In 2007, U.S. Cellular strategically enhanced its geographic footprint through purchases, exchanges, and auction activities. As of the end of 2007, the total market population of the company’s consolidated operating markets was 45 million, and U.S. Cellular owned or had rights to acquire interests in 260 wireless markets.

In February 2007, the company purchased all of the membership interests of Iowa 15 Wireless, LLC, and obtained the 25 megahertz (MHz) Federal Communications Commission (FCC) cellular license to provide wireless service in the Iowa Rural Service Area 15.

In the fourth quarter of 2007, U.S. Cellular agreed to deliver personal communication service spectrum in eight licenses covering portions of Illinois to Sprint Nextel in exchange for more strategically useful spectrum in eight licenses covering portions of Iowa, Oklahoma, West Virginia, and Maryland. The exchange transaction closed on March 19, 2008 and did not include any cash, customers, network assets, or other assets.

New spectrum from Auction 73
U.S. Cellular participated indirectly through its interest in King Street Wireless, L.P., in Auction 73, the FCC auction of spectrum in the 700 MHz band. King Street Wireless was the provisional winning bidder for 152 licenses for aggregate bids of approximately $300 million, net of its anticipated designated entity discount of 25 percent. As of March 31, 2008, the FCC had not yet awarded any of the licenses to winning bidders. The licenses expected to be awarded to King Street Wireless cover areas that overlap or are proximate or contiguous to areas covered by licenses that U.S. Cellular currently owns, operates, and/or consolidates in its financial statements.

Share Repurchases
To partially offset dilution from associate stock options, restricted stock, and various benefit plans, U.S. Cellular repurchased 1,006,000 shares in 2007 at a total cost of $83.3 million.

Gain on Investments
The forward contracts related to U.S. Cellular's investment in Vodafone American Depository Receipts (ADRs) matured on May 7, 2007. U.S. Cellular delivered the Vodafone ADRs in settlement of the forward contracts and sold the remaining shares, recording a $131.7 million pre-tax gain on the settlement of the forward contracts and sale of the remaining shares.

Remediation Progress and Credit Rating Upgrade
In the fourth quarter of 2007, U.S. Cellular and its parent, TDS, made significant progress in improving internal control over financial reporting. The material weaknesses related to personnel and accounting knowledge and fixed assets were reduced to the levels of deficiency and significant deficiency, respectively. In addition, the companies made progress toward remediating the remaining material weakness, related to income tax accounting.

We’re pleased to report that, as a result of this remediation progress, Standard & Poor's (S&P) Ratings Services upgraded both companies' credit ratings to BBB- with a positive outlook, from BB+. S&P indicated that it will further upgrade the rating for TDS and U.S. Cellular to BBB when the remaining material weakness is remediated, assuming continuation of the companies' favorable operating trends and conservative balance sheets.