IRVING, Texas -- VALOR Communications Group, Inc. (NYSE: VCG - News) today announced that its Board of Directors has approved an agreement in which VALOR would merge with Alltel's (NYSE: AT - News) Wireline business segment ("Alltel Wireline"). Alltel Wireline will be spun off and then merged with VALOR Communications Group, Inc. in a Reverse Morris Trust transaction that will create the leading rural-focused wireline company with 3.4 million access lines in 16 states. In the transaction VALOR will issue approximately 400 million shares of stock in exchange for Alltel Wireline stock. Upon completion of the transaction, VALOR shareholders will own 15 percent of the combined entity.

VALOR will host a conference call today at 11:00 a.m. (EST) to discuss the merger. Details appear later in this press release under "Conference Call Information."

Transaction Highlights

"This combination creates the clear industry leader in rural wireline telecom. Our leverage and payout ratio will decrease significantly and the combined company will have larger scale, a well clustered rural footprint and a stronger competitive position. We also have a common billing platform already in place, which reduces integration risk," said Jack Mueller, VALOR Communications Group president and chief executive officer.

Pro Forma Highlights

Mr. Mueller also stated, "As part of our previously discussed focused strategy, VALOR continually reviews strategic transactions and believes that this transaction provides significant value creation for our shareholders. In addition, I believe the combined company will be able to better leverage existing infrastructure creating cost savings opportunities, financial flexibility and potential for further value creation."

"VALOR is a very good fit with the Alltel wireline business and the combined companies will add value for our shareholders," said Jeff Gardner, president and chief executive officer of the new company. "I am pleased that the new company will add senior leadership from VALOR's current team and I look forward to working with my colleagues at VALOR to run our new company," added Mr. Gardner.

The transaction is expected to close by mid-2006 and requires approval from VALOR shareholders, federal and state regulators and a letter ruling from the Internal Revenue Service approving the tax-free status.

Voting Agreements

Shareholders representing approximately 42% of the VALOR share ownership have entered into voting agreements pursuant to which they have agreed to vote in favor of this transaction.

Dividends

VALOR also announced that its Board of Directors has declared a dividend of $0.36 per share of common stock for shareholders of record on Dec. 31, 2005. The dividend is payable on Jan. 16, 2006.

VALOR plans to continue paying its current dividend through the date of closing. Post closing the combined company expects to pay an annual dividend of $1.00 per share.

2005 Outlook

For the full year 2005, VALOR maintains its expectations of cash available to pay dividends, as defined in its third quarter 2005 earnings release, of $128 million to $133 million on a pro forma basis. The company continues to expect full year 2005 capital expenditures of approximately $59 million.

Valor Communications Group Inc.

Alltel Corp.