CTE Reports 2005 Second Quarter Results; CTE Reports Second Quarter Diluted Earnings Per Share of $0.66, Versus Reported Diluted Earnings Per Share of $0.68 in the Year Ago Quarter

Michael J. Mahoney, CTE president and CEO, will host a conferencecall and simultaneous webcast at 9:00 a.m. (EDT) today. Mr. Mahoneywill review CTE's 2005 second quarter results, and 2005 guidance. Thecall is expected to last approximately 30 minutes. To access today'sconference call, please call 1-877-277-1088. The conference callpasscode is 7363315. The simultaneous webcast can be accessed via theInternet at www.ct-enterprises.com. The conference call will bearchived and available for replay for 48 hours following the call. Toaccess the replay, please call 1-800-642-1687, passcode 7363315. Thewebcast will also be available for replay for 48 hours atwww.ct-enterprises.com.

Commonwealth Telephone Enterprises, Inc. ("CTE") (NASDAQ:CTCO),today announced financial results for the 2005 second quarter.

CTE 2005 Second Quarter Consolidated Results

For the 2005 second quarter, CTE reported diluted earnings pershare ("EPS") of $0.66, versus reported diluted EPS of $0.68 in the2004 second quarter.

CTE's 2005 second quarter reported diluted EPS of $0.66 includes a$0.16 unfavorable effect resulting from the execution of CTE's overalldividend strategy, which was announced on May 3, 2005, and whichincluded a special dividend and an initial quarterly dividend. Theitems comprising this unfavorable effect include advisory, legal andother fees related to the strategy; non-cash compensation expenserelated to certain stock-based compensation plans, which resulted fromthe dividend; and, the effect of including 2.1 million additionalshares in the diluted EPS calculation due to the conversion rateadjustment made under CTE's 3 1/4 % Convertible Notes Due 2023 as aresult of the dividends, as well as stock option exercises that tookplace in the quarter. Also included in the reported diluted EPS of$0.66 is a $0.02 favorable effect resulting from certain accessrevenue settlements and network costs settlements included in theCTSI, LLC ("CTSI"), results.

Included in CTE's 2004 second quarter reported diluted EPS is a$0.8 million (pre-tax), or $0.02 per share (after-tax), favorableeffect resulting from a positive settlement in connection with certainrestructuring charges recorded in the 2000 fourth quarter.

CTE ended the 2005 second quarter with a total of 466,524 switchedaccess lines installed, reflecting a decrease of 9,238 switched accesslines installed over the past 12 months, or a reduction of 2%.

CTE's reported consolidated revenues in the 2005 second quarterwere $83.0 million, down 1% versus 2004 second quarter revenues of$84.0 million.

CTE's reported consolidated operating income in the 2005 secondquarter was $27.5 million, versus $26.7 million in last year's secondquarter, reflecting an increase of 3%.

For the 2005 second quarter, CTE reported net income of $17.2million, versus reported net income of $16.3 million in the 2004second quarter.

Consolidated capital expenditures ("CAPEX") were $10.3 million inthe 2005 second quarter, versus CAPEX of $10.6 million in the year agoquarter.

The table below sets forth highlights of CTE's 2005 second quarterreported consolidated results, versus the 2004 second quarter:

2005 2004 % Change
Second Quarter Second Quarter Inc./(Dec.)
-------------- -------------- -----------

Total Access Lines 466,524 475,762 ( 2%)
Revenues $83.0M $84.0M ( 1%)
Operating Income $27.5M $26.7M 3%
Depreciation and
Amortization $14.1M $18.0M (22%)
CAPEX $10.3M $10.6M ( 3%)
Reported EPS $0.66 $0.68 ( 3%)

"We had a solid second quarter," said Michael J. Mahoney, CTE'spresident and chief executive officer. "Our two primary operatingunits, Commonwealth Telephone Company and CTSI, both achieved solidresults for the quarter and remain on track with our plans for theyear. We continue to achieve record subscriber growth with our DSLproduct - attaining net subscriber growth of 54%, versus the end oflast year's second quarter. Our diluted EPS for the quarter, apartfrom the effect of our dividend strategy, came in above our priorguidance and above the Street consensus mean estimate, and ourguidance for the 2005 full year remains unchanged, again, with theexception of the effect of our overall dividend strategy."

