(Amounts in thousands, except select operating metrics and share and per share amounts)

Certain statements included in this report, including that which relates to the impact on future revenue sources and potential sharing obligations of pending and future regulatory orders, continued expansion of the telecommunications network and expected changes in the sources of our revenue and cost structure resulting from our entrance into new communications markets, are forward-looking statements and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These forward looking statements generally are identified by the words "believe", "expect", "anticipate", "estimate", "intend", "should", "may", "will", "would", "will be", "will continue" or similar expressions. Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of SureWest Communications to be different from those expressed or implied in the forward-looking statements. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in our 2007 Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"). We disclaim any intention or obligation to update or revise publicly any forward-looking statements.

SureWest Communications (the "Company", "we" or "our") is one of the nation's leading integrated communications providers and is the bandwidth leader in the markets we serve. We classify our operations in two reportable segments:
Broadband and Telecommunications ("Telecom").

The Broadband segment, which generated approximately 58% and 39% of our consolidated revenue for the nine-month periods ended September 30, 2008 and 2007, respectively, utilizes fiber-to-the-premise and fiber-to-the-node networks to offer bundled residential and commercial services that include IP-based digital and high-definition television, high-speed internet, Voice over Internet Protocol ("VoIP"), and local and long distance telephone in the greater Sacramento, California and greater Kansas City, Kansas and Missouri areas ("Kansas City area").

In December 2007, we entered into a definitive agreement to purchase Everest Broadband, Inc. ("Everest" or "Kansas City"). On February 13, 2008 we acquired 100% of the issued and outstanding stock of Everest for a total purchase price of $181,700, including transaction costs. Subsequent to the acquisition, the Kansas City operations have been included in our Broadband segment. Everest is a competitive provider of high-speed data, video and voice services in the greater Kansas City area. The acquisition of Everest accelerates our growth strategy and builds on our status as a leading provider of network services to residential and business customers.

The Telecom segment offers landline telecommunications services, Digital Subscriber Line ("DSL") service, long distance services and certain non-regulated services operating only in the greater Sacramento area. SureWest Telephone, which is the principal operating subsidiary of the Telecom segment, provides local services, toll telephone services, network access services and certain non-regulated services. SureWest Long Distance is a reseller of long distance services.

On October 10, 2008, the Company entered into a definitive purchase agreement (the "Purchase Agreement") to sell its more than fifty owned wireless communications towers ("Tower Assets") owned by its subsidiary West Coast PCS, LLC "(West Coast PCS") to GTP Towers I, LLC. West Coast PCS is a component of our Broadband segment. Upon the closing of this transaction, the Tower Assets of West Coast PCS will include certain wireless telecommunication towers and related assets and liabilities transferred from the Company's subsidiaries SureWest Telephone and SureWest Broadband. The estimated aggregate purchase price will be based on the tower cash flow generated by commenced tenant leases and is expected to be in the range of $9,500 to $10,200. The initial closing of the Purchase Agreement is expected to occur in the fourth fiscal quarter ending December 31, 2008. The net proceeds from the Tower Assets will continue to enhance our financial flexibility as we expand our fiber-based bundled services to a broader service area.

In May 2008, we sold the operating assets of our Wireless business, SureWest Wireless, to Verizon Wireless ("Verizon") for an aggregate cash purchase price of $69,746, resulting in a gain as of September 30, 2008 of $19,179, net of tax. Under the agreement, Verizon acquired the spectrum licenses and operating assets of SureWest Wireless, excluding our owned communication towers. SureWest Wireless was previously reported as a separate reportable segment.

In February 2007, GateHouse Media acquired 100% of the stock of SureWest Directories (previously included in the Telecom segment), its directory publishing business, for an aggregate cash purchase price of $110,123, resulting in a gain as of September 30, 2008 of $59,339, net of tax. As part of the transaction, GateHouse Media became the publisher of the official directory of SureWest Telephone.

We expect that the sources of our revenues and our cost structure may be different in future periods, as a result of our entry into new communications markets, the disposition of non-strategic investments and regulatory and competitive forces in each of the markets in which we have operations.

Consolidated Overview

The tables below reflect certain financial data (on a consolidated and segment basis) and select operating metrics for each of our reportable segments as of and for the quarters and nine months ended September 30, 2008 and 2007.

