Alaska Communications Systems Reports Third Quarter 2013 Results

  Alaska Communications Systems Reports Third Quarter 2013 Results

     Growth in Wireline revenue, led by Broadband revenue growth of 19.4%

          Over $134.2 of net debt reductions on a year-to-date basis

   AWN transaction closed and monthly preferred distribution payments have
                                  commenced

 Guidance affirmed for the year, with free cash flow at the high end of range

Business Wire

ANCHORAGE, Alaska -- November 6, 2013

Alaska Communications Systems Group, Inc. (“ACS”) (NASDAQ: ALSK) today
reported financial results for its third quarter ended September 30, 2013.

“We are pleased to report steady performance to our business plan. Another
quarter of solid broadband revenue performance has driven total wireline
revenue growth, representing an important way we create value. Consistent with
the other mechanism in our plan to create value by strengthening our balance
sheet, we achieved meaningful de-leveraging and strong cash flows in this
quarter. Closing the AWN transaction allows us to direct our capital more
efficiently to further broadband growth,” said Anand Vadapalli, President and
Chief Executive Officer of ACS.

Year-Over-Year Financial Highlights for the Quarter:

The third quarter represents the first reporting period following the Alaska
Wireless Network, LLC (“AWN”) close and we encourage readers to review our
press release schedules for description of changes in mapping of certain
revenue categories. Further, we are providing additional supplemental
information for readers to understand the AWN preferred distribution structure
and its impact to our results.

  *Wireline revenues include business and wholesale, consumer and access
    revenues. We are focused on achieving growth in wireline revenues by
    driving broadband revenue performance. Wireline revenues were $50.1
    million which increased by $0.6 million, or 1.2%.

       *Business and wholesale revenue increased $0.9 million, or 3.7%, which
         was driven by broadband revenue growth of 17.0%.
       *Consumer revenue increased $0.5 million, or 5.3%, with broadband
         revenue growth of 21.3%.
       *Access revenue declined, as expected, $0.9 million, or 5.7%, due to
         lower switched, special and other access revenue.

  *Wireless and backhaul revenue was $33.8 million and, as expected, declined
    year-over-year.

       *Retail service revenue declined $1.0 million, or 5.5%.
       *As expected, foreign roaming revenue declined $13.3 million, as
         roaming revenue moved to AWN.
       *CETC revenue increased 3.2%. CETC is now a pass-through under the AWN
         structure and has no impact on Adjusted EBITDA.

  *Adjusted EBITDA was $24.8 million and free cash flow was $3.5 million. The
    decline in Adjusted EBITDA compared to last year was anticipated following
    the close of AWN.

       *The AWN preferred distribution contributed $9.6 million to Adjusted
         EBITDA.
       *Free cash flow was impacted by higher levels of capital spending
         associated with the summer build season.

  *Net debt, which represents total debt less cash and cash equivalents,
    stands at $404.4 million. This represents a decrease of $134.2 million, or
    24.9%, since December 31, 2012, evidencing commitment to deleveraging.

Sequential Metric Highlights: Third Quarter 2013 Compared to Second Quarter
2013

  *Business broadband connections increased by 112, or 0.6%, to 19,216 and
    business broadband ARPU remained relatively flat at $175.00.
  *Consumer broadband connections increased by 506, or 1.3%, to 38,117 and
    consumer broadband ARPU declined slightly by 1.2% to $48.63.
  *Consumer access lines declined by 1,716, or 3.3%, to 50,722 and business
    access lines decreased by 446, or 0.6%, to 80,071.
  *Wireless connections declined by 2,305, or 2.0%, to 112,114. Connections
    were impacted by 782 fewer lifeline customers associated with continued
    compliance with new certification rules, and 2,453 fewer post-pay
    connections of which 714 were non-revenue-generating-internal-use
    connections that were disconnected as part of the AWN transaction,
    partially offset by an increase of 930 in prepaid connections.
  *Wireless broadband ARPU increased 7.5%. Retail wireless ARPU declined
    slightly to $52.08.

