumed to decrease gradually to an ultimate rate of 5.0%
in the year 2008.

A one percentage point change in the assumed health care cost trend rate would
have the following effects on the Company's other postretirement benefits:
1% INCREASE   1% DECREASE
                                                                 -----------   -----------
Effect on 2003 service and interest costs...................      $ 2          $ (3)
   Effect on postretirement benefit obligations as of December
     31, 2003..................................................      $30          $(36)
The Company also sponsors an employee savings plan under Section 401(k) of the
Internal Revenue Code. The plan covers all employees. Under the plan, the
Company provides matching contributions based on qualified employee
contributions. Matching contributions charged to expense were $1,634, $2,026 and
$1,840 during the years ended December 31, 2001, 2002 and 2003, respectively.

12.  COMMITMENTS AND CONTINGENCIES

The Company has operating leases covering primarily buildings and land. Total
rental expense was $4,136, $4,020 and $4,578 in 2001, 2002 and 2003,
respectively. At December 31, 2003, rental commitments under noncancelable
leases are as follows:
AGGREGATE
   YEAR                                                           AMOUNTS
   ----                                                          ---------
2004........................................................   $ 2,257
   2005........................................................     2,244
   2006........................................................     2,156
   2007........................................................     1,820
   2008........................................................     1,824
   Thereafter..................................................     2,873
                                                                  -------
   Total.......................................................   $13,174
                                                                  =======
The Company has various commitments for capital expenditures of $35,852 at
December 31, 2003, of which $15,803 is related to the 2004 capital budget.
Capital expenditures were $107,869, $89,527 and $69,850, for the years ended
December 31, 2001, 2002 and 2003, respectively. Additionally, the Company has
unfulfilled contractual commitments for miscellaneous services at December 31,
2003 of $87,852. These commitments extend through December 31, 2006.

In the normal course of business, there are various legal proceedings
outstanding, including both commercial and regulatory litigation. In the opinion
of management, these proceedings will not have a material adverse effect on the
results of operations or financial condition of the Company.

The Company has a collective bargaining agreement with the Local 6171 and Local
7019 of the Communications Workers of America. This agreement provides for
annual or semi-annual wage increases for these employees and an annual incentive
compensation bonus depending on performance results. The current contracts will
expire on February 28, 2005 and February 14, 2006.

13.  REDEEMABLE PREFERRED INTERESTS

The Company has two classes of Redeemable Preferred Interests: Class A and Class
B. The carrying amount of the Redeemable Preferred Interests equals
approximately the amount of cash that would be

                                       F-23
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

paid under the conditions specified in the Partnership Agreement if settlement
of the Redeemable Preferred Interests had occurred at December 31, 2003 and
2002.

Information about the Redeemable Preferred Interests is as follows:
DECEMBER 31,
                                                                 --------------------
                                                                   2002        2003
                                                                 --------    --------
Class A: 500,000,000 interests authorized, 370,231,350
     interests outstanding at December 31, 2003 and 2002.......  $370,231    $370,231
   Class B: 29,305,106 interests authorized, 28,582,606
     interests outstanding at December 31, 2003 and 2002.......         -           -
                                                                 --------    --------
        Total Redeemable Preferred Interests...................  $370,231    $370,231
                                                                 ========    ========
In 1999, VTC authorized the issuance of 353,119,750 Class A preferred interests
and 22,505,106 Class B preferred interests. On January 1, 2002, the LLC
agreement for VTC was amended to reflect total authorized Class A preferred
interests of 500,000,000 and total authorized Class B preferred interests of
29,305,106.

The Class A and Class B preferred interests have no stated or par value.
365,733,249 of the Class A preferred interests were issued for aggregate
proceeds of $365,542 or approximately $1 per preferred interest. The balance of
4,498,101 Class A preferred interests were issued to the founders of the Company
in connection with the Company's formation in 1999. Additionally, 22,505,106
Class B preferred interests were issued to the founders of the Company in
connection with the Company's formation in 1999. No cash proceeds were received
for the issuance of the founder's interests. No cash proceeds were received by
the Company for the issuance of the Class B preferred interests.

Changes in the number of Class B interests outstanding are as follows:
YEARS ENDED DECEMBER 31,
                                                                 -------------------------
                                                                    2002          2003
                                                                 -----------   -----------
Interests outstanding, beginning............................   22,505,106    28,582,606
   Interests issued pursuant to Valor Telecom Executive
     Incentive Plan (see Note 15)..............................    6,077,500             -
                                                                 -----------   -----------
   Total Class B preferred interests outstanding...............   28,582,606    28,582,606
                                                                 ===========   ===========
These Class A and Class B Preferred Interests are not entitled to receive
dividends and have no voting rights. These interests are redeemable in whole or
in part at the option of the Company and all interests may be redeemed by
September 3, 2011, subject to the restrictions set forth in the Senior Credit
Agreement and the Partnership Agreement, at an amount up to the "Preferred
Appreciation Amount" plus the "Class A Preferred Capital Amount" (both defined
below). Currently, restrictions in the Senior Credit Agreement prevent any
distribution to the holders of the preferred interests in regards to redemption
or liquidation.

Upon the occurrence of a liquidation event, the entire net assets of the Company
available to be distributed among the holders of common and preferred interests,
other than those net assets attributable to Southwest II, shall be distributed
first, ratably among the holders of the Class A preferred interests, based on,
and up to the maximum amount of the "Class A Preferred Capital Amount" which is
defined in the Partnership Agreement as $1.00 per interest. The second order of
distribution provides that to the extent there are any net assets remaining
after the first order of distribution, there shall be a ratable distribution
among the holders of the Class A common interests, based on, and up to the
maximum amount of the "Class A Common Capital Amount" which is defined in the
Partnership Agreement as $1.00 per interest.

                                       F-24
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Next, to the extent there are any net assets remaining after the second order of
distribution, there shall be a ratable allocation among the holders of the Class
A preferred interests and the Class B preferred interests, based on, and up to
the maximum amount of, the "Preferred Appreciation Amount". The "Preferred
Appreciation Amount", per preferred interest holder, is defined as an
appreciation amount calculated as interest on the "Class A Preferred Capital
Amount", or $1 per interest, at a rate of 20% per year, compounded quarterly.

The sum of the "Preferred Appreciation Amount" and the "Class A Preferred
Capital Amount" is $757,855 at December 31, 2003.

14.  COMMON OWNERS' EQUITY

The outstanding Class A common interests, Class B common interests, and Class C
interests have no stated or par value. Each of the Class A common interests and
Class C interests are entitled to one vote. Dividends may be paid based on
certain restrictions related to the preferred interests. Any dividends must be
paid in equal amounts on the Class A and Class B common interests out of
proceeds associated with operations from sources other than Southwest II.
Dividends paid on the Class C interests must arise from proceeds attributable to
the Southwest II operations.

In the event of a liquidation of the Southwest operations, the holders of the
Class A common interests are entitled to $1.00 per interest, (or, if less, the
amount of the related capital contribution paid for such interest), after the
effects of distributions (other than dividends) and share ratably with the Class
B common interest holders in the remaining net assets available for
distribution.

In the event of a liquidation of the Southwest II operations, the holders of the
Class C interests are entitled to $1.00 per interest, (or, if less, the amount
of the related capital contribution paid for such interest), after the effects
of distributions (other than dividends) and share ratably in the remaining net
assets available for distribution.

                                       F-25
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

15.  STOCK OPTIONS

EQUITY INCENTIVE NON-QUALIFYING STOCK OPTIONS

In 1999, Southwest (a majority-owned subsidiary of the Company) reserved
9,000,000 Class B common interests for issuance to employees of the Company in
accordance with the Valor Telecommunications Southwest, LLC 2000 Equity
Incentive Non-Qualifying Option Agreement (the Plan). The vesting period for
these options ranges from immediate to 5 years and the options expire 10 years
after the date of grant. The weighted average remaining life of the options
outstanding at December 31, 2003 is 6.8 years. The options are granted at the
$1.00 stated price of the Class B common interests. The stated price is
equivalent to the estimated fair value of the interests.
STOCK OPTIONS                                                  NUMBER OF OPTIONS*
   -------------                                                  ------------------
Options outstanding, January 1, 2001........................          4,120
   Options granted.............................................            264
   Forfeited options...........................................           (124)
                                                                        ------
   Options outstanding, December 31, 2001......................          4,260
   Options granted.............................................            862
   Forfeited options...........................................           (405)
                                                                        ------
   Options outstanding, December 31, 2002......................          4,717
   Options granted.............................................            465
   Forfeited options...........................................            (60)
                                                                        ------
   Options outstanding, December 31, 2003......................          5,122
                                                                        ======
   Exercisable options at December 31, 2001....................          1,538
                                                                        ======
   Exercisable options at December 31, 2002....................          2,323
                                                                        ======
   Exercisable options at December 31, 2003....................          3,383
                                                                        ======
---------------------------
* Number of options expressed in thousands.