                                 Financial Data



                         Quarter Ended September 30,              Nine Months Ended September 30,
                                            $         %                                 $         %
                     2008       2007      Change    Change      2008        2007      Change    Change
Operating
revenues (1)
Broadband          $ 36,653   $ 17,630   $ 19,023      108 %  $  99,295   $ 51,348   $ 47,947       93 %
Telecom              24,108     26,197     (2,089 )     (8 )     73,336     79,807     (6,471 )     (8 )
Operating
revenues             60,761     43,827     16,934       39      172,631    131,155     41,476       32

Income (loss)
from operations
Broadband            (7,033 )   (6,714 )     (319 )     (5 )    (20,685 )  (20,643 )      (42 )     (0 )
Telecom              11,274     10,137      1,137       11       33,461     29,919      3,542       12
Income from
operations            4,241      3,423        818       24       12,776      9,276      3,500       38

Income (loss)
from continuing
operations
Broadband            (5,801 )   (4,770 )   (1,031 )    (22 )    (17,115 )  (14,491 )   (2,624 )    (18 )
Telecom               6,557      6,459         98        2       19,557     19,462         95       (0 )
Income from
continuing
operations         $    756   $  1,689   $   (933 )    (55 )% $   2,442   $  4,971   $ (2,529 )    (51 )%

                            Select Operating Metrics



                                                      As of September 30,
                                            2008        2007       Change     % Change
Broadband
Total residential subscribers (1)          100,600      57,200      43,400          76 %
Broadband residential
Revenue-generating units (2)               214,200      94,700     119,500         126
Data                                        95,700      55,000      40,700          74
Video                                       58,500      20,100      38,400         191
Voice                                       60,000      19,600      40,400         206
Total business customers (3)                 6,300       4,100       2,200          54

Telecom
Voice Revenue-generating units (4)          58,500      71,100     (12,600 )       (18 )
Total business customers (3)                 9,400       9,900        (500 )        (5 )%

Operating revenues for the Broadband segment increased $19,023 and $47,947 during the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007. The Broadband segment results of operations and select operating metrics in the current year compared to the same prior year periods have been impacted by the effects of the Everest acquisition, as described above. The Kansas City operations contributed approximately $16,508 and $41,050 of operating revenues during the quarter and nine-month period ended September 30, 2008, respectively. At September 30, 2008, the Kansas City operations accounted for 38,645, 104,659 and 1,973 of the residential subscribers, residential RGUs and business customers, respectively.

At September 30, 2008, the Broadband segment experienced a 76% annual increase in the number of residential subscribers compared to the same date in the prior year. In the Sacramento market, both data and video RGUs increased 9% and 17%, respectively, which was reflective of our ability to offer subscribers high-speed data, HDTV, HD DVR and other enhanced services. In addition, Broadband operating revenues increased due to the continued expansion of the broadband network and growth in the demand for digital video, voice and data offered as a bundled triple-play package.

In March 2008, we launched our new VoIP Digital Phone product in the Sacramento market, including the Telecom segment service territory. We anticipate that this offering will result in elevated take rates and an increase in broadband residential triple-play RGUs, while successfully mitigating access line losses in the Telecom segment by migrating these customers to voice RGUs in the Broadband segment. At September 30, 2008, Broadband voice RGUs in the Sacramento market increased 33% compared to the same date in the prior year.

We will continue to invest in success-based capital and building and deploying the broadband infrastructure while focusing on the generation of new customers and increasing residential penetration on existing marketable homes.

Operating revenues in the Telecom segment decreased $2,089 and $6,471 during the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007. Residential revenues accounted for nearly all of the decrease in operating revenues in the current year. Residential services were largely impacted by our customer's migration toward alternative communication services, including those offered by our Broadband segment, which contributed to an approximate 18% decline in the Telecom segment voice RGUs as of September 30, 2008 compared to September 30, 2007. As well, some competitors initiated marketing campaigns to include voice services targeted directly to residential subscribers within SureWest Telephone's service area. In an effort to mitigate future operating revenue and voice RGU declines, we now offer various flat-rate and bundled service

packages and have introduced a broadband VoIP service to customer's residing within SureWest Telephone's service area. The decrease in operating revenues was also impacted by continued scheduled reductions in California High Cost Fund ("CHCF") subsidies of approximately $510 and $1,530 during the quarter and nine-month period ended September 30, 2008, respectively, compared to the same prior year periods.

Consolidated operating expenses, excluding depreciation and amortization, increased $13,451 and $31,457 during the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007. Our Broadband segment accounted for substantially all of the increases in our consolidated operating expenses primarily as a result of the Kansas City operations, which accounted for $12,175 and $29,013 of the quarter and nine-month period increase, respectively. Cost of services and products expense increased $10,646 and $23,594 during the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007 primarily as a result of the Kansas City operations as well as increases in programming costs related to the growth in Broadband subscribers. Customer operations and selling expense increased $1,244 and $3,959 during the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007 due primarily to an increase in sales and advertising costs to promote subscriber growth and new product offerings within the Broadband segment. General and administrative expenses increased $1,561 and $3,904 during the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007. Excluding the addition of the operations for Kansas City, which accounted for $1,570 and $3,844 of the quarter and nine-month period increase, respectively, general and administrative expenses were consistent with the prior year periods as savings from a reduction in headcount and overhead costs was offset by an increase in consulting and advisory fees related to strategic initiatives.

