SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)
 |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
          ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2003.

                                       OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934.

                         Commission File Number: 027455

                                AirGate PCS, Inc.
             (Exact name of registrant as specified in its charter)


                    Delaware                        58-2422929
        (State or other jurisdiction of          (I.R.S. Employer
         incorporation or organization)        Identification Number)

 Harris Tower, 233 Peachtree St. NE, Suite 1700,
                Atlanta, Georgia                             30303
     (Address of principal executive offices)              (Zip code)

                                 (404) 525-7272
              (Registrant's telephone number, including area code)

     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|

     5,192,238 shares of common stock, $0.01 par value, were outstanding as of
February 13, 2004.






                                AIRGATE PCS, INC.
                              FIRST QUARTER REPORT

                                TABLE OF CONTENTS

PART I   FINANCIAL INFORMATION
Item 1.  Financial Statements.................................................3
         Consolidated Balance Sheets at December 31, 2003 (unaudited)
            and September 30, 2003............................................3
         Consolidated Statements of Operations for the three months
            ended December 31, 2003 and 2002 (unaudited)......................4
         Consolidated Statements of Cash Flows for the three months
            ended December 31, 2003 and 2002 (unaudited)......................5
         Notes to Consolidated Financial Statements (unaudited)...............6
Item 2.  Management's Discussion and Analysis of Financial Condition
            and Results of Operations........................................15
Item 3.  Quantitative and Qualitative Disclosures About Market Risk..........29
Item 4.  Controls and Procedures.............................................30

PART II  OTHER INFORMATION...................................................34
Item 1.  Legal Proceedings...................................................34
Item 2.  Changes in Securities and Use of Proceeds...........................34
Item 3.  Defaults Upon Senior Securities.....................................34
Item 4.  Submission of Matters to a Vote of Security Holders.................34
Item 5.  Other Information...................................................35
Item 6.  Exhibits and Reports on Form 8-K....................................35




PART I.  FINANCIAL INFORMATION

Item 1.  -- Financial Statements




                       AIRGATE PCS, INC. AND SUBSIDIARIES
                          CONCOLIDATED BALANCE SHEETS

                                                               December 31,      September 30,
                                                                   2003               2003
                                                             -----------------  -----------------

                                                               (unaudited)
                                                                      (Dollars in thousands,
                                                              except share and per share amounts)
                                                                                  
Assets
Current assets:
  Cash and cash equivalents                                          $ 60,043           $ 54,078
  Accounts receivable, net of allowance for doubtful
    accounts of $4,203 and $4,635                                      20,997             26,994
  Receivable from Sprint                                               15,728             15,809
  Inventories                                                           2,606              2,132
  Prepaid expense                                                       5,722              2,107
  Other current assets                                                    252                145
                                                             -----------------  -----------------
       Total current assets                                           105,348            101,265

Property and equipment, net of accumulated
  depreciation and Amortization of $141,753 and $129,986              167,902            178,070
Financing costs                                                         6,568              6,682
Direct subscriber activation costs                                      3,219              3,907
Other assets                                                              997                992
                                                             -----------------  -----------------

       Total assets                                                 $ 284,034          $ 290,916
                                                             =================  =================


Liabilities and Stockholders' Deficit
Current liabilities:
  Accounts payable                                                    $ 5,237            $ 5,945
  Accrued expense                                                       7,887             12,104
  Payable to Sprint                                                    46,056             45,069
  Deferred revenue                                                      8,291              7,854
  Current maturities of long-term debt                                 23,194             17,775
                                                             -----------------  -----------------
      Total current liabilities                                        90,665             88,747

Deferred subscriber activation fee revenue                              5,521              6,701
Other long-term liabilities                                             2,000              1,841
Long-term debt, excluding current maturities                          389,734            386,509
Investment in iPCS                                                          -            184,115
                                                             -----------------  -----------------
      Total liabilities                                               487,920            667,913

Commitments and contingencies                                               -                  -

Stockholders' deficit:
  Preferred stock, $.01 par value; 1,000,000
    shares authorized; no shares issued and
    outstanding                                                             -                  -
  Common stock, $.01 par value; 30,000,000
    shares authorized; 5,192,238 shares issued and
    outstanding at December 31, 2003 and September 30, 2003                52                 52
  Additional paid-in-capital                                          924,095            924,095
  Unearned stock compensation                                             (97)              (203)
  Accumulated deficit                                              (1,127,936)        (1,300,941)
                                                             -----------------  -----------------

       Total stockholders' deficit                                   (203,886)          (376,997)
                                                             -----------------  -----------------

             Total liabilities and stockholders' deficit            $ 284,034          $ 290,916
                                                             =================  =================



See accompanying notes to the unaudited consolidated financial statements.