The fair value for each of the Company's options was estimated at the date of
grant using a Black-Scholes option pricing model and the following weighted
average assumptions for 2001, 2002 and 2003:
2001   2002   2003
                                                                 ----   ----   ----
Dividend yield..............................................     0%     0%     0%
   Volatility factor...........................................     0      0      0
   Risk-free interest rate.....................................  5.14%  5.19%  4.05%
   Expected life in years......................................    10     10     10
In 2000, the Company granted an Equity Incentive Non-Qualifying Stock Option to
one of its key executives in the amount of 300,000 Class A Common Interests and
1,700,000 Class A Preferred Interests of VTC. The options vested immediately and
was granted at a $1.00 stated price. The stated price is equivalent to the
estimated fair value of the interests. This option was exercisable at December
31, 2001, 2002 and 2003.

PHANTOM STOCK UNITS

The Valor Telecom Executive Incentive Plan was implemented on April 1, 2002, and
allows for awards of up to 1,200,000 Class B Common Interests and 6,800,000
Class B Preferred Interests (collectively, Phantom Stock Units) to selected
executive employees of VTC and its subsidiaries. These interests allow
                                       F-26
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

the selected executives to participate in the appreciation on a pro-rata basis
with the Class A Preferred Interests and Class A Common Interests held by the
Equity Sponsors and Individual Investors. In accordance with Financial
Accounting Interpretation No. 28, "Accounting for Stock Appreciation Rights and
Other Variable Stock Option or Award Plans", the amount by which the market
value of these Phantom Stock Units exceeds the value specified under the plan is
charged to compensation expense over the vesting period. Certain of the awards
vested 20% immediately and 20% on January 1 for each of the following 4 years.
The remaining awards vest evenly over 5 years from the date the award was
granted. Unvested units are subject to cancellation upon expiration or
termination of employment. For the years ended December 31, 2002 and 2003 the
Phantom Stock Units were deemed to have no value and thus no compensation
expense was recorded during those periods. VTC issued 1,072,500 Class B Common
and 6,077,500 Class B Preferred units to the Executive Incentive Plan in 2002.
These units were granted to Executives as follows:
PHANTOM STOCK
                                                                   NUMBER OF UNITS
                                                                     IN THOUSANDS
                                                                 --------------------
                                                                 CLASS B     CLASS B
                                                                 COMMON     PREFERRED
                                                                 -------    ---------
Units outstanding, January 1, 2002..........................       -           -
   Units granted...............................................   1,073       6,078
   Forfeited units.............................................       -           -
                                                                  -----       -----
   Units outstanding, December 31, 2002........................   1,073       6,078
   Units granted...............................................       -           -
   Forfeited units.............................................       -           -
                                                                  -----       -----
   Units outstanding, December 31, 2003........................   1,073       6,078
                                                                  =====       =====
     Vested units at December 31, 2002.........................     180       1,020
                                                                  =====       =====
     Vested units at December 31, 2003.........................     395       2,236
                                                                  =====       =====
16.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:

CASH AND CASH EQUIVALENTS--The carrying amount approximates fair value because
of the short maturity of these instruments.

RTFC EQUITY CERTIFICATE--It is not practicable to estimate the fair value of
this investment because there is no quoted market price

DEBT--The fair value of long-term debt was estimated based on the Company's
current incremental borrowing rate for debt of the same remaining maturities.

INTEREST RATE SWAP AND COLLAR AGREEMENT--The Company's interest rate swap and
collar agreements do not qualify for hedge accounting under SFAS No. 133,
therefore, they are carried at fair market value.

                                       F-27
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The estimated fair value of the Company's financial instruments is as follows:
CARRYING
   DECEMBER 31, 2002                                               AMOUNT      FAIR VALUE
   -----------------                                             ----------    ----------
Financial liabilities:
   Long-term debt, including current maturities................  $1,544,285    $1,623,474
   Interest rate swap agreement................................  $    8,159    $    8,159
   Interest rate collar agreement..............................  $    9,195    $    9,195
CARRYING
   DECEMBER 31, 2003                                               AMOUNT      FAIR VALUE
   -----------------                                             ----------    ----------
Financial liabilities:
   Long-term debt, including current maturities................  $1,463,973    $1,522,847
   Interest rate swap agreement................................  $    4,189    $    4,189
   Interest rate collar agreement..............................  $    4,678    $    4,678
17.  OFF BALANCE SHEET RISK AND CONCENTRATION OF CREDIT RISK

Certain financial instruments potentially subject the Company to concentrations
of credit risk. These financial instruments consist primarily of trade
receivables, cash and cash equivalents and derivatives.

The Company places its cash and temporary cash investments with high credit
quality financial institutions and limits the amount of credit exposure to any
one financial institution. The Company also periodically evaluates the credit
worthiness of the institutions with which it invests. The Company does, however,
maintain unsecured cash and cash equivalent balances in excess of federally
insured limits.

18.  RELATED PARTY TRANSACTIONS

The Company had the following transactions with related parties:
YEAR ENDED DECEMBER 31
                                                                -----------------------------
                                                                 2001       2002       2003
                                                                -------    -------    -------
Issuance of additional note principal in lieu of cash
     interest payments to the Sponsors for Subordinated
     Debt.....................................................  $29,025    $32,612    $17,788
   Interest paid to the Sponsors for Subordinated Debt........        -          -     15,713
   Management fees paid to the Sponsors for advisory
     services.................................................    1,000      1,000      1,000
   Fees paid to investors for transaction advisory services...        -      1,300          -
   Various professional fees paid to certain Sponsors and
     Individual Investors.....................................      295        282        228
   Revenue earned from wireless affiliates....................        -        472        489
The Company had the following balances with related parties:
DECEMBER 31
                                                                 --------------------
                                                                   2002        2003
                                                                 --------    --------
Senior Subordinated Debt owed to the Sponsors...............  $296,469    $314,257
   Receivable from wireless affiliates for management services
     and facility leases.......................................     1,000         342
   Payable to the Sponsors for management fees.................       500         500
Under the terms of the CGKC&H partnership agreement, the general partners have
designated the Company to act as the operating partner of CGKC&H. The agreement
provides that the Company is to be

                                       F-28
VALOR TELECOMMUNICATIONS, LLC

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

reimbursed for all reasonable and necessary expenses incurred on behalf of
CGKC&H. During 2002 and 2003, the Company was reimbursed approximately $987 and
$958, respectively, from CGKC&H for these services.

19.  RESTRUCTURING CHARGES

In December 2002, the Company eliminated 81 positions as a result of a
restructuring of the Company's workforce. The Company recorded $1,768 of expense
primarily for termination benefits for employees whose jobs were eliminated. The
Company had a subsequent restructuring of December 2003 resulting in the
elimination of 15 additional positions. The Company recorded $141 of expense for
termination benefits for these 15 employees. As of December 31, 2003,
approximately $184 of the obligation for termination benefits remains and the
Company expects this amount to be paid in 2004. The following table provides a
reconciliation of the changes in the termination benefits obligation for the
years ended December 31, 2003 and 2002:
2002            2003            TOTAL
           LIABILITY FOR TERMINATION BENEFITS             RESTRUCTURING   RESTRUCTURING   RESTRUCTURING
           ----------------------------------             -------------   -------------   -------------
Termination benefits recorded in 2002...................     $1,768           $ --           $1,768
Payments in 2002........................................       (297)            --             (297)
                                                             ------           ----           ------
Balance, December 31, 2002..............................      1,471             --            1,471
Termination benefits recorded in 2003...................         --            141              141
Payments in 2003........................................     (1,405)           (23)          (1,428)
                                                             ------           ----           ------
Balance, December 31, 2003..............................     $   66           $118           $  184
                                                             ======           ====           ======
20.  GUARANTOR SUBSIDIARIES

The subordinated notes expected to be issued in connection with Valor's proposed
issuance of income deposit securities will be guaranteed by all of the Valor's
existing subsidiaries (the "guarantor subsidiaries"). Existing subsidiaries
include VTC, Southwest including its operating entities, and Southwest II
including its operating entities. Valor has no independent assets or operations.
Separate financial information has not been presented for the guarantor
subsidiaries because the guarantor subsidiaries will effectively comprise all of
Valor's assets and operations.

