CenturyTel, Inc., incorporated in 1968, together with its subsidiaries, is an integrated communications company engaged primarily in providing an array of communications services, including local and long distance voice, Internet access and broadband services. It conducts its operations in 25 states located within the continental United States. At December 31, 2007, its incumbent local exchange telephone subsidiaries operated approximately 2.1 million telephone access lines, primarily in rural areas and small to mid-size cities in 24 states, with over 68% of these lines located in Missouri, Wisconsin, Alabama, Arkansas and Washington. It also provides fiber transport, local exchange carrier, security monitoring, and other communications and business information services in certain local and regional markets. On April 30, 2007, it acquired all of the outstanding stock of Madison River Communications Corp. (Madison River). It derives revenue from providing local exchange and long distance voice telephone services, network access services, data services, which includes both high-speed and dial-up Internet services, as well as special access and private line services, fiber transport, competitive local exchange and security monitoring services and other related services.

Voice

The Company derives its local service revenues by providing local exchange telephone services in its franchised service areas, including basic dial-tone service through its regular switched network, for a fixed monthly charge. It offers voice services (such as call forwarding, conference calling, caller identification, selective call ringing and call waiting) to its local exchange customers for additional charges. It derives its long distance revenues by providing retail long distance services based on either usage or pursuant to flat-rate calling plans. At December 31, 2007, it provided long distance services to nearly 1.3 million lines.

Network access

The Company derives its network access revenues primarily from providing services to various carriers and customers in connection with the use of its facilities to originate and terminate their interstate and intrastate voice transmissions and receiving universal support funds which allows it to recover a portion of its costs under federal and state cost recovery mechanisms. Its revenues for switched access services depend primarily on the level of call volume.

Data

The Company derives its data revenues primarily from monthly recurring charges for providing Internet access services (both high-speed and dial-up services) and data transmission services over special circuits and private lines. At December 31, 2007, it provided high-speed Internet access services to over 555,000 customers and dial-up services to nearly 68,000 customers. During the year ended December 31, 2007, it added over 186,000 high-speed Internet customers (which includes approximately 58,000 from the Madison River acquisition). Its data revenue also includes amounts billed to its business customers for circuits used for various purposes, including connecting the customer’s offices or networks to its networks.

Fiber transport and competitive local exchange (CLEC)

The Company’s fiber transport and CLEC revenues include revenues from its fiber transport, CLEC and security monitoring businesses. Under the name LightCore, it sells fiber capacity to other carriers and businesses over a network that encompassed, at December 31, 2007, over 9,900 miles of fiber in the central United States. It offers around the clock burglary and fire monitoring services to over 10,500 customers in select markets in Louisiana, Arkansas, Mississippi, Texas and Ohio.

Other Services

The Company derives its other revenues principally by leasing, selling, installing and maintaining customer premise telecommunications equipment and wiring; providing billing and collection services to third parties and participating in the publication of local telephone directories. It also provides printing, database management and direct mail services and cable television services. It also offers wireless communications services through a reselling arrangement with a nationwide wireless carrier and wireless broadband Internet services in select locations in certain markets in eight states.