The increase in the consolidated operating expenses during the nine months ended September 30, 2008 compared to the same prior year period was offset by a decline in the costs associated with our defined benefit pension plan (the "Pension Plan"), Supplemental Executive Retirement Plan and certain post-retirement benefits other than pensions ("Other Benefits Plan") (collectively the "Plans"). During 2007, we substantially modified our employee compensation structure in order to attract and retain the right mix of talent necessary to successfully support a company which is significantly expanding and growing. As a result, we amended the Plans, effective April 1, 2007, which froze the Pension Plan so that no person is eligible to become a new participant in the Plans on or following that date and all future benefit accruals for existing participants under the Plans cease. As a result of the amendments to the Plans and final actuarial calculations, consolidated operating expenses decreased $715 during the nine months ended September 30, 2008, compared to the same prior year period. See Note 6 for more information on the Plans.

Our consolidated depreciation and amortization expense increased $2,665 and $6,519 during the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007 due to the continued network build-out and success-based capital projects undertaken within the residential broadband service territories and the Kansas City operations.

Reclassification

Certain amounts in our 2007 condensed consolidated financial statements and our previous 2008 interim financial statements have been reclassified to conform to the presentation of our 2008 condensed consolidated financial statements at September 30, 2008, which primarily consists of the effects of reclassifications from presentation of our Wireless business as a discontinued operation. In addition, the calculation of certain select operating metrics has been revised over time to reflect the current view of our business. Accordingly, where necessary, prior period metric calculations have been revised to conform to current practice.

Effects of Strategic Corporate Actions

Our acquisition of Everest and divestiture of SureWest Wireless will yield various impacts to our financial statements and results of operations in 2008.

As discussed above, we purchased Everest in February 2008. As a result, the Broadband segment operating revenues and income from operations increased approximately $41,050 and $2,303, respectively, during the nine-month period ended September 30, 2008

compared to the same period in 2007. The Everest acquisition has facilitated the rapid expansion of our geographic footprint and overall services targeted to businesses, while more than doubling the number of our triple-play residential subscribers, as evidenced by the increase in RGUs of nearly 126% at September 30, 2008 compared to the same period last year. The acquisition was largely funded by a financing agreement we entered into in February 2008. Accordingly, subsequent to the closing of the transaction we experienced increased interest expense resulting from the financing agreement. Our ability to continue to successfully integrate the Kansas City operations will depend on a number of factors, including our ability to devote adequate personnel to the integration process while still managing our current operations effectively. We do not anticipate difficulties integrating the acquired business; however such difficulties could increase our costs or adversely impact our ability to operate our business.

The sale of the operating assets of our Wireless business, SureWest Wireless, has also affected our financial statements and results of operations subsequent to the closing of the transaction, which occurred on May 9, 2008. The results of SureWest Wireless are reported as a discontinued operation in our condensed consolidated financial statements for all periods presented. Income (loss) from discontinued operations was $(242) and $263 for the quarter and nine-month period ended September 30, 2008, respectively, and $(953) and $(2,397) for the same prior year periods. See Note 2 for a summary of the Wireless business operating results included in discontinued operations.

Segment Results of Operations



Broadband



                         Quarter Ended September 30,               Nine Months Ended September 30,
                                            $         %                                  $         %
                     2008       2007      Change    Change      2008        2007       Change    Change

Data               $ 10,147   $  6,929   $  3,218       46 %  $  29,143   $  20,089   $  9,054       45 %
Video                10,599      3,743      6,856      183       28,552      10,994     17,558      160
Voice                 5,334      2,077      3,257      157       14,322       6,126      8,196      134
Total
residential
revenues             26,080     12,749     13,331      105       72,017      37,209     34,808       94
Business              9,284      4,414      4,870      110       23,970      12,753     11,217       88
Access                  428         89        339      381        1,054         228        826      362
Other                   861        378        483      128        2,254       1,158      1,096       95
Total operating
revenues from
external
customers            36,653     17,630     19,023      108       99,295      51,348     47,947       93
Intersegment
revenues                138        142         (4 )     (3 )        419         463        (44 )    (10 )
Operating
expenses*            33,013     18,628     14,385       77       90,626      55,492     35,134       63
Depreciation and
amortization         10,811      5,858      4,953       85       29,773      16,962     12,811       76
Loss from
operations           (7,033 )   (6,714 )     (319 )     (5 )    (20,685 )   (20,643 )      (42 )     (0 )
Loss from
continuing
operations         $ (5,801 ) $ (4,770 ) $ (1,031 )    (22 )% $ (17,115 ) $ (14,491 ) $ (2,624 )    (18 )%

Operating Revenues

Operating revenues from external customers in the Broadband segment increased $19,203 and $47,947 in the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007. Our Kansas City operations, as described above, contributed $16,508 and $41,050 of operating revenues in the quarter and nine-month period ended September 30, 2008, respectively.