                                       F-29
--------------------------------------------------------------------------------

                        VALOR COMMUNICATIONS GROUP, INC.

                                      IDSS

                          ---------------------------
                                   PROSPECTUS
                          ---------------------------

                                          , 2004

                               CIBC WORLD MARKETS

                              MERRILL LYNCH & CO.

                                LEHMAN BROTHERS

                         BANC OF AMERICA SECURITIES LLC

                                    JPMORGAN

--------------------------------------------------------------------------------

UNTIL           , 2004, ALL DEALERS THAT BUY, SELL OR TRADE OUR IDSS, WHETHER OR
NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS REQUIREMENT IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
VALOR TELECOMMUNICATIONS, LLC

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
ADDITIONS
                                 ----------------------------------------------------------------------------
                                 BALANCE AT BEGINNING   CHARGED TO COSTS AND   CHARGED TO OTHER                 BALANCE AT END OF
DESCRIPTION                           OF PERIOD               EXPENSES             ACCOUNTS       DEDUCTIONS         PERIOD
-----------                      --------------------   --------------------   ----------------   -----------   -----------------
YEAR ENDED DECEMBER 31, 2001
Allowance for doubtful
  accounts -- customers........      $(7,049,640)           $(11,078,719)        $(1,398,667)     $15,229,114      $(4,297,912)
Allowance for doubtful
  accounts -- carriers and
  other........................         (400,000)               (300,000)           (100,000)              --         (800,000)
                                     -----------            ------------         -----------      -----------      -----------
    Total......................      $(7,449,640)           $(11,378,719)        $(1,498,667)     $15,229,114      $(5,097,912)
                                     ===========            ============         ===========      ===========      ===========
YEAR ENDED DECEMBER 31, 2002
Allowance for doubtful
  accounts -- customers........      $(4,297,912)           $ (6,064,222)        $   (52,377)     $ 6,417,285      $(3,997,226)
Allowance for doubtful
  accounts -- carriers and
  other........................         (800,000)             (5,329,090)           (200,000)       5,536,105         (792,985)
                                     -----------            ------------         -----------      -----------      -----------
    Total......................      $(5,097,912)           $(11,393,312)        $  (252,377)     $11,953,390      $(4,790,211)
                                     ===========            ============         ===========      ===========      ===========
YEAR ENDED DECEMBER 31, 2003
Allowance for doubtful
  accounts -- customers........      $(3,997,226)           $ (3,160,384)                         $ 4,485,432      $(2,672,178)
Allowance for doubtful
  accounts -- carriers and
  other........................         (792,985)               (137,789)                 --          278,914         (651,860)
                                     -----------            ------------         -----------      -----------      -----------
    Total......................      $(4,790,211)           $ (3,298,173)        $         0      $ 4,764,346      $(3,324,038)
                                     ===========            ============         ===========      ===========      ===========
S-1
PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than underwriting
discounts and commissions, payable by Valor Communications Group, Inc. in
connection with the offer and sale of the securities being registered. All
amounts are estimates except the SEC registration fee and the NASD filing fee.
SEC registration fee........................................  $110,863
   NASD filing fee.............................................    30,500
            listing fee........................................         *
   Toronto Stock Exchange listing fee (IDSs)...................   160,500
   Toronto Stock Exchange listing fee (Common Stock)...........   160,500
   Transfer agent's fee........................................    30,000
   Trustee's fee...............................................    15,000
   Printing and engraving costs................................         *
   Legal fees and expenses.....................................         *
   Accounting fees and expenses................................         *
   Miscellaneous...............................................         *
        Total..................................................         *
---------------------------

* To be filed by amendment.

ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

Delaware. The General Corporation Law of the State of Delaware ("DGCL")
authorizes corporations to limit or eliminate the personal liability of
directors to corporations and their stockholders for monetary damages for
breaches of directors' fiduciary duties. The certificates of incorporation of
the Delaware registrants include a provision that eliminates the personal
liability of directors for monetary damages for actions taken as a director,
except for liability for breach of duty of loyalty; for acts or omissions not in
good faith or involving intentional misconduct or knowing violation of law;
under Section 174 of the DGCL (unlawful dividends and stock repurchases); or for
transactions from which the director derived improper personal benefit.

The certificates of incorporation of the Delaware registrants provide that these
registrants must indemnify their directors and officers to the fullest extent
authorized by the DGCL and must also pay expenses incurred in defending any such
proceeding in advance of its final disposition upon delivery of an undertaking,
by or on behalf of an indemnified person, to repay all amounts so advanced if it
should be determined ultimately that such person is not entitled to be
indemnified under this section or otherwise.

The indemnification rights set forth above shall not be exclusive of any other
right which an indemnified person may have or hereafter acquire under any
statute, provision of our amended and restated certificate of incorporation, our
by laws, agreement, vote of stockholders or disinterested directors or
otherwise.

Valor Communications Group, Inc. maintains insurance to protect itself and its
directors and, officers and those of its subsidiaries against any such expense,
liability or loss, whether or not it would have the power to indemnify them
against such expense, liability or loss under applicable law.

Texas. Article 2.02-1 of the Texas Business Corporation Act (the "TBCA")
provides that a director of a Texas corporation may be indemnified against
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by him in connection with any action, suit or proceeding in which he
was, is, or is threatened to be made a named defendant by reason of his position
as director or officer, provided that

                                       II-1
he conducted himself in good faith and reasonably believed that, in the case of
conduct in his official capacity as a director or officer of the corporation,
such conduct was in the corporation's best interests; and, in all other cases,
that such conduct was at least not opposed to the corporation's best interests.
If a director is found liable to the corporation or is found liable on the basis
that personal benefit was improperly received by the person, the indemnification
is limited to reasonable expenses actually incurred by the person in connection
with the proceeding and shall not be made in respect of any proceeding in which
the person shall have been found liable for willful or intentional misconduct in
the performance of his duty to the corporation. In the case of a criminal
proceeding, a director or officer may be indemnified only if he had no
reasonable cause to believe his conduct was unlawful. If a director or officer
is wholly successful, on the merits or otherwise, in connection with such a
proceeding, such indemnification is mandatory.

The TBCA further provides that a corporation may indemnify and advance expenses
to an officer, employee or agent of the corporation, and to those who are not or
were not officers, employees or agents but who are or were serving at the
request of the corporation, to the same extent that it may indemnify and advance
expenses to directors.

ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES

The registrant was formed in February 2004 and has not issued any securities.
Simultaneously with the consummation of the offering of the securities being
registered hereby, the registrant will issue an aggregate of      shares of its
Class B common stock in connection with its reorganization. This issuance will
be made in reliance upon Section 4(2) of the Securities Act of 1933, as amended
and Regulation D promulgated thereunder and will not involve any underwriters,
underwriting discounts or commissions, or any public offering. The persons and
entities who will receive such securities have represented their intention to
acquire these securities for investment only and not with a view to or for sale
in connection with any distribution thereof, and appropriate legends will be
affixed to any share certificates issued. All recipients have adequate access
through their relationship with us to information about us.

ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)  Exhibits. The following exhibits are filed as part of this Registration
Statement.
1.1     Form of Underwriting Agreement.*
    3.1     Amended and Restated Certificate of Incorporation of Valor
            Communications Group, Inc.*
    3.2     Certificate of Formation of Valor Telecommunications, LLC.*
    3.3     Certificate of Formation of Valor Telecommunications of
            Texas, LP.*
    3.4     Certificate of Formation of Valor Telecommunications
            Equipment, LP.*
    3.5     Certificate of Formation of Valor Telecommunications
            Services, LP.*
    3.6     Certificate of Formation of Valor Telecommunications
            Investments, LLC.*
    3.7     Certificate of Formation of Valor Telecommunications
            Enterprises, LLC.*
    3.8     Certificate of Formation of Valor Telecommunications LD,
            LP.*
    3.9     Certificate of Formation of Southwest Enhanced Network
            Services, LP.*
    3.10    Certificate of Formation of Western Access Services, LLC.*
    3.11    Certificate of Formation of Western Access Services of
            Arizona, LLC.*
    3.12    Certificate of Formation of Western Access Services of
            Arkansas, LLC.*
    3.13    Certificate of Formation of Western Access Services of
            Colorado, LLC.*
    3.14    Certificate of Formation of Western Access Services of
            Oklahoma, LLC.*
II-2
.15  3   Certificate of Formation of Western Access Services of New Mexico, LLC.*
3.16    Certificate of Formation of Western Access Services of Texas, LP.*
    3.17    Certificate of Formation of Valor Telecommunications Corporate Group,
            LP.*
    3.18    Certificate of Formation of Valor Telecommunications Southwest II, LP.*
    3.19    Certificate of Formation of Valor Telecommunications Enterprises II,
            LLC.*
    3.20    Certificate of Incorporation of Kerrville Communications Corporation.*
    3.21    Certificate of Formation of Kerrville Communications Management, LLC.*
    3.22    Certificate of Formation of Kerrville Communications Enterprises, LLC.*
    3.23    Certificate of Formation of Advanced Tel-Com Systems, LP.*
    3.24    Certificate of Formation of Kerrville Telephone, LP.*
    3.25    Certificate of Formation of Kerrville Cellular, LP.*
    3.26    Certificate of Formation of KCC TelCom, LP.*
    3.27    Certificate of Formation of Kerrville Cellular Management, LLC.*
    3.28    Certificate of Formation of Kerrville Cellular Holdings, LLC.*
    3.29    Certificate of Formation of Kerrville Mobile Holdings, Inc.*
    3.30    Certificate of Formation of Kerrville Wireless Holdings, LP.*
    3.31    By-Laws of Valor Communications Group, Inc.*
    3.32    Second Amended and Restated Limited Liability Agreement of Valor
            Telecommunications, LLC, dated January 31, 2002, by and among the
            members named therein.*
    3.33    Limited Partnership Operating Agreement of Valor Telecommunications of
            Texas, LP.*
    3.34    Limited Partnership Operating Agreement of Valor Telecommunications
            Equipment, LP.*
    3.35    Limited Partnership Operating Agreement of Valor Telecommunications
            Services, LP.*
    3.36    Limited Liability Company Operating Agreement of Valor
            Telecommunications Investments, LLC.*
    3.37    Limited Liability Company Operating Agreement of Valor
            Telecommunications Enterprises, LLC.*
    3.38    Limited Partnership Operating Agreement of Valor Telecommunications LD,
            LP.*
    3.39    Limited Partnership Operating Agreement of Southwest Enhanced Network
            Services, LP.*
    3.40    Limited Liability Company Operating Agreement of Western Access
            Services, LLC.*
    3.41    Limited Liability Company Operating Agreement of Western Access Services
            of Arizona, LLC.*
    3.42    Limited Liability Company Operating Agreement of Western Access Services
            of Arkansas, LLC.*
    3.43    Limited Liability Company Operating Agreement of Western Access Services
            of Colorado, LLC.*
    3.44    Limited Liability Company Operating Agreement of Western Access Services
            of Oklahoma, LLC.*
    3.45    Limited Liability Company Operating Agreement of Western Access Services
            of New Mexico, LLC*
    3.46    Limited Partnership Operating Agreement of Western Access Services of
            Texas, LP.*
II-3
3.47    Limited Partnership Operating Agreement of Valor
            Telecommunications Corporate Group, LP.*
    3.48    Amended and Restated Limited Liability Agreement of Valor
            Telecommunications Southwest II, LLC, dated January 31,
            2002, by and among the members named therein.*
    3.49    Limited Liability Company Operating Agreement of Valor
            Telecommunications Enterprises II, LLC.*
    3.50    By-laws of Kerrville Communications Corporation.*
    3.51    Limited Liability Company Operating Agreement of Kerrville
            Communications Management, LLC.*
    3.52    Limited Liability Company Operating Agreement of Kerrville
            Communications Enterprises, LLC.*
    3.53    Limited Partnership Operating Agreement of Advanced Tel-Com
            Systems, LP.*
    3.54    Limited Partnership Operating Agreement of Kerrville
            Telephone, LP.*
    3.55    Limited Partnership Operating Agreement of Kerrville
            Cellular, LP.*
    3.56    Limited Partnership Operating Agreement of KCC TelCom, LP.*
    3.57    Limited Liability Company Operating Agreement of Kerrville
            Cellular Management, LLC.*
    3.58    Limited Liability Company Operating Agreement of Kerrville
            Cellular Holdings, LLC.*
    3.59    Bylaws of Kerrville Mobile Holdings, Inc.*
    3.60    Limited Liability Company Operating Agreement of Kerrville
            Wireless Holdings, LP.*
    4.1     Form of Indenture, among Valor Communications Group, Inc.,
            the guarantors thereto and         , as Trustee.*
    4.2     Form of Senior Subordinated Note (included in Exhibit 4.1).*
    4.3     Form of Registration Rights Agreement.*
    4.4     Form of stock certificate for common stock.*
    4.5     Form of global IDS.*
    5.1     Opinion of Kirkland & Ellis LLP.*
    5.2     Opinion of Cynthia Ayers, Esq.*
    8.1     Opinion of Kirkland & Ellis LLP.*
   10.1     Valor Communications Group, Inc. 2004 Long-Term Incentive
            Plan.*
   10.2     Valor Communications Group, Inc. Annual Incentive
            Compensation Plan.*
   10.3     Valor Telecommunications Southwest, LLC Savings Plan.*
   10.4     Valor Telecommunications Enterprises, LLC Pension Plan.*
   10.5     Telecommunications Services Agreement, dated as of September
            30, 2000, by and between Valor Telecommunications
            Enterprises, LLC and MCI Worldcom Network Services, Inc.
            (the "Telecommunications Services Agreement").+
   10.6     Amendment No. 1 to the Telecommunications Services
            Agreement, dated as of September 4, 2001, by and between
            Valor Telecommunications Enterprises, LLC and MCI Worldcom
            Network Services, Inc.+
   10.7     Amendment No. 2 to the Telecommunications Services
            Agreement, dated as of September 18, 2001, by and between
            Valor Telecommunications Enterprises, LLC and MCI Worldcom
            Network Services, Inc.+
II-4
.8  10   Amendment No. 3 to the Telecommunications Services Agreement, dated as of January 2,
            2002, by and between Valor Telecommunications Enterprises, LLC and MCI Worldcom
            Network Services, Inc.+
10.9     Amendment No. 4 to the Telecommunications Services Agreement, dated as of March 5,
            2002, by and between Valor Telecommunications Enterprises, LLC and MCI Worldcom
            Network Services, Inc.+
   10.10    Amendment No. 5 to the Telecommunications Services Agreement, dated as of May 28,
            2002, by and between Valor Telecommunications Enterprises, LLC and MCI Worldcom
            Network Services, Inc.+
   10.11    Amendment No. 6 to the Telecommunications Services Agreement, dated as of March 26,
            2003, by and between Valor Telecommunications Enterprises, LLC and MCI Worldcom
            Network Services, Inc.+
   10.12    Amendment No. 7 to the Telecommunications Services Agreement, dated as of May 8,
            2003, by and between Valor Telecommunications Enterprises, LLC and MCI Worldcom
            Network Services, Inc.+
   10.13    Amendment No. 8 to the Telecommunications Services Agreement, dated as of July 16,
            2003, by and between Valor Telecommunications, LLC and MCI Worldcom Network
            Services, Inc.+
   10.14    Amendment No. 9 to the Telecommunications Services Agreement, dated as of November
            4, 2003, by and between Valor Telecommunications, LLC and MCI Worldcom Network
            Services, Inc.+
   10.15    Amendment No. 10 to the Telecommunications Services Agreement, dated as of December
            16, 2003, by and between Valor Telecommunications Enterprises, LLC and MCI Worldcom
            Network Services, Inc.+
   10.16    Master Services Agreement, dated as of December 9, 1999 by and between Valor
            Telecommunications Enterprises, LLC (as successor to Valor Telecommunications South-
            west, LLC, as successor to dba Communications, LLC and Alltel Information Services,
            Inc. (the "Master Services Agreement")+
   10.17    First Amendment to Master Services Agreement, dated as of April 1, 2000, by and
            between Valor Telecommunications Enterprises, LLC (as successor to Valor
            Telecommunications Southwest, LLC, as successor to dba Communications, LLC and
            Alltel Information Services, Inc.+
   10.18    Second Amendment to the Master Services Agreement, dated as of April 1, 2000, by and
            between Valor Telecommunications Enterprises, LLC (as successor to Valor
            Telecommunications Southwest, LLC, as successor to dba Communications, LLC) and
            Alltel Information Services, Inc.+
   10.19    Third Amendment to the Master Services Agreement, dated as of July 1, 2000, by and
            between Valor Telecommunications Enterprises, LLC (as successor to Valor
            Telecommunications Southwest, LLC, as successor to dba Communications, LLC) and
            Alltel Information Services, Inc.+
   10.20    Fourth Amendment to the Master Services Agreement, dated as of July 24, 2000, by and
            between Valor Telecommunications Enterprises, LLC (as successor to Valor
            Telecommunications Southwest, LLC, as successor to dba Communications, LLC) and
            Alltel Information Services, Inc.+
   10.21    Fifth Amendment to the Master Services Agreement, dated as of January 18, 2001, by
            and between Valor Telecommunications Enterprises, LLC (as successor to Valor
            Telecommunications Southwest, LLC, as successor to dba Communications, LLC) and
            Alltel Information Services, Inc.+
II-5
10.22    Sixth Amendment to the Master Services Agreement, dated as
            of January 2001 to the Master Services Agreement by and
            between Valor Telecommunications Enterprises, LLC and Alltel
            Information Services, Inc.+
   10.23    Seventh Amendment, dated as of April 1, 2002 to the Master
            Services Agreement, by and between Valor Telecommunications
            Enterprises, LLC (as successor to Valor Telecommunications
            Southwest, LLC, as successor to dba Communications LLC) and
            Alltel Information Services, Inc.+
   10.24    Eighth Amendment, dated as of April 1, 2002 to the Master
            Services Agreement, dated as of December 9, 1999 by and
            between Valor Telecommunications Enterprises, LLC and Alltel
            Information Services, Inc.+
   10.25    Sprint Wholesale Services Data and Private Line Agreement,
            dated as of February 20, 2003, between Sprint Communications
            Company L.P. and Valor Telecommunications Enterprises, LLC.+
   10.26    Wholesale Solutions Switched Services Agreement, dated as of
            August 11, 2003, by and between Sprint Communications
            Company L.P. and Valor Telecommunications Enterprises, LLC.+
   10.27    First Amendment to Wholesale Solutions Switched Services
            Data and Private Line Agreement, dated as of October 3,
            2003, between Sprint Communications Company L.P. and Valor
            Telecommunications Enterprises, LLC.+
   10.28    Employment Agreement, dated as of June 18, 2000, by and
            between Valor Telecommunications, LLC and Kenneth R. Cole.
   10.29    Amendment One to Employment Agreement, dated as of January
            2, 2002, by and between Valor Telecommunications, LLC and
            Kenneth R. Cole.
   10.30    Employment Agreement, dated as of January 2, 2002, by and
            between Valor Telecommunications, LLC and John J. Mueller.
   10.31    Employment Agreement, dated as of March 20, 2000, by and
            between Valor Telecommunications, LLC and John A. Butler.
   10.32    Employment Agreement, dated as of November 13, 2000, by and
            between Valor Telecommunications, LLC and William M. Ojile,
            Jr.
   10.33    Amendment One to Employment Agreement, dated as of January
            2, 2002, by and between Valor Telecommunications, LLC and
            William M. Ojile, Jr.*
   10.34    Employment Agreement, dated as of February 28, 2000, by and
            between Valor Telecommunications, LLC and W. Grant Raney.
   10.35    Amendment One to Employment Agreement, dated as of January
            2, 2002, by and between Valor Telecommunications, LLC and W.
            Grant Raney.
   23.1     Consent and report on schedule of Deloitte & Touche LLP.
   23.2     Consent of Kirkland & Ellis LLP (included in Exhibit 5.1).*
   23.3     Consent of Kirkland & Ellis LLP (included in Exhibit 8.1).*
   24.1     Powers of Attorney (included on signature page).
   25.1     Form T-1 Statement of Eligibility under Trust Indenture Act
            of 1939, as amended, of   as Trustee.*
---------------------------