“This is the first quarter of results following the close of the AWN
transaction, and we have provided additional information in this press release
to enable readers to evaluate our performance under this new operating
structure. During our upcoming conference call we will walk the readers
through this information. Our path to deliver shareholder value is growing
wireline and total broadband revenue, while strengthening the business through
debt reductions. Our financial results are in-line with our expectations, with
solid free cash flow generation for the year,” said Wayne Graham, Chief
Financial Officer of ACS.

Guidance for the year is as follows:

Total revenue guidance is unchanged and expected to be $340 - $350 million.

Adjusted EBITDA guidance is unchanged and expected to be $105 - $110 million.

Capital spending, previously targeted to be around $50 million, is now
expected to be moderately lower.

Previous Free Cash Flow guidance of $20 - $25 million is unchanged and we are
comfortable with the high end of the range.

Guidance for 2014, with a full-year without the transition period of pre- and
post-AWN ownership, will be provided when we report fourth quarter 2013
results.

Conference Call

The company will host a conference call and live webcast today at 5:00 p.m.
Eastern time to discuss these results. Parties in the United States and Canada
can access the call at 1-877-941-0843. Parties outside the United States and
Canada can access the call at 1-480-629-9722. The live webcast of the
conference call will be accessible from the "Events Calendar" section of the
company's website (www.alsk.com).

The webcast will be archived for a period of 90 days. A telephonic replay of
the conference call will also be available two hours after the call and will
run until December 31, 2013, at midnight Eastern time. To hear the replay,
parties in the United States and Canada can call 1-800-406-7325 and enter pass
code 4645116. Parties outside the United States and Canada can call
1-303-590-3030 and enter pass code 4645116.

About Alaska Communications

Alaska Communications is a leading provider of advanced broadband solutions
for businesses and consumers in Alaska.We operate a highly reliable, advanced
statewide data and voice network with the latest technology and the most
diverse undersea fiber optic system connecting Alaska to the contiguous United
States. For more information, visit www.alaskacommunications.com or
www.alsk.com.

Non-GAAP Measures

In an effort to provide investors with additional information regarding the
Company's results as determined by GAAP, the Company also discloses certain
non-GAAP information which management utilizes to assess performance and
believes provides useful information to investors. The Company has disclosed
Adjusted EBITDA as net income before interest, loss on extinguishment of debt,
depreciation and amortization, loss on sale of short-term investments, gain or
loss on asset purchases or disposals, earnings on equity method investments,
gains and distributions related to AWN, amortization of deferred AWN service
revenue, provisions for taxes, stock-based compensation, and AWN
transaction-related costs, and Adjusted EBITDA Margin, defined as Adjusted
EBITDA divided by Operating Revenues. Additionally, the Company has disclosed
Free cash flow as Adjusted EBITDA, less capital expenditures that create an
obligation to pay (“incurred capital expenditures”), less amortization of
deferred AWN capacity revenue, less AWN transaction-related capital costs,
less cash interest expense. These measures are provided because the Company
believes they are important indicators regarding our ability to make principal
payments on debt and fund working capital. Adjusted EBITDA, Adjusted EBITDA
Margin and Free cash flow are non-GAAP measures and should not be considered a
substitute for net cash provided by operating activities and other measures of
financial performance recorded in accordance with GAAP.

Forward-Looking Statements

This press release includes certain “forward-looking statements,” as that term
is defined in the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on management’s beliefs as well as on a
number of assumptions concerning future events made using information
currently available to management. Readers are cautioned not to put undue
reliance on such forward-looking statements, which are not a guarantee of
performance and are subject to a number of uncertainties and other factors,
many of which are outside ACS’ control. Such factors include, without
limitation, Verizon’s continued build out of their wireless network in Alaska,
Universal Service Fund changes, AWN’s future financial and operational
performance and the wholesale terms it establishes, adverse national economic
conditions, adverse conditions in the credit markets impacting the cost,
including interest rates, and/or availability of financing, adverse local
economic conditions, including an unexpected downturn in the Alaskan oil and
gas or tourism markets, changes in capital expenditures, the effects of
competition in our markets, the entry of one or more additional
facilities-based carriers into the Alaska market; the Company’s ability to
complete, manage, integrate, market, maintain, and attract sufficient
customers to the products and services it may deliver, adverse changes in
labor matters, including workforce levels, labor negotiations, and benefits
costs; disruption of our suppliers’ provisioning of critical products or
services; the impact of natural or man-made disasters; changes in Company’s
relationships with large carrier or enterprise customers; unforeseen changes
in public policies; changes in accounting policies, including the Company’s
application of regulatory accounting rules, which could result in an impact on
earnings; or disruptive technological developments in the telecommunications
industry. For further information regarding risks and uncertainties associated
with ACS’ business, please refer to the Company’s SEC filings, including, but
not limited to, the sections entitled "Risk Factors” and “Management's
Discussion and Analysis of Financial Condition and Results of Operations” in
our annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of
the Company’s SEC filings may be obtained by contacting its investor relations
department at (907) 564-7556 or by visiting its investor relations website at
www.alsk.com.