                       AIRGATE PCS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

                                                     For the Quarters Ended
                                                          December 31,
                                                  ----------------------------
                                                       2003           2002
                                                  ------------   -------------
                                                 (Dollars in thousands, except
                                                  share and per share amounts)
Revenue:
  Service revenue                                    $ 62,173       $ 59,933
  Roaming revenue                                      16,483         18,910
  Equipment revenue                                     2,847          3,022
                                                  ------------  -------------
     Total revenue                                     81,503         81,865

Operating Expense:
 Cost of service and roaming (exclusive of
  depreciation and amortization as
  shown separately below)                              42,465         51,384
 Cost of equipment                                      6,586          6,847
 Selling and marketing expense                         14,125         16,797
 General and administrative expense                     6,407          4,077
 Non-cash stock compensation expense                      106            176
 Depreciation and amortization of property
   and equipment                                       11,767         11,619
 Loss (gain) on disposal of property and equipment         (2)           198
                                                   ------------  -------------
   Total operating expense                             81,454         91,098
                                                   ------------  -------------
   Operating income (loss)                                 49         (9,233)
Interest income                                           157              -
Interest expense                                      (11,316)       (10,194)
                                                  ------------  -------------
   Loss from continuing operations before
      income tax                                      (11,110)       (19,427)
Income tax                                                  -              -
                                                 -------------  -------------
   Loss from continuing operations                    (11,110)       (19,427)
Discontinued Operations:
 Loss from discontinued operations                          -        (28,247)
 Gain on disposal of discontinued operations
  net of $0 income tax expense                        184,115              -
                                                 -------------  -------------

  Income (loss) from discontinued operations          184,115        (28,247)
                                                 -------------  -------------
  Net income (loss)                                 $ 173,005      $ (47,674)
                                                 =============  =============

Basic and diluted weighted-average number of
  shares outstanding                                5,192,238      5,164,830

Basic and diluted earnings (loss) per share:
 Loss from continuing operations                    $   (2.14)     $   (3.76)
 Income (loss) from discontinued operations             35.46          (5.47)
                                                 -------------  -------------
  Net income (loss)                                 $   33.32      $   (9.23)
                                                 =============  =============

See accompanying notes to the unaudited consolidated financial statements.






                       AIRGATE PCS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)



                                                                                               For the Quarters Ended
                                                                                                    December 31,
                                                                                         ------------------------------------
                                                                                                2003              2002
                                                                                         -----------------  -----------------
                                                                                               (Dollars in thousands)
                                                                                                           
Cash flows from operating activities:
 Net income (loss)                                                                             $ 173,005       $ (47,674)
   Adjustments to reconcile net income (loss) to net cash provided by (used in)
      operating activities:
   Gain on disposal of discontinued operations                                                  (184,115)              -
   Loss from discontinued operations                                                                   -          28,247
   Depreciation and amortization of property and equipment                                        11,767          11,619
   Amortization of financing costs into interest expense                                             305             302
   Provision for doubtful accounts                                                                   405           2,186
   Interest expense associated with accretion of discounts                                         9,150           7,970
   Non-cash stock compensation                                                                       106             176
   Loss (gain) on disposal of property and equipment                                                  (2)            198
     Changes in assets and liabilities:
        Accounts receivable                                                                        5,592            (923)
        Receivable from Sprint                                                                        81            (850)
        Inventories                                                                                 (474)            758
        Prepaid expenses, other current and non-current assets                                    (3,039)         (2,818)
        Accounts payable, accrued expenses and other long term liabilities                        (5,944)         (3,045)
        Payable to Sprint                                                                            987            (231)
        Deferred revenue                                                                             437           1,274
                                                                                           -------------     -----------
 Net cash provided by (used in) operating activities                                               8,261          (2,811)
                                                                                           -------------     -----------