Commonwealth Telephone Company ("CT") Results

CT had a total of 329,385 switched access lines installed at theend of the 2005 second quarter - reflecting a reduction of 2%, versuslast year's second quarter. CT's residential additional linepenetration was 35% at the end of the quarter, versus 37% at the endof the prior year quarter.

CT's 2005 second quarter revenues were $57.0 million, versusrevenues of $56.9 million in the 2004 second quarter.

CT's 2005 second quarter operating income was $28.4 million,versus $25.4 million in the 2004 second quarter.

CT's 2005 second quarter CAPEX were $6.1 million, versus $7.1million in the 2004 second quarter.

CTSI Results

CTSI had a total of 137,139 switched access lines installed at theend of the 2005 second quarter - reflecting a 2% decline, versus the139,316 switched access lines installed at the end of the 2004 secondquarter. The decline in CTSI's access lines installed was primarilydue to a reduction in ISP customer lines, as the dial-up ISP businesshas continued to slow. CTSI's non-ISP related access lines installedincreased slightly over the past 12 months. At the end of the 2005second quarter, 99% of CTSI's access lines were "on-switch," and 55%were "on-net" (defined as 100% on CTSI's owned network). CTSI'sbusiness/residential line split at the end of the 2005 second quarterwas 91%/9%, identical to the split at the end of the 2004 secondquarter.

CTSI's 2005 reported second quarter revenues were $21.5 million,versus revenues of $20.8 million in the 2004 second quarter. CTSI's2005 second quarter reported revenues include a $0.5 million favorableeffect resulting from certain access revenue settlements.

CTSI's reported operating income in the 2005 second quarter was$3.3 million, versus operating income of $2.6 million in the 2004second quarter. CTSI's 2005 second quarter reported operating incomeincludes a $0.9 million favorable effect resulting from theaforementioned access revenue settlements and certain network costssettlements. CTSI's 2004 second quarter reported operating incomeincludes the previously mentioned $0.8 million (pre-tax) favorableeffect resulting from a positive settlement in connection with certainrestructuring charges recorded in the 2000 fourth quarter.

CTSI's 2005 second quarter capital expenditures were $3.8 million,versus $3.3 million in the year ago quarter.

DSL

In the 2005 second quarter, CTE installed 2,497 net new DSLsubscribers. CTE had 23,632 installed DSL subscribers at the end ofthe 2005 second quarter, having added a record total of 8,306 net newsubscribers over the past 12 months, which reflected a growth rate of54%, versus the end of last year's second quarter. DSL is marketed inCTE's CT and CTSI geographies.

2005 Guidance Outlined

The table below sets forth CTE's consolidated 2005 full yearguidance, which Mr. Mahoney will review on this morning's conferencecall and webcast:

Previously
Communicated Updated
2005 Full Year 2005 Full Year
Item Guidance (1) Guidance (1)
------------------ ---------------- ----------------

Consolidated CTE Access Line Growth (2%) - 0% Unchanged
Revenue Growth (1%) - 0% Unchanged
Operating Income $108M - $110M Unchanged
Depreciation and
Amortization $58M - $59M Unchanged
Effective Tax Rate 38% Unchanged
Diluted EPS -
3Q05(2) n/a $0.57 - $0.59
Diluted EPS -
FY05(2) $2.81 - $2.84 $2.53 - $2.56
CAPEX $40M - $42M Unchanged

(1) Does not reflect any additional common stock repurchases or
conversions of notes.

(2) Includes the effect of anticipated quarterly dividends to be paid
in the 2005 third and fourth quarters (subject to declaration by
CTE's Board of Directors).

About CTE

Headquartered in Dallas, PA, Commonwealth Telephone Enterprises,Inc., serves business and residential customers with a full array oftechnologically advanced data and voice telecommunications productsand services, including broadband data services and high-speedInternet access, delivered over its 100% digitally switched,fiber-rich network.

CTE's primary operating segments are: Commonwealth TelephoneCompany ("CT"), the nation's eighth largest publicly held independentlocal exchange carrier, which has been operating in various ruralPennsylvania markets since 1897; and, CTSI, LLC ("CTSI"), a localexchange carrier operating in competitive markets outside CT'sterritory, that formally commenced operations in 1997. CTE deploysbroadband DSL technology to offer high-speed Internet access in the CTand CTSI service territories. CTE's support businesses include epix(R)Internet Services (www.epix.net), one of the Northeast's largest ruraldial-up Internet Service Providers ("ISPs"), and CommonwealthCommunications, a provider of telecommunications equipment andfacilities management services.