Schedule 1

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED SCHEDULE OF OPERATIONS
(Unaudited, In Thousands Except Per Share Amounts)

                 Three Months Ended             Nine Months Ended
                   September 30,                    September 30,
                   2013           2012            2013           2012
                                                                     
Operating          $ 83,841         $ 96,750        $ 272,657        $ 272,709
revenues
                                                                     
Operating
expenses:
Cost of
services and
sales,               44,720           36,346          117,371          111,602
inclusive of
$11,228 of AWN
Selling,
general &            29,274           25,437          83,717           80,374
administrative
Depreciation
and                  9,209            12,932          33,291           38,452
amortization
(Income) loss
on disposal of       (132,109 )       (2,559  )       (131,483 )       (2,140  )
assets, net
Earnings on
equity method        (8,082   )       (45     )       (8,061   )       (45     )
investments
AWN excess          (2,867   )      -             (2,867   )      -       
distribution
Total
operating           (59,855  )      72,111        91,968         228,243 
(income)
expenses
                                                                     
Operating            143,696          24,639          180,689          44,466
income
                                                                     
Other income
and expense:
Interest             (9,785   )       (10,268 )       (29,970  )       (29,203 )
expense
Loss on
extinguishment       (2,094   )       -               (2,370   )       (323    )
of debt
Interest             19               9               37               31
income
Other               -              -             (13      )      -       
Total other
income and          (11,860  )      (10,259 )     (32,316  )      (29,495 )
expense
                                                                     
Income before
income tax           131,836          14,380          148,373          14,971
expense
                                                                     
Income tax          (54,238  )      (6,136  )      (29,613  )      (6,385  )
expense
                                                                     
Net income         $ 77,598        $ 8,244        $ 118,760       $ 8,586   
                                                                     
Net income per
share:
Basic              $ 1.65          $ 0.18         $ 2.55          $ 0.19    
Diluted            $ 1.33          $ 0.17         $ 2.09          $ 0.19    
                                                                     
Weighted
average shares
outstanding:
Basic               47,159         45,664        46,592         45,511  
Diluted             59,346         59,437        58,816         45,806  
                                                                     
                                                                     

Schedule 2

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, In Thousands Except Per Share Amounts)

                                           September 30,    December 31,
Assets                                       2013               2012
                                                                
Current assets:
Cash and cash equivalents                    $ 53,295           $ 16,839
Restricted cash                                482                3,875
Short-term investments                         -                  2,050
Accounts receivable-trade, net of              31,390             39,713
allowance of $5,744 and $6,231
Materials and supplies                         12,112             9,409
Prepayments and other current assets           7,672              5,566
Deferred income taxes                         1,478            8,301      
Total current assets                           106,429            85,753
                                                                
Property, plant and equipment                  1,345,048          1,463,320
Less: accumulated depreciation and            (1,005,035 )      (1,052,459 )
amortization
Property, plant and equipment, net             340,013            410,861
                                                                
Goodwill                                       4,650              8,850
Intangible assets, net                         -                  24,118
Debt issuance costs                            7,502              10,558
Deferred income taxes                          48,337             69,049
Equity method investments                      207,566            2,028
Other assets                                  400              3,510      
Total assets                                 $ 714,897         $ 614,727    
                                                                