Cash flows from investing activities:
 Purchases of property and equipment                                                              (1,599)         (5,626)
                                                                                           -------------     -----------
   Net cash used in investing activities                                                          (1,599)         (5,626)
                                                                                           -------------     -----------

Cash flows from financing activities:
 Borrowings under credit facility                                                                      -           5,000
 Repayments of credit facility                                                                      (506)           (506)
 Financing cost on credit facility                                                                  (191)              -
                                                                                           -------------    ------------
   Net cash provided by (used in) financing activities                                              (697)          4,494
                                                                                           -------------    ------------
   Net increase (decrease) in cash and cash equivalents                                            5,965          (3,943)
Cash and cash equivalents at beginning of period                                                  54,078           4,887
                                                                                           -------------    ------------
Cash and cash equivalents at end of period                                                      $ 60,043           $ 944
                                                                                           =============    ============

Supplemental disclosure of cash flow information:
      Interest paid                                                                              $ 2,076         $ 1,954
Supplemental disclosure for non-cash investing activities:
     Capitalized interest                                                                             30             114


See accompanying notes to the unaudited consolidated financial statements.






                       AIRGATE PCS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2003
                                   (unaudited)

(1)      Business, Basis of Presentation and Liquidity

(a)  Basis of Presentation

The accompanying  unaudited  consolidated  financial  statements of AirGate PCS,
Inc. and subsidiaries (the "Company") are presented in accordance with the rules
and  regulations of the Securities  and Exchange  Commission  ("SEC") and do not
include  all of the  disclosures  normally  required  by  accounting  principles
generally  accepted  in  the  United  States  of  America.  In  the  opinion  of
management,  these  statements  reflect  all  adjustments,  including  recurring
adjustments,  which are necessary for a fair  presentation  of the  consolidated
financial  statements  for  the  interim  periods.  The  consolidated  financial
statements should be read in conjunction with the audited consolidated financial
statements  and notes thereto  contained in the Company's  Annual Report on Form
10-K/A and Amendment No. 2 to 10-K/A (collectively, the "Annual Report") for the
fiscal year ended  September  30, 2003,  which are filed with the SEC and may be
accessed via EDGAR on the SEC's  website at  http://www.sec.gov.  The results of
operations  for  the  quarter  ended  December  31,  2003  are  not  necessarily
indicative of the results that can be expected for the entire fiscal year ending
September 30, 2004. Certain prior year amounts have been reclassified to conform
to the current year's presentation.  Management of the Company has made a number
of estimates and assumptions relating to the reporting of assets and liabilities
and the disclosure of contingent  liabilities  at the dates of the  consolidated
balance sheets and revenues and expenses during the reporting periods to prepare
these consolidated financial statements in conformity with accounting principles
generally accepted in the United States of America.  Actual results could differ
from those  estimates.  All significant  intercompany  accounts and transactions
have been eliminated in consolidation.

AirGate PCS, Inc. and its restricted  subsidiaries  were created for the purpose
of providing wireless Personal  Communication Services ("PCS"). The Company is a
network  partner  of Sprint  with the right to market  and  provide  Sprint  PCS
products and services using the Sprint brand names in a defined  territory.  The
accompanying  consolidated  financial statements include the accounts of AirGate
PCS, Inc. and its  wholly-owned  restricted  subsidiaries,  AGW Leasing Company,
Inc.,  AirGate Service Company,  Inc. and AirGate Network Services,  LLC for all
periods presented.

On November 30, 2001, we acquired iPCS, Inc. and its subsidiaries  ("iPCS") in a
merger.  In light of  consolidation in the wireless  communications  industry in
general and among Sprint PCS network  partners in  particular,  we believed that
the merger represented a strategic  opportunity to significantly expand the size
and scope of our operations,  attain access to attractive  markets,  and provide
greater operational  efficiencies and growth potential than we would have had on
our own.  The  transaction  was  accounted  for  under  the  purchase  method of
accounting.