Broadband residential revenues increased $13,331 and $34,808 in the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007; of which $12,128 and $30,946, was attributable to the Kansas City operations. Broadband residential subscribers and RGUs increased 76% and 126%, respectively, as of September 30, 2008 compared to the same period in 2007. We anticipate continued growth in residential broadband RGUs and average revenue per user resulting from the HD DVR and VoIP Digital Phone

services, which were recently launched in the Sacramento market. SureWest Digital Phone presents the Company with a more competitive triple-play offering with increased options and multiple packages.

Residential data revenues increased $3,218 and $9,054 in the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007. Data RGUs in the Sacramento market increased 9% as of September 30, 2008 compared to the same period in 2007, which was reflective of our ability to offer subscribers superior high-speed data products and other enhanced services. The reliability and high speeds of the data service in both the Sacramento and Kansas City markets enhance other services such as the SureWest Digital Phone, where customers manage phone services through the online SureWest portal. The remaining increase in Data revenues was due to the Kansas City operations.

Residential video revenues increased $6,856 and $17,588 in the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007. In the Sacramento market, the Broadband segment experienced a 17% growth in Video RGUs as of September 30, 2008 compared to the same period in 2007 due in part to demand for our new product offerings and other enhanced services and features such as HD DVR and additional high definition content. In addition, effective January 2008 video rates increased 10%. The remaining increase was the result of our Kansas City operations.

Residential voice revenues increased $3,257 and $8,196 in the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007. The increase was due in part to the growth in voice RGUs, of which the growth in the Sacramento market was 33% as of September 30, 2008 compared to the same period in 2007. In March 2008, we launched our new VoIP Digital Phone product in the Sacramento market, including the Telecom service territory. We anticipate that this offering will result in elevated take rates and an increase in Broadband residential triple-play RGUs.

Business revenues increased $4,870 and $11,217 in the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007. Business customers increased 54% as of September 30, 2008 compared to the same period in 2007. We continue to expand our business broadband services in Sacramento; however a significant portion of the business revenue growth was due to our Kansas City operations.

Operating Expenses

Total operating expenses in the Broadband segment increased $14,385 and $35,134 in the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007. The increase in operating expenses was offset in part by a decline in the costs related to the Plans of $239 for the nine months ended September 30, 2008, as described in the Consolidated Overview section above.

Cost of services and products (exclusive of depreciation and amortization) increased $10,606 and $23,841 in the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007. The increase in costs in the current year periods was primarily due to Kansas City operations, contributing $8,556 and $20,573 in additional expenses, respectively. The increase was also attributable to (i) an increase in programming, transport and access costs related to the growth in Broadband subscribers, residential broadband RGUs and business customers and (ii) an increase in maintenance costs corresponding to the increased subscriber count, as well as the expanded network footprint.

Customer operations expense increased $1,889 and $5,268 in the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007. Substantially all of the increase in the current year period was attributable to our Kansas City operations resulting, in part, from increased radio and television advertising in the Kansas City market. We have experienced a modest increase in the California market in sales and advertising costs to promote subscriber growth, as well as new and existing product offerings.

General and administrative expense increased $1,890 and $6,025 in the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007 primarily due to increases in (i) information technology costs related to system maintenance and development, including integration of Kansas City operations and increased production support projects and
(ii) consulting and advisory fees. During the quarter and nine-month period ended September 30, 2008, Kansas City operations contributed $1,570 and $3,844, respectively, to the increase in general and administrative expenses.

Depreciation and amortization increased $4,953 and $12,811 in the quarter and nine-month period ended September 30, 2008, respectively, compared to the same periods in 2007 due to the continued expansion of the broadband network and success based capital projects. Our Kansas City operations increased depreciation and amortization expense by $4,060 and $9,734 during the

quarter and nine-month period ended September 30, 2008, respectively.

Telecom



                        Quarter Ended September 30,             Nine Months Ended September 30,
                                          $         %                                 $         %
                    2008      2007      Change    Change      2008        2007      Change    Change
. . .