Liabilities and Stockholders' Equity
(Deficit)
Current liabilities:
Current portion of long-term obligations     $ 12,865           $ 21,628
Accounts payable, accrued and other
current liabilities, inclusive of $3,926       61,033             56,378
of AWN
Advance billings and customer deposits        8,837            8,970      
Total current liabilities                      82,735             86,976
                                                                
Long-term obligations, net of current          444,782            533,772
portion
Other long-term liabilities                   93,571           28,662     
Total liabilities                             621,088          649,410    
Commitments and contingencies
Stockholders' equity (deficit):
Common stock, $.01 par value; 145,000          486                458
authorized
Additional paid in capital                     151,784            144,377
Accumulated deficit                            (51,519    )       (170,279   )
Accumulated other comprehensive loss          (6,942     )      (9,239     )
Total stockholders' equity (deficit)           93,809             (34,683    )
                                                                
Total liabilities and stockholders'          $ 714,897         $ 614,727    
equity (deficit)
                                                                             
                                                                             

Schedule 3

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, In Thousands)

                    Three Months Ended             Nine Months Ended
                      September 30,                    September 30,
                      2013           2012            2013           2012
Cash Flows from
Operating
Activities:
Net income            $ 77,598         $ 8,244         $ 118,760        $ 8,586
Adjustments to
reconcile net
income to net
cash provided by
operating
activities:
Depreciation and        9,209            12,932          33,291           38,452
amortization
Gain on
sale/contribution       (132,424 )       -               (132,424 )       -
of asset to AWN
AWN excess              (2,867   )       -               (2,867   )       -
distribution
Gain on
ineffective hedge       231              -               (785     )       -
adjustment
Amortization of
debt issuance           2,714            1,380           5,754            4,382
costs and debt
discount
Amortization of         1,082            -               1,948            -
ineffective hedge
Amortization of
deferred AWN            (738     )       -               (738     )       -
capacity revenue
Stock-based             550              969             2,268            2,662
compensation
Deferred income         53,640           6,136           29,015           6,385
taxes
Provision for
uncollectible           366              307             805              1,836
accounts
Cash distribution
from equity             5,389            32              5,389            32
method
investments
Earnings on
equity method           (8,082   )       (45     )       (8,061   )       (45     )
investments
Other non-cash          (2,572   )       (2,585  )       (1,710   )       (2,042  )
expense, net
Changes in
operating assets       7,161          (8,198  )      6,096          (4,038  )
and liabilities
Net cash provided
by operating            11,257           19,172          56,741           56,210
activities
                                                                        
Cash Flows from
Investing
Activities:
Capital                 (13,717  )       (13,876 )       (27,314  )       (36,319 )
expenditures
Capitalized             (421     )       (567    )       (1,291   )       (1,396  )
interest
Change in
unsettled capital       553              (1,279  )       (3,276   )       (5,648  )
expenditures
Proceeds on sale        2,812            2,923           4,747            2,923
of assets
Proceeds on
sale/contribution       100,000          -               100,000          -
of asset to AWN
AWN excess              2,867            -               2,867            -
distribution
Net change in
short-term              525              -               2,037            -
investments
Change in
unsettled               (3,345   )       -               (3,345   )       -
acquisition costs
Net change in
restricted             3,345          (527    )      3,393          (1,071  )
accounts
Net cash provided
(used) by               92,619           (13,326 )       77,818           (41,511 )
investing
activities
                                                                        
Cash Flows from
Financing
Activities:
Repayments of           (67,001  )       (1,330  )       (97,382  )       (9,255  )
long-term debt
Debt issuance           (25      )       -               (206     )       -
costs
Payment of cash
dividend on             -                (2,285  )       -                (6,831  )
common stock
Payment of
withholding taxes       (2       )       (4      )       (632     )       (243    )
on stock-based
compensation
Proceeds from
issuance of            2              (1      )      117            179     
common stock
Net cash used by
financing               (67,026  )       (3,620  )       (98,103  )       (16,150 )
activities
                                                                        
Change in cash
and cash                36,850           2,226           36,456           (1,451  )
equivalents
                                                                        
Cash and cash
equivalents,           16,445         16,813        16,839         20,490  
beginning of
period
                                                                        