Although  iPCS's growth rates  through March 2002 met or exceeded  expectations,
the slowdown in growth in the wireless industry,  increased  competition,  iPCS'
dependence  on Sprint and the  reimposition  and  increase  of the  deposit  for
sub-prime credit  customers,  all contributed to slower than expected growth. In
addition,  iPCS'  problems  were  compounded  because it was earlier in its life
cycle when growth slowed, had approximately one-third fewer subscribers than the
Company, and a less complete network.

On February 23, 2003, iPCS filed a Chapter 11 bankruptcy  petition in the United
States  Bankruptcy Court for the Northern District of Georgia for the purpose of
effecting a court administered reorganization.  Subsequent to February 23, 2003,
the Company no longer  consolidated  the accounts and results of  operations  of
iPCS and the  accounts  of iPCS were  recorded as an  investment  using the cost
method of accounting.

In   connection   with  the   issuance   of  common   stock  in  the   Company's
Recapitalization  Plan (described  below), the Company will undergo an ownership
change  for tax  purposes.  Such  ownership  change  would  also have  caused an
ownership change of iPCS,  which could have had a detrimental  effect on the use
of certain net operating losses of iPCS. Consequently,  on October 17, 2003, the
Company  irrevocably  transferred  all of its shares of iPCS  common  stock to a
trust for the benefit of the Company's  shareholders of record as of the date of
transfer.  On October 17,  2003,  the iPCS  investment  ($184.1  million  credit
balance carrying  amount) was eliminated and recorded as a non-monetary  gain on
disposition of discontinuing  operations.  The Company's  consolidated financial
statements reflect the results of iPCS as discontinued operations.

(b)  Liquidity, Financial Restructuring and Going Concern

The financial  statements  have been prepared on a going  concern  basis,  which
contemplates  the  realization of assets and  satisfaction of liabilities in the
normal  course  of  business.  The  financial  statements  do  not  include  any
adjustments  relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might result should
the Company be unable to continue as a going concern.  In connection  with their
audit of the Company's fiscal 2003 consolidated financial statements, KPMG, LLP,
the Company's  independent auditors included an explanatory paragraph for "going
concern" in their audit opinion.

The PCS  market  is  characterized  by  significant  risks as a result  of rapid
changes in technology,  intense  competition  and the costs  associated with the
build-out,  on-going  operations  and  growth of a PCS  network.  The  Company's
operations are dependent upon Sprint's ability to perform its obligations  under
the  agreements  between  the  Company  and Sprint  (see note 3) under which the
Company has agreed to  construct  and manage its Sprint PCS network (the "Sprint
Agreements"). The Company's ability to attract and maintain a subscriber base of
sufficient size and credit quality is critical to achieving  sufficient positive
cash flow. Significant changes in technology,  increased competition, or adverse
economic  conditions  could impair the Company's  ability to achieve  sufficient
positive cash flow.

As shown in the  consolidated  financial  statements,  the Company has generated
significant  net losses since  inception and has an accumulated  deficit of $1.1
billion and  stockholders'  deficit of $203.9  million at December 31, 2003. For
the  quarter  ended  December  31,  2003,  the  Company's  loss from  continuing
operations  amounted to $11.1 million.  As of December 31, 2003, the Company had
working capital of $14.7 million and cash and cash equivalents of $60.0 million,
and no  remaining  availability  under its  credit  facility.  As a result,  the
Company is completely dependent on available cash and operating cash flow to pay
debt  service  and  meet  its  other  capital  needs.  If such  sources  are not
sufficient, alternative funding sources may not be available.

In addition  to its  capital  needs to fund  operating  losses,  the Company has
invested  large amounts to build-out its networks and for other capital  assets.
Since  inception,  the  Company has  invested  approximately  $303.6  million to
purchase  property and  equipment.  While much of the  Company's  network is now
complete  and capital  expenditures  are  expected to be lower than prior years,
such expenditures will continue to be necessary.

A number of factors,  including slower subscriber growth,  increased competition
and churn and our dependence on Sprint and Sprint's  changes to various programs
and fees,  have had an  adverse  affect on the  Company's  business  and led the
Company to revise its  business  strategy  and take  actions to cut costs during
fiscal year 2003. These actions included the following:

o    Restructuring  the Company's  organization  and  eliminating  more than 150
     positions;

o    Reducing capital expenditures;

o    Reducing spending for sales and marketing activities; and

o    Reducing  per  minute  network  operating  costs by more  closely  managing
     connectivity costs.

