May 3, 2006

The Company has set forth, below, its best offer for an early settlement of a new contract. The Company will avoid significant expenditures, in terms of strike preparation, if the offer is accepted by the Union prior to May 16, 2006. The Company also believes that both it, the Union, and the employees will enjoy a welcome relief from the pressures of an approaching contract expiration if the offer is accepted. Therefore, the Company has modified its positions significantly in an effort to achieve early settlement, and assures the Union that this offer is as forthcoming as the Company will be. Hopefully, the employees will agree that this is an offer worth accepting.

Specifically, the Company offers to enter into a new collective bargaining agreement, effective June 8, 2006, to replace the agreement expiring June 7, 2006. The provisions of the new agreement will be identical to those contained in the expiring agreement, with the following amendments, additions, and changes:

1. The new agreement shall be of three years duration, effective June 8, 2006, and expiring June 7, 2009.

2. Wages – General wage increases of 3%, rounded up or down to the nearest cent per hour, shall be applied to each step of each wage progression schedule, effective June 8, 2006, June 8, 2007, and June 8, 2008, respectively.

3. Active Medical – Premium cost sharing arrangements shall remain at the current 85% (Company) 15% (Employee) level through December 31, 2008. Effective January 1, 2009, that cost sharing level or formula shall change to 80% (Company) 20% (Employee). Dental premium cost sharing shall remain at 50% Company and 50% Employee, but shall cover all levels including Employee only, effective January 1, 2007. See the attached for Article 40 contract language. (Attachment 1 to the Company’s original proposal identifies the benefits referenced in Article 40, but not the premium sharing arrangement for medical and dental selections.)

4. Retiree Medical – The Company’s premium contribution toward retiree medical benefits will remain as it is today (55% - see numbered paragraph 2 of the MOA appearing at page 105 of the current contract) for employees retiring on or before May 31, 2009. For those retiring after May 31, 2009, the Company will pay $80 per month toward the cost of employee-only medical insurance coverage prior to Medicare eligibility and $17 per month toward Medicare Maintenance of Benefit insurance after Medicare eligibility. Numbered Paragraph 2 of the MOA appearing at page 105 of the contract will be amended to so provide.

5. Signing Bonus – If the offer is accepted prior to May 16, 2006, each employee on the payroll as of May 3, 2006, will be paid a one-time lump sum payment in the gross amount of $500, to be paid as soon as practicable.

6. If the Company (i.e. the wireline Company after spin-off) creates a scholarship fund for employees’ families and dependents, members of this bargaining unit will be included in the plan.

7. Relief Periods – Any employee working sixteen (16) consecutive hours or more shall have an eight (8) hour rest period before reporting to his next scheduled tour of duty. If such rest period extends into the employee’s regular scheduled tour, he shall not be require to report to work but will be paid his regular straight-time rate of pay for all hours that extend into his regular scheduled time. Should an employee be required to report back to work, and before the eight (8) hours has elapsed, he shall be paid one and one-half (1-1/2) times his regular rate of pay for all hours worked until eight (8) hours from the time his rest period began.

8. Educational Assistance – Any employee who successfully passes a course which is directly related to a company product or service will be eligible for up to an additional $1,000 reimbursement benefit (over and above present plan).

9. Holidays – Amend Article 24 to add Martin Luther King’s birthday

as a designated holiday. Also, change the word “authorized” to “designated” where it modifies the word “holiday” and change the word “floating” to “optional” where it modifies the word “holiday”.

10. Union business – As new second and third sentences to Article 8, Section 2A, add the following:

“If 120 days is insufficient during any calendar year, the President of the Union shall be entitled to another 30 days. Similarly, if, due to the incapacity of the President, another Union Officer is needed to serve as the President’s designee, that other officer shall be entitled to an additional 30 days during the year involved.”

11. Classifications – Reclassify all Customer Engineer – Data Application employees as Business Zone Technician II, and move the Business Zone Technician II classification to Wage Schedule l0.

The above offer is contingent upon acceptance by the Union prior to May 16, 2006. If it is not so accepted, it will be automatically withdrawn. In such event, as we have discussed with the Union Committee, each party will be free to re-assert all of its original proposals. In the case of the Company, we believe that all of our original proposals were reasonable, and consistent with agreements which the Company currently has with other CWA units.

It is the Company’s understanding that the Union will respectfully present this offer to the bargaining unit for ratification.

Respectfully submitted,

Kentucky Alltel, Inc.