Cash and cash
equivalents, end      $ 53,295        $ 19,039       $ 53,295        $ 19,039  
of period
                                                                        
Supplemental Cash
Flow Data:
Interest paid         $ 6,818          $ 7,796         $ 25,201         $ 24,799
Extinguishment of
hedging               $ 4,073          $ -             $ 4,073          $ -
instrument
Income tax paid       $ -              $ -             $ -              $ (24     )
(refunded), net
                                                                        
Supplemental
Non-cash
Transactions:
Property
(retired)
acquired under        $ (19      )     $ -             $ (17      )     $ (24     )
capital leases,
net
Dividend
declared, but not     $ -              $ 2,286         $ -              $ 2,286
paid
Additions to ARO      $ 43             $ 24            $ 180            $ 78
asset
Exchange of debt      $ 6,000          $ -             $ 6,000          $ -
with common stock
                                                                                  
                                                                                  

Schedule 4

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
ADJUSTED EBITDA AND FREE CASH FLOW
(Unaudited, In Thousands)

                      Three Months Ended             Nine Months Ended
                        September 30,                    September 30,
                        2013           2012            2013          2012
                                                                        
Net income              $ 77,598         $ 8,244         $ 118,760      $ 8,586
Add (subtract):
Interest expense          9,785            10,268          29,970         29,203
Loss on
extinguishment of         2,094            -               2,370          323
debt
Interest income           (19      )       (9      )       (37      )     (31     )
Depreciation and          9,209            12,932          33,291         38,452
amortization
Loss on sale of
short-term                -                -               13             -
investments
(Gain) loss on            315              (2,559  )       941            (2,140  )
disposal of assets
Earnings on equity
method investment         (18      )       (45     )       3              (45     )
in TekMate
Earnings on equity
method investment         (8,064   )       -               (8,064   )     -
in AWN
Gain on
sale/contribution         (132,424 )       -               (132,424 )     -
of asset to AWN
TekMate
distribution              -                32              -              32
received
AWN excess                (2,867   )       -               (2,867   )     -
distribution
AWN distributions         5,389            -               5,389          -
received
AWN distributions
receivable within         4,167            -               4,167          -
14 days
Income tax expense        54,238           6,136           29,613         6,385
Stock-based
compensation and          702              969             2,750          2,662
long-term cash
incentives
AWN
transaction-related      4,702          587           5,974        5,046   
costs
                                                                        
Adjusted EBITDA         $ 24,807        $ 36,555       $ 89,849      $ 88,473  
                                                                        
Less:
Incurred capital          (13,717  )       (13,876 )       (27,314  )     (36,319 )
expenditures
Amortization of
deferred AWN              (738     )       -               (738     )     -
capacity revenue
AWN
transaction-related       -                342             (41      )     342
capital costs, net
change
Cash interest            (6,818   )      (7,796  )      (25,201  )    (24,799 )
expense
Free cash flow          $ 3,534         $ 15,225       $ 36,555      $ 27,697  
                                                                        
Revenue                 $ 83,841        $ 96,750       $ 272,657     $ 272,709 
                                                                        
Adjusted EBITDA           29.6     %       37.8    %       33.0     %     32.4    %
Margin
                                                                                  

        In an effort to provide investors with additional information
        regarding the Company's results as determined by GAAP, the Company
        also discloses certain non-GAAP information which management utilizes
        to assess performance and believes provides useful information to
        investors. The Company has disclosed Adjusted EBITDA as net income
        before interest, loss on extinguishment of debt, depreciation and
        amortization, loss on sale of short-term investments, gain or loss on
        asset purchases or disposals, earnings on equity method investments,
        gains and distributions related to AWN, amortization of deferred AWN
        service revenue, provisions for taxes, stock-based compensation, and
        AWN transaction-related costs, and Adjusted EBITDA Margin, defined as
Note:  Adjusted EBITDA divided by Operating Revenues. Additionally, the
        Company has disclosed Free cash flow as Adjusted EBITDA, less capital
        expenditures that create an obligation to pay (“incurred capital
        expenditures”), less amortization of deferred AWN capacity revenue,
        less AWN transaction-related capital costs, less cash interest
        expense. These measures are provided because the Company believes they
        are important indicators regarding our ability to make principal
        payments on debt and fund working capital. Adjusted EBITDA, Adjusted
        EBITDA Margin and Free cash flow are non-GAAP measures and should not
        be considered a substitute for net cash provided by operating
        activities and other measures of financial performance recorded in
        accordance with GAAP.
        