Despite these measures and certain amendments to its credit facility,  under our
current  business plan, the Company's  compliance  with the financial  covenants
under its credit facility was not assured and the Company's  ability to generate
sufficient cash flow to meet its financial  covenants and payment obligations in
2005 and beyond was substantially  uncertain. In addition, there was substantial
risk that  under its  current  business  plan,  the  Company  would not have had
sufficient  liquidity to meet its cash interest  obligations under the Old Notes
(defined  below)  in  2006.  As a  result,  the  Company  proposed  a  financial
restructuring (the "Recapitalization Plan") as follows:

On January 14, 2004, the Company  commenced  public and private  exchange offers
and consent solicitations:

o    The  Company  offered  to  exchange  all of the  outstanding  13.5%  senior
     subordinated discount notes due 2009 (the "Old Notes") for (i) newly issued
     shares of common stock representing 56% of the shares of common stock to be
     issued and outstanding immediately after the Recapitalization Plan and (ii)
     $160.0  million  aggregate  principal  amount of newly issued 9 3/8% senior
     subordinated notes due 2009 (the "New Notes");

o    The  consent  solicitations  requested  the  consents of holders of the Old
     Notes to  remove  substantially  all of the  restrictive  covenants  in the
     indenture  governing  the Old Notes,  release  collateral  that secured the
     Company's  obligations  thereunder  and  waive  any  defaults  or events of
     default that occur in connection with the restructuring, and;

o    The Company also solicited  acceptances  from holders of the Old Notes of a
     prepackaged  plan of  reorganization  under Chapter 11 of the United States
     Bankruptcy Code (the "Prepackaged  Plan"). The Prepackaged Plan would have
     effected the same transactions as the Recapitalization Plan, only under the
     governance of a bankruptcy court.

In addition,  the Company  called a Special  Meeting of  Shareholders  ("Special
Meeting") at which it asked its shareholders to:

o    Approve the  issuance in the  restructuring  of up to 56% of the  Company's
     issued and outstanding common stock immediately after the restructuring;

o    Approve the  amendment and  restatement  of the  Company's  certificate  of
     incorporation to implement a 1-for-5 reverse stock split; and

o    Approve the  amendment and  restatement  of the 2002 AirGate PCS, Inc. Long
     Term Incentive Plan to increase the number of shares available and reserved
     for issuance thereunder,  to make certain other changes, and to approve the
     grant of  certain  performance-vested  restricted  stock  units  and  stock
     options to certain executives of the Company.

Pursuant to the Proxy  Statement  for the  Special  Meeting,  the  Company  also
solicited acceptances to the Prepackaged Plan from its shareholders.

On  February  12,  2004,  the  Company's  shareholders  approved  the  proposals
discussed  above.  On the same date, the exchange offers expired and the Company
accepted all  $298,204,000 of Old Notes (or 99.4% of the Old Notes  outstanding)
that were validly tendered and not withdrawn in the exchange offers. On February
13, 2004,  the Company  effected the 1-for-5  reverse  stock split.  The Company
anticipates settling the Recapitalization Plan on February 20, 2004.

(2)     Significant New Accounting Pronouncements

In May 2003, the Financial  Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standards  ("SFAS") No. 150,  "Accounting  for Certain
Financial  Instruments with Characteristics of Liabilities and Equity," which is
effective at the beginning of the first interim period  beginning after June 15,
2003.  However,  certain  aspects of SFAS 150 have been  deferred.  SFAS No. 150
establishes  standards for the Company's  classification  of  liabilities in the
financial  statements that have  characteristics of both liabilities and equity.
The  implementation of SFAS 150 did not have a material impact on our results of
operations, financial position or cash flows.

In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable Interest  Entities",  an interpretation of Accounting Research Bulletin
("ARB") No. 51. This  interpretation  addresses  the  consolidation  by business
enterprises of variable interest entities as defined in the interpretation. This
interpretation  applies  immediately to variable  interests in variable interest
entities  created after January 31, 2003, and to variable  interests in variable
interest  entities  obtained  after  January 31,  2003.  The  Interpretation  is
generally  effective for interim  periods ending after December 15, 2003 for all
variable  interests in variable  interest  entities created prior to January 31,
2003. We do not have any variable interest entity arrangements.