A web site featuring current information regarding CommonwealthTelephone Enterprises, Inc., can be found on the Internet atwww.ct-enterprises.com. However, the information on this web site doesnot form a part of this release.

Forward-Looking Statements

This press release contains certain forward-looking statementswithin the meaning of Section 27A of the Securities Act and Section21E of the Exchange Act and CTE intends that such forward-lookingstatements be subject to these safe harbors. Such forward-lookingstatements involve risks and uncertainties that could significantlyaffect expected results in the future differently than expressed inany forward-looking statements made by CTE. These risks anduncertainties include, but are not limited to, uncertainties relatedto CTE's ability to further penetrate its markets and the relatedcosts of that effort, economic conditions, acquisitions anddivestitures, government and regulatory policies, the pricing andavailability of equipment, materials and inventories, technologicaldevelopments, reductions in rates or traffic that are subject toaccess charges, changes in the competitive environment in which CTEoperates and receipt of necessary regulatory approvals.

COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)


THREE MONTHS ENDED JUNE 30, 2005
-------------------------------------------
CT CTSI OTHER TOTAL
---------- ---------- ---------- ----------

Sales $ 56,955 $ 21,500 $ 4,563 $ 83,018
Costs & Expenses
(excluding other
operating expenses) 19,490 13,421 8,552 41,463

Depreciation &
Amortization 9,077 4,776 255 14,108

Restructuring Reversals - (31) - (31)
---------- ---------- ---------- ----------

Operating Income (Loss) 28,388 3,334 (4,244) 27,478

Interest and Dividend
Income 2,910
Interest Expense (3,431)
Other Income (Expense),
Net (1,397)
Equity in Income of
Unconsolidated Entities 1,865
----------

Income before Income Taxes 27,425

Provision for Income Taxes 10,231
----------

Net Income $ 17,194
==========


THREE MONTHS ENDED JUNE 30, 2004
-------------------------------------------
CT CTSI OTHER TOTAL
---------- ---------- ---------- ----------

Sales $ 56,925 $ 20,780 $ 6,309 $ 84,014

Costs & Expenses
(excluding other
operating expenses) 19,588 13,803 6,662 40,053

Depreciation &
Amortization 11,977 5,212 836 18,025

Restructuring Reversals - (799) - (799)
---------- ---------- ---------- ----------

Operating Income (Loss) 25,360 2,564 (1,189) 26,735

Interest and Dividend
Income 1,216
Interest Expense (4,325)
Other Income (Expense),
Net 502
Equity in Income of
Unconsolidated Entities 1,790
----------

Income before Income Taxes 25,918

Provision for Income Taxes 9,600
----------

Net Income $ 16,318
==========



COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)


SIX MONTHS ENDED JUNE 30, 2005
-------------------------------------------
CT CTSI OTHER TOTAL
---------- ---------- ---------- ----------

Sales $ 113,332 $ 43,622 $ 9,593 $ 166,547
Costs & Expenses
(excluding other
operating expenses) 39,297 26,882 15,025 81,204

Depreciation &
Amortization 21,429 9,705 712 31,846

Restructuring Reversals - (31) - (31)
---------- ---------- ---------- ----------

Operating Income (Loss) 52,606 7,066 (6,144) 53,528

Interest and Dividend
Income 5,500
Interest Expense (6,945)
Other Income (Expense),
Net (1,424)
Equity in Income of
Unconsolidated Entities 2,110
----------

Income before Income Taxes 52,769

Provision for Income Taxes 19,657
----------

Net Income $ 33,112
==========


SIX MONTHS ENDED JUNE 30, 2004
-------------------------------------------
CT CTSI OTHER TOTAL
---------- ---------- ---------- ----------

Sales $ 114,441 $ 41,332 $ 12,621 $ 168,394
Costs & Expenses
(excluding other
operating expenses) 39,052 27,607 13,781 80,440

Depreciation &
Amortization 23,670 10,301 1,661 35,632

Restructuring Reversals - (799) - (799)
---------- ---------- ---------- ----------

Operating Income (Loss) 51,719 4,223 (2,821) 53,121

Interest and Dividend
Income 2,292
Interest Expense (8,812)
Other Income (Expense),
Net 519
Equity in Income of
Unconsolidated Entities 2,025
----------

Income before Income Taxes 49,145

Provision for Income Taxes 18,262
----------

Net Income $ 30,883
==========



COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(GAAP)


THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------

Net Income $ 17,194 $ 16,318 $ 33,112 $ 30,883

Net Income Adjustment for
Interest on Convertible
Debt, Net of Tax 1,870 1,874 3,739 3,743
--------------------- ---------------------

Net Income, as Adjusted $ 19,064 $ 18,192 $ 36,851 $ 34,626
===================== =====================



Weighted Average Common
Shares Outstanding -
Basic 21,501,624 21,207,371 21,331,990 21,674,971

Effect of Dilutive
Securities on Shares
Outstanding:
Stock Options and
Restricted Stock 237,194 180,113 276,087 161,315
Convertible Debt 7,091,882 5,263,170 6,182,578 5,263,170
--------------------- ---------------------

Weighted Average Common
Shares Outstanding -
Diluted 28,830,700 26,650,654 27,790,655 27,099,456
===================== =====================

Basic Earnings per
Average Common Share:


Net Income $ 0.80 $ 0.77 $ 1.55 $ 1.42
===================== =====================

Diluted Earnings per
Average Common Share:


Net Income $ 0.66 $ 0.68 $ 1.33 $ 1.28
===================== =====================



COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)


JUNE 30, DECEMBER 31,
2005 2004
-------------------------
ASSETS

CURRENT ASSETS:

Cash and Temporary Cash Investments $ 81,717 $ 312,260

Accounts Receivable and Unbilled Revenues,
Net of Allowance for Doubtful Accounts of
$1,699 in 2005 and $2,185 in 2004 38,645 40,089

Other Current Assets 13,294 8,805

Deferred Income Taxes 12,271 13,388
-------------------------

Total Current Assets 145,927 374,542
-------------------------

PROPERTY PLANT AND EQUIPMENT (NET OF
ACCUMULATED DEPRECIATION OF $531,198 IN
2005 AND $506,711 IN 2004) 369,068 382,523


INVESTMENTS 10,481 10,338

DEFERRED CHARGES AND OTHER ASSETS 13,640 16,028
-------------------------

TOTAL ASSETS $ 539,116 $ 783,431
=========================



COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)


JUNE 30, DECEMBER 31,
2005 2004
-------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Notes Payable $ 35,000 $ 35,000

Capital Lease Obligation 721 721

Accounts Payable 26,229 25,012

Advance Billings and Customer Deposits 5,403 5,316

Accrued Expenses 43,944 55,057

Accrued Restructuring Expenses 374 344
-------------------------

Total Current Liabilities 111,671 121,450
-------------------------

LONG TERM DEBT 300,000 300,000


CAPITAL LEASE OBLIGATION - 361


DEFERRED INCOME TAXES 75,815 77,279


OTHER LONG TERM LIABILITIES 15,961 18,411


COMMON SHAREHOLDERS' EQUITY:

Common Stock 24,193 24,172

Additional Paid-in Capital 116,857 284,358

Deferred Compensation (21,235) (10,093)

Other Comprehensive Loss (405) (830)

Retained Earnings 11,157 86,931

Treasury Stock at Cost, 2,404,282 shares at
June 30, 2005 and 3,049,114 at December 31,
2004 (94,898) (118,608)
-------------------------

Total Common Shareholders' Equity 35,669 265,930
-------------------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 539,116 $ 783,431
=========================



COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)


SIX MONTHS ENDED
JUNE 30,
-------------------------
2005 2004
------------ ------------

NET CASH PROVIDED BY OPERATING ACTIVITIES $ 57,896 $ 62,344

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant & Equipment (18,124) (19,921)
Other 1,764 2,336
------------ ------------
Net Cash Used in Investing Activities (16,360) (17,585)
------------ ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Long-Term Debt - (29,521)
Redemption of Short-Term Debt - (15,000)
Dividends Paid (294,138) -
Proceeds from Exercise of Stock Options 22,420 2,751
Capital Lease Payments (361) (417)
Payment Made for Debt Issuance Costs - (82)
Stock Repurchases - (74,362)
------------ ------------
Net Cash Used in Financing Activities (272,079) (116,631)
------------ ------------

Net Decrease in Cash and Temporary Cash
Investments (230,543) (71,872)
------------ ------------

Cash and Temporary Cash Investments at
Beginning of Period 312,260 336,035
------------ ------------

Cash and Temporary Cash Investments at End
of Period $ 81,717 $ 264,163
============ ============