        

Schedule 5

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
REVENUE GROWTH
(Unaudited, In Thousands)

                       Three Months Ended        Nine Months Ended
                         September 30,               September 30,
Wireline revenue         2013         2012         2013          2012
Business and
wholesale
Retail service
revenue
Voice                    $ 5,790        $ 5,967      $ 17,303        $ 18,046
Broadband                  10,080         8,613        29,509          25,156
Equipment sales            480            311          1,340           927
Wholesale and other       9,193        9,736       28,288        29,686
Total business and        25,543       24,627      76,440        73,815
wholesale revenue
                                                                     
Consumer
Retail service
revenue
Voice                      4,147          4,676        12,819          14,460
Broadband                  5,596          4,613        16,443          13,469
Equipment sales            36             42           111             126
Other                     478          413         1,275         971
Total consumer            10,257       9,744       30,648        29,026
revenue
                                                                     
Access
High cost support          4,984          5,087        13,558          15,041
Switched, special         9,273        10,024      28,056        30,503
and other access
Total access              14,257       15,111      41,614        45,544
Total wireline            50,057       49,482      148,702       148,385
revenue
                                                                     
Wireless and
backhaul revenue
Retail service
revenue
Voice                      9,993          12,355       31,824          37,231
Broadband                  7,680          6,340        21,783          17,892
Equipment sales            1,255          1,737        3,785           4,594
Foreign roaming            5,594          18,919       40,029          40,996
Other                      1,441          1,132        3,591           3,227
CETC                       5,139          4,979        16,093          15,669
Wireless backhaul          1,944          1,806        6,112           4,715
Amortization of
deferred AWN              738          -           738           -
capacity
Total wireless and        33,784       47,268      123,955       124,324
backhaul revenue
                                                                     
Total revenues           $ 83,841      $ 96,750     $ 272,657      $ 272,709
                                                                     
Revenue Growth:
Business and               3.7    %                    3.6     %
wholesale
Consumer                   5.3    %                    5.6     %
Wireline                   1.2    %                    0.2     %
Total revenue              -13.3  %                    0.0     %
Broadband                  19.4   %                    19.8    %
                                                                     
                                                                     

Schedule 6

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
KEY OPERATING STATISTICS
(Unaudited)

                             Three Months Ended
                               September 30,   June 30,      September 30,
                               2013              2013            2012
                                                                 
Voice:
Consumer access lines             50,722           52,438           57,483
Business access lines             80,071           80,517           81,330
                                                                 
Voice ARPU consumer            $  26.81          $ 27.25         $  26.65
Voice ARPU business            $  24.04          $ 23.93         $  24.34
                                                                 
Broadband: (1)
Consumer connections              38,117           37,611           36,152
Business connections (2)          19,216           19,104           18,605
                                                                 
ARPU consumer                  $  48.63          $ 49.21         $  41.73
ARPU business (2)              $  175.00         $ 174.87        $  154.02
                                                                 
Wireless:
Postpaid connections (3)          86,423           88,876           94,530
Lifeline connections              9,077            9,859            12,690
Prepaid connections              16,614         15,684         13,755   
Total                            112,114        114,419        120,975  
                                                                 
Retail wireless ARPU           $  52.08          $ 52.68         $  51.79
Wireless broadband ARPU        $  26.40          $ 24.55         $  19.70
                                                                 
Churn:
                                                                 
Voice connections (4)             1.4      %       1.3     %        1.4      %
Broadband connections (1)         2.4      %       2.0     %        2.3      %
(4)
Wireless connections              3.2      %       2.4     %        2.0      %
                                                                 
                                                                 
Wireless equipment subsidy        (1,062   )       (3,463  )        (2,608   )
                                                                             

(1)  Consumer and business broadband connections, ARPU, and churn have been
      restated to exclude dial up lines.
      