In  December  2002,  the FASB issued SFAS No. 148  "Accounting  for  Stock-Based
Compensation  -- Transition and Disclosure -- an amendment of FASB Statement No.
123." SFAS No. 148 provides  alternative  methods of transition  for a voluntary
change to the fair value based method of  accounting  for  stock-based  employee
compensation from the intrinsic  value-based method of accounting  prescribed by
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to  Employees."  As allowed by SFAS No. 123, the Company has elected to continue
to apply the intrinsic  value-based  method of  accounting,  and has adopted the
disclosure requirements of SFAS No. 123 and 148.

In November 2002, the Emerging  Issues Task Force ("EITF") of the FASB reached a
consensus on EITF No. 00-21,  "Accounting for Revenue Arrangements with Multiple
Element   Deliverables."   The  EITF  guidance  addresses  how  to  account  for
arrangements that may involve multiple revenue-generating  activities, i.e., the
delivery or performance  of multiple  products,  services,  and/or rights to use
assets.  In applying  this  guidance,  separate  contracts  with the same party,
entered into at or near the same time, will be presumed to be a package, and the
consideration  will be measured and  allocated  to the  separate  units based on
their relative fair values.  This consensus guidance is applicable to agreements
entered into for quarters  beginning  after June 15, 2003.  The Company  adopted
this EITF on July 1, 2003.  The  adoption  of EITF 00-21 did not have a material
impact on our results of operations, financial position or cash flows.

(3)    Sprint Agreements

Under the  Sprint  Agreements,  Sprint  is  obligated  to  provide  the  Company
significant  support  services  such as  billing,  collections,  long  distance,
customer care, network operations support,  inventory logistics support,  use of
Sprint brand names,  national  advertising,  national  distribution  and product
development.  Additionally,  the Company derives substantial roaming revenue and
expenses when Sprint's and Sprint's network partners' wireless subscribers incur
minutes of use in the Company's  territory  and when the  Company's  subscribers
incur  minutes  of  use  in  Sprint  and  other  Sprint  network  partners'  PCS
territories. These transactions are recorded in roaming revenue, cost of service
and roaming,  cost of equipment,  and selling and marketing  expense captions in
the  accompanying  consolidated  statements of  operations.  Cost of service and
roaming  transactions  include the 8%  affiliation  fee, long distance  charges,
roaming  expense and costs of services  such as billing,  collections,  customer
service and  pass-through  expenses.  Cost of equipment  transactions  relate to
inventory  purchased  by the Company  from Sprint  under the Sprint  Agreements.
Selling and marketing  transactions  relate to subsidized  costs on handsets and
commissions paid by the Company under Sprint's national  distribution  programs.
Amounts  recorded  relating to the Sprint  Agreements for the three months ended
December 31, 2003 and 2002 are as follows:

                                                 For the Quarters Ended
                                                       December 31,
                                             ----------------------------------
                                                   2003              2002
                                             ----------------  ----------------
                                                  (Dollars in thousands)

Amounts included in the Consolidated
  Statements of Operations:
Roaming revenue                                     $ 15,747          $ 17,690
Cost of service and roaming:
Roaming                                             $ 13,274          $ 14,852
Customer service                                       5,189            11,303
Affiliation fee                                        4,699             4,836
Long distance                                          3,268             2,785
Other                                                    588               494

                                             ----------------  ----------------
Total cost of service and roaming                   $ 27,018          $ 34,270
                                             ================  ================

Purchased inventory                                 $  7,328          $  5,650
                                             ================  ================

Selling and marketing                               $  4,993          $  3,101
                                             ================  ================


                                                           As of
                                             ----------------------------------
                                              December 31,      September 30,
                                                  2003              2003
                                             ----------------  ----------------
                                                  (Dollars in thousands)
Receivable from Sprint                         $  15,728         $  15,809
Payable to Sprint                              $ (46,056)        $ (45,069)