* To be filed by amendment.

+ A request for confidential treatment was filed for portions of this document.
  Confidential portions have been omitted and filed separately with the
  Securities and Commission as required by Rule 406.

                                       II-6
(b)  Financial Statement Schedules

ITEM 17.  UNDERTAKINGS

1.  The undersigned registrant hereby undertakes to provide to the underwriters
    at the closing specified in the underwriting agreements, certificates in
    such denominations and registered in such names as required by the
    underwriters to permit prompt delivery to each purchaser.

2.  Insofar as indemnification for liabilities arising under the Securities Act
    may be permitted to directors, officers, and controlling persons of the
    registrant pursuant to the foregoing provisions, or otherwise, the
    registrant has been advised that in the opinion of the SEC such
    indemnification is against public policy as expressed in the Securities Act
    and is therefore unenforceable. In the event that a claim for
    indemnification by the registrant against such liabilities, other than the
    payment by the registrant of expenses incurred or paid by a director,
    officer or controlling person of the registrant in the successful defense of
    any action, suit or proceeding, is asserted by such director, officer or
    controlling person in connection with the securities being registered, the
    registrant will, unless in the opinion of its counsel the matter has been
    settled by controlling precedent, submit to a court of appropriate
    jurisdiction the question whether such indemnification by it is against
    public policy as expressed in the Act and will be governed by the final
    adjudication of such issue.

3.  The undersigned registrant hereby undertakes that

    (1)  For purposes of determining any liability under the Securities Act, the
         information omitted from the form of prospectus filed as part of this
         registration statement in reliance upon Rule 430A and contained in a
         form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
         or (4) or 497(h) under the Securities Act shall be deemed to be part of
         this registration statement as of the time it was declared effective.

    (2)  For the purpose of determining any liability under the Securities Act,
         each post-effective amendment that contains a form of prospectus shall
         be deemed to be a new registration statement relating to the securities
         offered therein, and the offering of such securities at that time shall
         be deemed to be the initial bona fide offering thereof.

                                       II-7
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR COMMUNICATIONS GROUP, INC.

                                          By: /s/ JOHN J. MUELLER
                                            ------------------------------------
                                              Name: John J. Mueller
                                              Title:   President and Chief
                                                       Executive Officer

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John Butler and William Ojile Jr. his
or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Communications Group, Inc.) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                 /s/ JOHN BUTLER                        Executive Vice President and Chief Financial
 ------------------------------------------------        Officer (Principal Financial and Accounting
                   John Butler                                            Officer)

             /s/ ANTHONY J. DE NICOLA                               Chairman and Director
 ------------------------------------------------
               Anthony J. de Nicola

               /s/ KENNETH R. COLE                               Vice Chairman and Director
 ------------------------------------------------
                 Kenneth R. Cole
II-8
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ SANJAY SWANI                                         Director
 ------------------------------------------------
                   Sanjay Swani

                 /s/ TODD KHOURY                                          Director
 ------------------------------------------------
                   Todd Khoury
II-9
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS, LLC

                                          By: /s/ JOHN J. MUELLER
                                            ------------------------------------
                                              Name: John J. Mueller
                                              Title:   Chief Executive Officer

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications, LLC) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                           Chief Executive Officer and Manager
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                      Executive Vice President and Chief Financial
 ------------------------------------------------        Officer (Principal Financial and Accounting
                  John A. Butler                                          Officer)

               /s/ ANNE K. BINGAMAN                                        Manager
 ------------------------------------------------
                 Anne K. Bingaman

             /s/ ANTHONY J. DE NICOLA                                      Manager
 ------------------------------------------------
               Anthony J. de Nicola

                 /s/ SEAN TRAYNOR                                          Manager
 ------------------------------------------------
                   Sean Traynor

                 /s/ SANJAY SWANI                                          Manager
 ------------------------------------------------
                   Sanjay Swani

                /s/ MICHAEL SMALL                                          Manager
 ------------------------------------------------
                  Michael Small

                 /s/ TODD KHOURY                                           Manager
 ------------------------------------------------
                   Todd Khoury

