Alaska Communications Systems Reports Third Quarter 2008 Results, Completes Acquisition of Crest Communications Corporation

Alaska Communications Systems Group, Inc. ("ACS”) (NASDAQ: ALSK) today reported financial results for its third quarter ended September 30, 2008. In addition, the company today separately announced that it had completed its acquisition of Crest Communications Corporation.

Liane Pelletier, ACS president, chief executive officer and chairman, said, "In these turbulent times our investors should be reassured by the comparative strength of our market. Alaska has one of the nation’s healthiest housing markets, it has entered its 21^st consecutive year of job growth, and it has recently distributed to residents dividends from the Alaska Permanent fund and a state-funded energy rebate, together valued at $2 billion. Alaska is the nation’s second largest oil producing state and has the nation’s largest commercial construction project in the form of a gas pipeline under consideration. These factors should help contribute to a comparatively strong economy as the nation pursues a strategy of energy independence.”

"Against this economic backdrop, we continue to invest in the future of telecommunications. Our focus on Enterprise and high-end wireless customers drives our financial results. Those two segments accounted for nearly half of our revenue in the quarter. Enterprise revenues grew 37 percent from a year ago and 13 percent over the last quarter; and we exited the quarter substantially covering the incremental operating and financing cash costs of our AKORN build and our Crest buy. Our AKORN cable build remains on track for commercial launch in the first quarter of 2009 and we have just closed our acquisition of Crest. Wireless growth among unlimited calling plan users and among data cards users was again strong, with those sales driving about 30 percent of gross adds, for the second consecutive quarter. Data ARPU is up 65 percent from last year and is poised to grow with ACS’ recent introduction of BlackBerry smartphones in mid-September,” concluded Pelletier.

Financial Highlights: Third Quarter 2008 Compared to Third Quarter 2007

"We exited the third quarter with total cash deposits of $83.6 million and with full access to our $45 million revolver facility providing more than enough liquidity to complete our AKORN build and close our acquisition of Crest,” said David Wilson, chief financial officer. "We are also well shielded from the current turmoil in the credit markets with no significant debt maturities due until February 2012; interest rate swaps to fixed rates in place for 100 percent of our bank term loan; over a full turn of EBITDA headroom with our tightest debt covenant; and bank counterparty risk limited to large and tenured commercial banks.”

Metric Highlights: Third Quarter 2008 Compared to Second Quarter 2008

Nine Month Financial Review

For the nine months ended September 30, 2008, revenues were $292.5 million, up 2.0 percent from $286.7 million in the same period last year. Net income, inclusive of book income tax expense of $6.6 million, was $8.7 million, or $0.20 per diluted share, compared to net income of $23.8 million, or $0.54 per diluted share, in the same period in 2007. Net cash provided by operating activities for the first nine months of 2008 was $68.2 million, as compared to $78.3 million in the same period in 2007. Excluding $2.2 million in start-up costs for our long haul fiber investments, EBITDA for the nine months ended September 30, 2008 was $101.5 million, compared to $104.2 million in the same period last year.

2008 Business Outlook

For the full-year 2008, ACS is reaffirming its revenue, EBITDA net cash interest and maintenance capex guidance, with revenues expected to be in the range of $380 million to $390 million; EBITDA to be in the range of $128 million to $132 million, excluding start-up costs for its long haul fiber investments of approximately $4 million; net cash interest expense of $33 million; and maintenance capex of $42 million. For growth capex, $10 million for final installment of our AKORN build that was originally forecast to be invoiced in 2009 is now expected to be invoiced in 2008, increasing our guidance for the year from $82 million to $92 million (with payment in 2009, there is no impact to 2008 cash flow). We also expect our purchase of $2.6 million in wireless spectrum that will support a future migration to LTE to close in 2008 rather than 2009; and we expect to invest $2 million in capex to secure a geographically diverse fiber route to Fairbanks.

Conference Call

The company will host a conference call and live webcast today at 5:00 p.m. Eastern Time. Parties in the United States and Canada can call 800-257-6607 to access the conference call. Parties outside the United States and Canada can access the call at 303-228-2961. 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 2 hours after the call and will run until Monday, November 3, 2008 at midnight ET. To hear the replay, parties in the United States and Canada can call 800-405-2236 and enter pass code 11121311. Parties outside the United States and Canada can call 303-590-3000 and enter pass code 11121311.

About Alaska Communications Systems

Headquartered in Anchorage, ACS is Alaska’s leading provider of broadband and other wireline and wireless solutions to Enterprise and mass market customers. The ACS wireline operations include the state’s most advanced data networks and, to be launched in early 2009, the only diverse undersea fiber optic system connecting Alaska to the contiguous United States. The ACS wireless operations include the only statewide 3G CDMA network, reaching across Alaska from the North Slope to Ketchikan, with coverage extended via best-in-class CDMA carriers in the Lower 49 and Canada. By investing in the fastest-growing market segments and attracting the highest-quality customers, ACS seeks to drive top- and bottom-line growth, while continually improving customer experience and cost structure through process improvement. More information can be found on the company’s website at www.acsalaska.com or at its investor site at www.alsk.com.

Forward-Looking EBITDA Guidance

This press release includes information related to management's estimate of EBITDA for the year ending December 31, 2008. EBITDA, as defined by the company, may not be similar to EBITDA measures used by other companies and is not a measurement under generally accepted accounting principles (GAAP). Management believes that EBITDA provides useful information to investors about the company's performance because it eliminates the effects of period-to-period changes in costs associated with capital investments, interest and stock-based compensation expense that are not directly attributable to the underlying performance of the company's business operations. Management believes the most directly comparable GAAP measure would be "Net cash provided by operating activities." Due to the difficulty in forecasting and quantifying the amounts that would be required to be included in this comparable GAAP measure, the company is not providing an estimate of year-end net cash provided by operating activities at this time.

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 and projections as well as on a number of assumptions concerning future financial results, rates of return, dividend payments, and other 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 are, without limitation, the company's ability to complete, manage, integrate, market, maintain, and attract sufficient customers to the products and services it may derive from the construction of its AKORN fiber facility and its purchase of Crest; changes in capital expenditures, or other factors affecting the company's ability to generate sufficient earnings and cash flows to continue to make payments on its substantial debt and dividend payments to its stockholders; the continued availability of financing to support future operations or expansion; increased competition, including from national wireless and local wireline facilities-based competitors; regulatory limitations on pricing or bundling of its communications services; the company's ability to keep pace with rapid technological developments in the telecommunications industry; fluctuations in wireless revenue, including roaming revenue; changes in company's relationships with its roaming partners; changes in revenue from the Universal Service Fund or other public policy changes; changes in accounting policies or practices; changes in interest rates or other general national, regional or local economic conditions, including changes in tourism in Alaska. 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.