Because  approximately 96% of our revenue is collected by Sprint and 64% of cost
of service and roaming in our  financial  statements  are derived  from fees and
charges by (or through) Sprint, we have a variety of settlement issues and other
contract  disputes  open and  outstanding  from  time to time.  Currently,  this
includes,  but is not  limited  to,  the  following  items,  all  of  which  for
accounting purposes have been reserved or otherwise provided for:

o    In fiscal year 2002,  Sprint PCS  asserted it has the right to recoup up to
     $3.9 million in long-distance access revenues previously paid by Sprint PCS
     to  AirGate,  for which  Sprint  PCS has  invoiced  $1.2  million.  We have
     disputed these amounts.

o    Sprint invoiced the Company approximately $0.4 million for fiscal year 2002
     and $1.0  million  (net of a $0.4  million  credit  as a result of the 2003
     service bureau fee true-up) for fiscal year 2003, respectively to reimburse
     Sprint for certain 3G related development  expenses.  For the quarter ended
     December 31, 2003, Sprint invoiced the Company  approximately $0.7 million.
     We are disputing Sprint's right to charge 3G fees in 2002 and beyond.

o    Sprint invoiced the Company for software  maintenance fees of approximately
     $1.7  million and $1.3  million for each of the fiscal years 2002 and 2003,
     respectively.  For the quarter ended December 31, 2003, Sprint invoiced the
     Company  approximately  $0.5 million.  We are disputing  Sprint's  right to
     charge software maintenance fees.

o    Sprint  invoiced the Company  $1.3  million  (net of a $1.4 million  credit
     related  to the  service  bureau  fee  true-up  and a $1.2  million  credit
     resulting  from  Sprint's  decision to  discontinue  their  billing  system
     conversion) for the fiscal year 2003 and $1.2 million for the quarter ended
     December 31, 2003 for the cost of IT projects  completed by Sprint.  We are
     disputing Sprint's right to collect these fees.

The payable to Sprint  includes  disputed  amounts for which Sprint has invoiced
the Company  approximately  $9.2 million.  The invoiced  amount does not include
$2.7  million for  long-distance  access  revenues  claimed but not  invoiced by
Sprint,  or other  fees not yet  invoiced  relating  to  disputed  3G,  software
maintenance and information technology that Sprint would assert have accrued.

We intend to vigorously  contest  these charges and to closely  examine all fees
and charges  imposed by Sprint.  In addition  to these  disputes,  we have other
outstanding  issues  with  Sprint  which  could  result in set-offs to the items
described above or in payments due from Sprint.  For example,  we believe Sprint
has failed to calculate, pay and report on collected revenues in accordance with
our agreements with Sprint,  which,  together with other cash remittance issues,
has  resulted  in a  shortfall  in cash  payments  to the  Company.  Sprint  has
unilaterally  reduced the  reciprocal  roaming rate charged among Sprint and its
network  partners,  in a manner  which we believe is a breach of our  agreements
with Sprint.

During the quarter ended December 31, 2003, the Company recorded $0.9 million as
a  reduction  of roaming  revenue and $1.2  million in credits  from Sprint as a
reduction  of cost of service.  The $0.9 million  reduction  of roaming  revenue
resulted  from  a  correction  to  Sprint's   billing  system  with  respect  to
data-related  inbound roaming revenue,  which the Company  continues to examine.
The $1.2 million credit  resulted from Sprint's  decision to  discontinue  their
billing  system  conversion.  Sprint had  previously  billed and passed on to us
their  development  costs as part of the IT service  bureau fee we were charged.
This credit positively affects the quarterly results;  however, it is a non-cash
item that was previously disputed and not paid.

Sprint  determines  monthly  service  charges at the  beginning of each calendar
year.  Sprint takes the position that at the end of each year, it calculates the
costs to provide  these  services for its network  partners and requires a final
settlement for the calendar year against the charges actually paid. If the costs
to provide  these  services are less than the amounts  paid by Sprint's  network
partners,  Sprint issues a credit for these amounts. If the costs to provide the
services are more than the amounts  paid by Sprint's  network  partners,  Sprint
charges the network partners for these amounts.  For the quarters ended December
31, 2003 and 2002, Sprint credited the Company $2.6 million and $1.3 million for
the  calendar  years  2003 and 2002,  respectively,  which  were  recorded  as a
reduction to cost of service.  The calendar year 2003 service bureau fee true-up
included $1.9 million in previously  disputed  amounts;  therefore cash proceeds
from Sprint of $0.7 million will be received  during the quarter ended March 31,
2003.