                /s/ FEDERICO PENA                                          Manager
 ------------------------------------------------
                  Federico Pena
II-10
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS OF TEXAS, LP

                                          By: Valor Telecommunications
                                              Enterprises, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:   Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications of Texas, LP) to sign any or
all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
II-11
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS EQUIPMENT, LP

                                          By: Valor Telecommunications
                                              Enterprises, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:   Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications Equipment, LP) to sign any
or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
II-12
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS SERVICES, LP

                                          By: Valor Telecommunications
                                              Enterprises, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications Services, LP) to sign any or
all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
II-13
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS INVESTMENTS,
                                          LLC

                                          By: Valor Telecommunications
                                              Enterprises, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications Investments, LLC) to sign
any or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                           TITLE
                        ---------                                           -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
II-14
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS ENTERPRISES,
                                          LLC

                                          By: Valor Telecommunications
                                              Southwest, LLC
                                          Its: Sole Member

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications Enterprises, LLC) to sign
any or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
II-15
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS LD, LP

                                          By: Valor Telecommunications
                                          Enterprises, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications LD, LP) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
II-16
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          SOUTHWEST ENHANCED NETWORK SERVICES,
                                          LP

                                          By: Valor Telecommunications
                                          Enterprises, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Southwest Enhanced Network Services, LP) to sign any
or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
II-17
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          WESTERN ACCESS SERVICES, LLC

                                          By: Valor Telecommunications
                                          Enterprises, LLC
                                          Its: Sole Member

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Western Access Services, LLC) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
II-18
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          WESTERN ACCESS SERVICES OF ARIZONA,
                                          LLC

                                          BY: WESTERN ACCESS SERVICES, LLC
                                          ITS: SOLE MEMBER

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Western Access Services of Arizona, LLC) to sign any
or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
II-19
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          WESTERN ACCESS SERVICES OF ARKANSAS,
                                          LLC

                                          BY: WESTERN ACCESS SERVICES, LLC
                                          ITS: SOLE MEMBER

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Western Access Services of Arkansas, LLC) to sign any
or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
II-20
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          WESTERN ACCESS SERVICES OF COLORADO,
                                          LLC

                                          By: Western Access Services, LLC
                                          Its: Sole Member

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Western Access Services of Colorado, LLC) to sign any
or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
II-21
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          WESTERN ACCESS SERVICES OF OKLAHOMA,
                                          LLC

                                          By: Western Access Services, LLC
                                          Its: Sole Member

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Western Access Services of Oklahoma, LLC) to sign any
or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
II-22
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                         WESTERN ACCESS SERVICES OF NEW MEXICO,
                                         LLC

                                         By: Western Access Services, LLC
                                         Its: Sole Member

                                         By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                             Name: William M. Ojile, Jr.
                                             Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Western Access Services of New Mexico, LLC) to sign
any or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                            and
                  John A. Butler                                          Treasurer
                                                        (Principal Financial and Accounting Officer)
II-23
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          WESTERN ACCESS SERVICES OF TEXAS, LP

                                          By: Western Access Services, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Western Access Services of Texas, LP) to sign any or
all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
II-24
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS CORPORATE
                                          GROUP, LP

                                          By: Valor Telecommunications
                                          Enterprises, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications Corporate Group, LP) to sign
any or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
II-25
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          VALOR TELECOMMUNICATIONS SOUTHWEST II,
                                          LP

                                          By: /s/ JOHN J. MUELLER
                                            ------------------------------------
                                              Name: John J. Mueller
                                              Title:  Chief Executive Officer

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications Southwest II, LP) to sign
any or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                     TITLE
          ---------                                     -----
/s/ JOHN J. MUELLER                 Chief Executive Officer and Director
------------------------------              (Principal Executive Officer)
       John J. Mueller

      /s/ JOHN A. BUTLER                              Treasurer
------------------------------       (Principal Financial and Accounting Officer)
        John A. Butler

   /s/ ANTHONY J. DE NICOLA                            Director
------------------------------
     Anthony J. de Nicola

       /s/ SANJAY SWANI                                Director
------------------------------
         Sanjay Swani

     /s/ JOHN J. MUELLER                               Director
------------------------------
       John J. Mueller

       /s/ TODD KHOURY                                 Director
------------------------------
         Todd Khoury
II-26
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                        VALOR TELECOMMUNICATIONS ENTERPRISES II,
                                        LLC

                                        By: Valor Telecommunications Southwest
                                            II, LLC
                                        Its: Sole Member

                                        By: /s/ WILLIAM M. OJILE, JR.
                                           -------------------------------------
                                            Name: William M. Ojile, Jr.
                                            Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Valor Telecommunications Enterprises II, LLC) to sign
any or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                               TITLE
                    ---------                                               -----
/s/ JOHN J. MUELLER                          President and Chief Executive Officer
 ------------------------------------------------               (Principal Executive Officer)
                 John J. Mueller

                /s/ JOHN A. BUTLER                    Executive Vice President, Chief Financial Officer
 ------------------------------------------------                       and Treasurer
                  John A. Butler                        (Principal Financial and Accounting Officer)
II-27
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE COMMUNICATIONS CORPORATION

                                          By: /s/ JOHN J. MUELLER
                                            ------------------------------------
                                              Name: John J. Mueller
                                              Title:  Chief Executive Officer

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Communications Corporation) to sign any or
all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                     TITLE
          ---------                                     -----
/s/ JOHN J. MUELLER                 Chief Executive Officer and Director
------------------------------              (Principal Executive Officer)
       John J. Mueller

      /s/ JOHN A. BUTLER                        Treasurer and Director
------------------------------       (Principal Financial and Accounting Officer)
        John A. Butler
II-28
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE COMMUNICATIONS MANAGEMENT,
                                          LLC

                                          By: Kerrville Communications
                                          Corporation
                                          Its: Sole Member

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Communications Management, LLC) to sign any
or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                     TITLE
          ---------                                     -----
/s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller

      /s/ JOHN A. BUTLER                     Executive Vice President and
------------------------------                 Chief Financial Officer
        John A. Butler               (Principal Financial and Accounting Officer)
II-29
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE COMMUNICATIONS ENTERPRISES,
                                          LLC

                                          By: Kerrville Communications
                                          Corporation
                                          Its: Sole Member

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Communications Enterprises, LLC) to sign
any or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                     TITLE
          ---------                                     -----
/s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller

      /s/ JOHN A. BUTLER                     Executive Vice President and
------------------------------                 Chief Financial Officer
        John A. Butler               (Principal Financial and Accounting Officer)
II-30
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          ADVANCED TEL-COM SYSTEMS, LP

                                          By: Kerrville Communications
                                          Management, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Advanced Tel-Com Systems, LP) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                     TITLE
          ---------                                     -----
/s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller

      /s/ JOHN A. BUTLER                              Treasurer
------------------------------       (Principal Financial and Accounting Officer)
        John A. Butler
II-31
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE TELEPHONE, LP

                                          By: Kerrville Communications
                                          Management, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Telephone, LP) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                     TITLE
          ---------                                     -----
/s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller

      /s/ JOHN A. BUTLER                              Treasurer
------------------------------       (Principal Financial and Accounting Officer)
        John A. Butler
II-32
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE CELLULAR, LP

                                          By: Kerrville Communications
                                          Management, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Cellular, LP) to sign any or all amendments
(including post-effective amendments) to this registration statement and any
subsequent registration statement filed pursuant to Rule 462 (b) under the
Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                     TITLE
          ---------                                     -----
/s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller

      /s/ JOHN A. BUTLER                     Executive Vice President and
------------------------------                 Chief Financial Officer
        John A. Butler               (Principal Financial and Accounting Officer)
II-33
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KCC TELCOM, LP

                                          By: Kerrville Communications
                                          Management, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of KCC TelCom, LP) to sign any or all amendments
(including post-effective amendments) to this registration statement and any
subsequent registration statement filed pursuant to Rule 462 (b) under the
Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                     TITLE
          ---------                                     -----
/s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller

      /s/ JOHN A. BUTLER                              Treasurer
------------------------------       (Principal Financial and Accounting Officer)
        John A. Butler
II-34
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE CELLULAR MANAGEMENT, LLC

                                          By: Kerrville Cellular, LP
                                          Its: Sole Member

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Cellular Management, LLC) to sign any or
all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement filed pursuant to Rule 462
(b) under the Securities Act, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                     TITLE
          ---------                                     -----
/s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller

      /s/ JOHN A. BUTLER                     Executive Vice President and
------------------------------                 Chief Financial Officer
        John A. Butler               (Principal Financial and Accounting Officer)
II-35
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE CELLULAR HOLDINGS, LLC

                                          By: Kerrville Cellular, LP
                                          Its: Sole Member

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Cellular Holdings, LLC) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                     TITLE
          ---------                                     -----
/s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller

      /s/ JOHN A. BUTLER                     Executive Vice President and
------------------------------                 Chief Financial Officer
        John A. Butler               (Principal Financial and Accounting Officer)
II-36
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE MOBILE HOLDINGS, INC.

