Citizens Communications New Securities Group Rich Gallugi James Kocher

Quick FactsQuick Facts Overview of CompanyOverview of Company Financial Ratio Comparison Stock Performance Stock Valuation Valuation by Comparables FCF and Common Equity Valuation Recent News/Activity Holdings Breakdown/Insider Activity Analyst Recommendations Summary and Conclusions Recommendations Table of Contents

Quick Facts Ticker: CZN Sector: Technology Industry: Telecom Services - Domestic Market Cap: $4.47 Billion Recent Stock Price: (10/21/2007) 52 week high/low: Beta:.93 Shares outstanding: Million Dividend/Yield: $1.00 (7.60%) P/E Ratio: PEG Ratio: 5.06

Company Overview Citizens Communications Company is one of the nation's largest independent providers of telecommunications services. Known to customers by the brand name of Frontier, they offer local and long distance telephone service, Internet access, and satellite television. They operate in some 24 states, over 2.4 million access lines, serving rural areas, towns and small cities that other communications companies might overlook. The company was incorporated in the state of Delaware in 1935, but been in business for more than 100 years, and they have built our reputation by delivering the very best in telecommunications products and services to everyone from residential customers to small businesses to global organizations. In 2007, they acquired Commonwealth Telephone Enterprises, Inc.

Company Overview Mission Statement: “Be the leader in providing communications services to residential and business customers in our markets” The company has 5,446 full time employees Television services includes the provision of access to all-digital television channels featuring movies, sports, news, music, and high- definition TV programming The company was founded in 1927 and was formerly known as Citizens Utilities Company. Citizens Communications Company is based in Stamford, Connecticut. Citizens Communications Co.'s Corporate Governance Quotient (CGQ ｨ ) as of 1-Oct-07 is better than 46.5% of S&P 500 companies and 95% of Telecommunication Services companies.Corporate Governance Quotient (CGQ ｨ )

Financial Ratio Comparison

Stock Performance 1 year

Stock Performance 5 Year

Stock Valuation

Valuation by Comparables

Free Cash Flow and Common Equity Valuation

Analyst Recommendations Mean recommendation = 2.8 Mean Target = Analyst sentiment has not changed from month to month. 1 buy and 1 outperform, and 14 holds

Recent News Citizens Communications To Acquire Global Valley Networks and GVN Services For $62 Million Citizens Communications announced that it has entered into an agreement with Country Road Communications LLC to acquire Global Valley Networks Inc. (GVN) and GVN Services (GVS) through the purchase from Country Road of 100% of the outstanding common stock of Evans Telephone Holdings, Inc., the parent company of GVN and GVS. The purchase price is $62 million in cash, subject to adjustment. Citizens intends to finance the acquisition with cash on hand. The transaction is expected to close within six to nine months.

Recent News (cont) Communications Company (NYSE:CZN) announced today that Peter C.B. Bynoe has been appointed to its Board of Directors effective October 1, Mr. Bynoe is a senior partner in the Chicago office of the international law firm DLA Piper and serves on its Executive Committee. He joined DLA Piper in Prior to joining DLA Piper, Mr. Bynoe managed Telemat Ltd., a business consulting firm that he founded in From March 1988 to June 1992, he served as the Executive Director of the Illinois Sports Facilities Authority, a joint venture of the City of Chicago and State of Illinois created to develop a new Comiskey Park for the Chicago White Sox. Mr. Bynoe was responsible for all aspects of planning and executing the development of this $250 million project. The facility was completed on time and several million dollars under budget

Holdings Breakdown

Recent Insider Activity

Summary and Conclusions Huge Free Cash Flow –Potential takeover target –First half of 2007, paid out 56% of FCF in dividends, lower than most small telecom peers Benefiting from workforce cuts and continued growth of high margin calling services 12 month target price is based on EBITDA multiple of 7.5X, is in line with other rural firms

Recommendations Buy –Future synergies with new acquisition –Large Free Cash Flows and potential for take over target –Buy at market –Not strong buy due to S&P quantitative model (overvalued)