      Business broadband connections counts have been restated to correct how
      certain high bandwidth circuits types are measured. These change have no
(2)   affect on our financial results, but will affect connection count and
      ARPU amounts presented above compared to their presentation in prior
      periods.
      
(3)   September 30, 2013 Wireless connections have been reduced by 714,
      non-revenue generating, internal-use, connections.
      
(4)   Voice and broadband churn have been restated to exclude wholesale lines.
      
      

                                                                    Schedule 7

                  ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
                           Summary AWN information
                          (Unaudited, In Thousands)

Alaska Wireless Network, LLC
Stand Alone Selected Operating Results
For the Period July 23, 2013 - September 30, 2013

Operating revenues                                        $ 58,826   
                                                                         
Operating expenses:
                 Cost of services and sales                 22,258
                  Selling, general & administrative          3,908
                  Depreciation and amortization             7,327  
                                                                         
Total operating expenses                                      33,493
                                                                         
Operating income                                              25,333
                                                                         
Other income and (expense)                                   (74    )
                                                                         
Net income                                                    25,259     A
                                                                         
Plus:              Depreciation Expense                       7,327
                   Other, net                                 753
Minus:             Capital Spending                           12,435
                   Management Fee to GCI                     836    
Adjusted Free Cash Flow                                     $ 20,068    D
                                                                         
Distributions paid or payable to ACS:
(includes balance to be received with 12 days)                9,556      E
                                                                         
Distributions to ACS as a proportion of Free Cash Flow:       47.6   %


The above information reflects summary unaudited financial performance of AWN,
which Alaska Communication owns a 33.3% ownership interest. Certain additional
summary information is included in our Form 10-Q filings.


Key AWN Results Included in the ACS Consolidated Balance Sheet:
                                                           
Equity method investment                                        $ 205,542
Deferred AWN capacity revenue:                                  $ 76,337
Accounts payable, accrued and other current liabilities         $ 3,852
Other long-term liabilities                                     $ 72,485


Investment in AWN represents the value of ACS's 1/3 ownership interest in AWN.
Deferred revenue represents capacity contributions and the operations and
maintenance support of these capacity contributions for AWN's network. The
benefit of this deferred revenue is recognized over 20 years.

Key AWN Results included in the ACS Consolidated Income Statement:

AWN net income                           $ 25,259    A
Adjusted for step-up in GCI assets            (1,066 )   B
AWN stepped-up earnings                      $ 24,193     C
Adjusted Free Cash Flow                      $ 20,068     D
Distributions paid or payable to ACS         $ 9,556      E
ACS ownership percentage of AWN                33.33  %   F

"Adjusted for step-up"(B) reflects the step up on basis on the GCI contributed
assets to AWN and associated higher depreciation expense that ACS is required
to incorporate in its consolidated financial statements.

Earnings on equity method investment in AWN     $ 8,064  C * F
                                                              
Distributions paid or payable to ACS                $ 9,556   E
Hypothetical distributions at 33.3%                  6,689   D * F
AWN excess distribution                             $ 2,867

AWN's stepped up net income is used to calculate the equity in earnings at
ACS' 1/3 ownership percentage or $8,064. Additionally, an AWN excess
distribution, or $2,867, is recognized in the quarter to reflect the
disproportionate nature of the AWN preferred distributions.

Key AWN Results Included in the ACS Non GAAP financial measures:

Cash distributions received during the quarter                    $ 5,389
Less:   Distributions received during the quarter related to           -
         the previous period
Plus:    Distributions received within 14 business days of              4,167
         quarter-end
         Amortization of deferred AWN capacity revenue                 738
Equals   AWN impact to Adjusted EBITDA                                $ 10,294
                                                                      
Less:    Amortization of deferred AWN capacity revenue                 738
Equals   AWN impact to Free Cash Flow                                 $ 9,556

In our non-GAAP reporting of Adjusted EBITDA, ACS is using our Senior Credit
Agreement definition, as amended, for the AWN distribution, which is
distributions received or eligible to be received within 14 business days.

Contact:

Alaska Communications
Investors:
Wayne Graham, 907-564-3314
Chief Financial Officer
investors@acsalaska.com