                                          By: /s/ JOHN J. MUELLER
                                            ------------------------------------
                                              Name: John J. Mueller
                                              Title:  Chief Executive Officer

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Mobile Holdings, Inc.) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                     TITLE
          ---------                                     -----
/s/ JOHN J. MUELLER                 Chief Executive Officer and Director
------------------------------              (Principal Executive Officer)
       John J. Mueller

      /s/ JOHN A. BUTLER                        Treasurer and Director
------------------------------       (Principal Financial and Accounting Officer)
        John A. Butler
II-37
SIGNATURES

Pursuant to the requirements of the Securities Act, as amended, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irving, Texas on April 5, 2004.

                                          KERRVILLE WIRELESS HOLDINGS, LP

                                          By: Kerrville Cellular Management, LLC
                                          Its: General Partner

                                          By: /s/ WILLIAM M. OJILE, JR.
                                            ------------------------------------
                                              Name: William M. Ojile, Jr.
                                              Title:  Secretary

                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints John J. Mueller, John A. Butler and William Ojile Jr.
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (including his or her capacity as a
director and/or officer of Kerrville Wireless Holdings, LP) to sign any or all
amendments (including post-effective amendments) to this registration statement
and any subsequent registration statement filed pursuant to Rule 462 (b) under
the Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement
on Form S-1 has been signed by the following persons in the capacities indicated
on April 5, 2004.
SIGNATURE                                     TITLE
          ---------                                     -----
/s/ JOHN J. MUELLER                       Chief Executive Officer
------------------------------              (Principal Executive Officer)
       John J. Mueller

      /s/ JOHN A. BUTLER                     Executive Vice President and
------------------------------                 Chief Financial Officer
        John A. Butler               (Principal Financial and Accounting Officer)
II-38
EXHIBIT INDEX
EXHIBIT
  NO.                        DESCRIPTION OF EXHIBIT
-------                      ----------------------
1.1     Form of Underwriting Agreement.*
  3.1     Amended and Restated Certificate of Incorporation of Valor
          Communications Group, Inc.*
  3.2     Certificate of Formation of Valor Telecommunications, LLC.*
  3.3     Certificate of Formation of Valor Telecommunications of
          Texas, LP.*
  3.4     Certificate of Formation of Valor Telecommunications
          Equipment, LP.*
  3.5     Certificate of Formation of Valor Telecommunications
          Services, LP.*
  3.6     Certificate of Formation of Valor Telecommunications
          Investments, LLC.*
  3.7     Certificate of Formation of Valor Telecommunications
          Enterprises, LLC.*
  3.8     Certificate of Formation of Valor Telecommunications LD,
          LP.*
  3.9     Certificate of Formation of Southwest Enhanced Network
          Services, LP.*
  3.10    Certificate of Formation of Western Access Services, LLC.*
  3.11    Certificate of Formation of Western Access Services of
          Arizona, LLC.*
  3.12    Certificate of Formation of Western Access Services of
          Arkansas, LLC.*
  3.13    Certificate of Formation of Western Access Services of
          Colorado, LLC.*
  3.14    Certificate of Formation of Western Access Services of
          Oklahoma, LLC.*
  3.15    Certificate of Formation of Western Access Services of New
          Mexico, LLC.*
  3.16    Certificate of Formation of Western Access Services of
          Texas, LP.*
  3.17    Certificate of Formation of Valor Telecommunications
          Corporate Group, LP.*
  3.18    Certificate of Formation of Valor Telecommunications
          Southwest II, LLC.*
  3.19    Certificate of Formation of Valor Telecommunications
          Enterprises II, LLC.*
  3.20    Certificate of Incorporation of Kerrville Communications
          Corporation.*
  3.21    Certificate of Formation of Kerrville Communications
          Management, LLC.*
  3.22    Certificate of Formation of Kerrville Communications
          Enterprises, LLC.*
  3.23    Certificate of Formation of Advanced Tel-Com Systems, LP.*
  3.24    Certificate of Formation of Kerrville Telephone, LP.*
  3.25    Certificate of Formation of Kerrville Cellular, LP.*
  3.26    Certificate of Formation of KCC TelCom, LP.*
  3.27    Certificate of Formation of Kerrville Cellular Management,
          LLC.*
  3.28    Certificate of Formation of Kerrville Cellular Holdings,
          LLC.*
  3.29    Certificate of Formation of Kerrville Mobile Holdings, Inc.*
  3.30    Certificate of Formation of Kerrville Wireless Holdings,
          LP.*
  3.31    By-Laws of Valor Communications Group, Inc.*
  3.32    Second Amended and Restated Limited Liability Agreement of
          Valor Telecommunications, LLC, dated January 31, 2002, by
          and among the members named therein.*
  3.33    Limited Partnership Operating Agreement of Valor
          Telecommunications of Texas, LP.*
  3.34    Limited Partnership Operating Agreement of Valor
          Telecommunications Equipment, LP.*
  3.35    Limited Partnership Operating Agreement of Valor
          Telecommunications Services, LP.*
  3.36    Limited Liability Company Operating Agreement of Valor
          Telecommunications Investments, LLC.*
  3.37    Limited Liability Company Operating Agreement of Valor
          Telecommunications Enterprises, LLC.*
  3.38    Limited Partnership Operating Agreement of Valor
          Telecommunications LD, LP.*
  3.39    Limited Partnership Operating Agreement of Southwest
          Enhanced Network Services, LP.*
EXHIBIT
  NO.                        DESCRIPTION OF EXHIBIT
-------                      ----------------------
3.40    Limited Liability Company Operating Agreement of Western
          Access Services, LLC.*
  3.41    Limited Liability Company Operating Agreement of Western
          Access Services of Arizona, LLC.*
  3.42    Limited Liability Company Operating Agreement of Western
          Access Services of Arkansas, LLC.*
  3.43    Limited Liability Company Operating Agreement of Western
          Access Services of Colorado, LLC.*
  3.44    Limited Liability Company Operating Agreement of Western
          Access Services of Oklahoma, LLC.*
  3.45    Limited Liability Company Operating Agreement of Western
          Access Services of New Mexico, LLC*
  3.46    Limited Partnership Operating Agreement of Western Access
          Services of Texas, LP.*
  3.47    Limited Partnership Operating Agreement of Valor
          Telecommunications Corporate Group, LP.*
  3.48    Amended and Restated Limited Liability Agreement of Valor
          Telecommunications Southwest II, LLC, dated January 31,
          2002, by and among the members named therein.*
  3.49    Limited Liability Company Operating Agreement of Valor
          Telecommunications Enterprises II, LLC.*
  3.50    By-laws of Kerrville Communications Corporation.*
  3.51    Limited Liability Company Operating Agreement of Kerrville
          Communications Management, LLC.*
  3.52    Limited Liability Company Operating Agreement of Kerrville
          Communications Enterprises, LLC.*
  3.53    Limited Partnership Operating Agreement of Advanced Tel-Com
          Systems, LP.*
  3.54    Limited Partnership Operating Agreement of Kerrville
          Telephone, LP.*
  3.55    Limited Partnership Operating Agreement of Kerrville
          Cellular, LP.*
  3.56    Limited Partnership Operating Agreement of KCC TelCom, LP.*
  3.57    Limited Liability Company Operating Agreement of Kerrville
          Cellular Management, LLC.*
  3.58    Limited Liability Company Operating Agreement of Kerrville
          Cellular Holdings, LLC.*
  3.59    Bylaws of Kerrville Mobile Holdings, Inc.*
  3.60    Limited Liability Company Operating Agreement of Kerrville
          Wireless Holdings, LP.*
  4.1     Form of Indenture, among Valor Communications Group, Inc.,
          the guarantors thereto and         , as Trustee.*
  4.2     Form of Senior Subordinated Note (included in Exhibit 4.1).*
  4.3     Form of Registration Rights Agreement.*
  4.4     Form of stock certificate for common stock.*
  4.5     Form of global IDS.*
  5.1     Opinion of Kirkland & Ellis LLP.*
  5.2     Opinion of Cynthia Ayers, Esq.*
  8.1     Opinion of Kirkland & Ellis LLP.*
 10.1     Valor Communications Group, Inc. 2004 Long-Term Incentive
          Plan.*
 10.2     Valor Communications Group, Inc. Annual Incentive
          Compensation Plan.*
 10.3     Valor Telecommunications Southwest, LLC Savings Plan.*
 10.4     Valor Telecommunications Enterprises, LLC Pension Plan.*
 10.5     Telecommunications Services Agreement, dated as of September
          30, 2000, by and between Valor Telecommunications
          Enterprises, LLC and MCI Worldcom Network Services, Inc.
          (the "Telecommunications Services Agreement").+
EXHIBIT
  NO.                        DESCRIPTION OF EXHIBIT
-------                      ----------------------
10.6     Amendment No. 1 to the Telecommunications Services
          Agreement, dated as of September 4, 2001, by and between
          Valor Telecommunications Enterprises, LLC and MCI Worldcom
          Network Services, Inc.+
 10.7     Amendment No. 2 to the Telecommunications Services
          Agreement, dated as of September 18, 2001, by and between
          Valor Telecommunications Enterprises, LLC and MCI Worldcom
          Network Services, Inc.+
 10.8     Amendment No. 3 to the Telecommunications Services
          Agreement, dated as of January 2, 2002, by and between Valor
          Telecommunications Enterprises, LLC and MCI Worldcom Network
          Services, Inc.+
 10.9     Amendment No. 4 to the Telecommunications Services
          Agreement, dated as of March 5, 2002, by and between Valor
          Telecommunications Enterprises, LLC and MCI Worldcom Network
          Services, Inc.+
 10.10    Amendment No. 5 to the Telecommunications Services
          Agreement, dated as of May 28, 2002, by and between Valor
          Telecommunications Enterprises, LLC and MCI Worldcom Network
          Services, Inc.+
 10.11    Amendment No. 6 to the Telecommunications Services
          Agreement, dated as of March 26, 2003, by and between Valor
          Telecommunications Enterprises, LLC and MCI Worldcom Network
          Services, Inc.+
 10.12    Amendment No. 7 to the Telecommunications Services
          Agreement, dated as of May 8, 2003, by and between Valor
          Telecommunications Enterprises, LLC and MCI Worldcom Network
          Services, Inc.+
 10.13    Amendment No. 8 to the Telecommunications Services
          Agreement, dated as of July 16, 2003, by and between Valor
          Telecommunications, LLC and MCI Worldcom Network Services,
          Inc.+
 10.14    Amendment No. 9 to the Telecommunications Services
          Agreement, dated as of November 4, 2003, by and between
          Valor Telecommunications, LLC and MCI Worldcom Network
          Services, Inc.+
 10.15    Amendment No. 10 to the Telecommunications Services
          Agreement, dated as of December 16, 2003, by and between
          Valor Telecommunications Enterprises, LLC and MCI Worldcom
          Network Services, Inc.+
 10.16    Master Services Agreement, dated as of December 9, 1999 by
          and between Valor Telecommunications Enterprises, LLC (as
          successor to Valor Telecommunications Southwest, LLC, as
          successor to dba Communications, LLC and Alltel Information
          Services, Inc. (the "Master Services Agreement")+
 10.17    First Amendment to Master Services Agreement, dated as of
          April 1, 2000, by and between Valor Telecommunications
          Enterprises, LLC (as successor to Valor Telecommunications
          Southwest, LLC, as successor to dba Communications, LLC and
          Alltel Information Services, Inc.+
 10.18    Second Amendment to the Master Services Agreement, dated as
          of April 1, 2000, by and between Valor Telecommunications
          Enterprises, LLC (as successor to Valor Telecommunications
          Southwest, LLC, as successor to dba Communications, LLC) and
          Alltel Information Services, Inc.+
 10.19    Third Amendment to the Master Services Agreement, dated as
          of July 1, 2000, by and between Valor Telecommunications
          Enterprises, LLC (as successor to Valor Telecommunications
          Southwest, LLC, as successor to dba Communications, LLC) and
          Alltel Information Services, Inc.+
 10.20    Fourth Amendment to the Master Services Agreement, dated as
          of July 24, 2000, by and between Valor Telecommunications
          Enterprises, LLC (as successor to Valor Telecommunications
          Southwest, LLC, as successor to dba Communications, LLC) and
          Alltel Information Services, Inc.+
EXHIBIT
  NO.                        DESCRIPTION OF EXHIBIT
-------                      ----------------------
10.21    Fifth Amendment to the Master Services Agreement, dated as
          of January 18, 2001, by and between Valor Telecommunications
          Enterprises, LLC (as successor to Valor Telecommunications
          Southwest, LLC, as successor to dba Communications, LLC) and
          Alltel Information Services, Inc.+
 10.22    Sixth Amendment to the Master Services Agreement, dated as
          of January 2001 to the Master Services Agreement by and
          between Valor Telecommunications Enterprises, LLC and Alltel
          Information Services, Inc.+
 10.23    Seventh Amendment, dated as of April 1, 2002 to the Master
          Services Agreement, by and between Valor Telecommunications
          Enterprises, LLC (as successor to Valor Telecommunications
          Southwest, LLC, as successor to dba Communications LLC) and
          Alltel Information Services, Inc.+
 10.24    Eighth Amendment, dated as of April 1, 2002 to the Master
          Services Agreement, dated as of December 9, 1999 by and
          between Valor Telecommunications Enterprises, LLC and Alltel
          Information Services, Inc.+
 10.25    Sprint Wholesale Services Data and Private Line Agreement,
          dated as of February 20, 2003, between Sprint Communications
          Company L.P. and Valor Telecommunications Enterprises, LLC.+
 10.26    Wholesale Solutions Switched Services Agreement, dated as of
          August 11, 2003, by and between Sprint Communications
          Company L.P. and Valor Telecommunications Enterprises, LLC.+
 10.27    First Amendment to Wholesale Solutions Switched Services
          Agreement, dated as of October 3, 2003, between Sprint
          Communications Company L.P. and Valor Telecommunications
          Enterprises, LLC.+
 10.28    Employment Agreement, dated as of June 18, 2000, by and
          between Valor Telecommunications, LLC and Kenneth R. Cole.
 10.29    Amendment One to Employment Agreement, dated as of January
          2, 2002, by and between Valor Telecommunications, LLC and
          Kenneth R. Cole.
 10.30    Employment Agreement, dated as of January 2, 2002, by and
          between Valor Telecommunications, LLC and John J. Mueller.
 10.31    Employment Agreement, dated as of March 20, 2000, by and
          between Valor Telecommunications, LLC and John A. Butler.
 10.32    Employment Agreement, dated as of November 13, 2000, by and
          between Valor Telecommunications, LLC and William M. Ojile,
          Jr.
 10.33    Amendment One to Employment Agreement, dated as of January
          2, 2002, by and between Valor Telecommunications, LLC and
          William M. Ojile, Jr.*
 10.34    Employment Agreement, dated as of February 28, 2000, by and
          between Valor Telecommunications, LLC and W. Grant Raney.
 10.35    Amendment One to Employment Agreement, dated as of January
          2, 2002, by and between Valor Telecommunications, LLC and W.
          Grant Raney.
 23.1     Consent and report on schedule of Deloitte & Touche LLP.
 23.2     Consent of Kirkland & Ellis LLP (included in Exhibit 5.1).*
 23.3     Consent of Kirkland & Ellis LLP (included in Exhibit 8.1).*
 24.1     Powers of Attorney (included on signature page).
 25.1     Form T-1 Statement of Eligibility under Trust Indenture Act
          of 1939, as amended, of as Trustee.*
---------------------------

* To be filed by amendment.

+ A request for confidential treatment was filed for portions of this document.
  Confidential portions have been omitted and filed separately with the
  Securities and Commission as required by Rule 406.