The Sprint  Agreements  require the Company to maintain  certain minimum network
performance  standards and to meet other performance  requirements.  The Company
was in  compliance  in all  material  respects  with  these  requirements  as of
December 31, 2003.

 (4) Litigation

In May 2002,  putative class action  complaints  were filed in the United States
District Court for the Northern  District of Georgia  against AirGate PCS, Inc.,
Thomas M.  Dougherty,  Barbara L. Blackford,  Alan B.  Catherall,  Credit Suisse
First Boston, Lehman Brothers, UBS Warburg LLC, William Blair & Company,  Thomas
Wiesel  Partners LLC and TD Securities.  The complaints do not specify an amount
or range of damages that the plaintiffs are seeking.  The complaints  seek class
certification  and  allege  that  the  prospectus  used in  connection  with the
secondary  offering  of Company  stock by certain  former iPCS  shareholders  on
December 18, 2001  contained  materially  false and  misleading  statements  and
omitted material information  necessary to make the statements in the prospectus
not false and misleading. The alleged omissions included (i) failure to disclose
that in order to complete an  effective  integration  of iPCS,  drastic  changes
would have to be made to the Company's  distribution  channels,  (ii) failure to
disclose  that the  sales  force in the  acquired  iPCS  markets  would  require
extensive  restructuring  and (iii)  failure  to  disclose  that the  "churn" or
"turnover" rate for subscribers would increase as a result of an increase in the
amount of sub-prime credit quality subscribers the Company added from its merger
with iPCS. On July 15, 2002, certain plaintiffs and their counsel filed a motion
seeking appointment as lead plaintiffs and lead counsel. Subsequently, the court
denied this motion without prejudice and two of the plaintiffs and their counsel
filed a renewed motion seeking  appointment as lead plaintiffs and lead counsel.
On September 12, 2003, the court again denied the motion  without  prejudice and
on December  2, 2003,  certain  plaintiffs  and their  counsel  filed a modified
renewed motion.

On December 11, 2003, Stuart Tinney, an AirGate  shareholder,  filed suit in the
U.S. District Court for the District of Delaware against Genesco Communications,
Inc., Cambridge Telecom,  Inc., The Blackstone Group, Trust Company of the West,
Cass  Communications  Management,  Inc.,  Technology Group, LLC, Montrose Mutual
PCS, Inc.,  Gridley  Enterprises,  Inc., Timothy M. Yager, Peter G. Peterson and
Stephen A. Schwarzman (collectively, the "Defendants"). The lawsuit alleges that
the  Defendants,  as  either  officers,  directors  or 10%  shareholders  of the
Company,  purchased and sold the Company's  securities within a six-month period
ended  December 15, 2001 and profited  from these  transactions  in violation of
Section  16(b) of the Exchange  Act.  The lawsuit  seeks  disgorgement  of these
"short swing" profits and payment of the profits to the Company,  which is named
as a nominal  defendant  in the lawsuit for its failure to directly  take action
against the Defendants.

While there is no pending  litigation with Sprint, we have a variety of disputes
with Sprint, which are described in Note 3.

We are also  subject to a variety of other claims and suits that arise from time
to time in the ordinary course of business.

While  management  currently  believes  that  resolving  all of  these  matters,
individually or in the aggregate, will not have a material adverse impact on our
liquidity,  financial  condition or results of  operations,  the  litigation and
other claims noted above are subject to inherent  uncertainties and management's
view may change in the future.  If an unfavorable  outcome were to occur,  there
exists the possibility of a material adverse impact on our liquidity,  financial
condition and results of operations  for the period in which the effect  becomes
reasonably estimable.

(5)  Income Taxes

Income taxes are accounted for under the asset and  liability  method.  Deferred
income tax assets and liabilities are recognized for the future tax consequences
attributable to differences  between the financial statement carrying amounts of
existing  assets and  liabilities  and their  respective tax bases and operating
loss and tax credit carry  forwards.  Deferred income tax assets and liabilities
are measured using enacted tax rates applied to expected  taxable income for the
years in which those  temporary  differences  are  expected to be  recovered  or
settled.  The effect on deferred  income tax assets and liabilities for a change
in tax rates is  recognized  as income in the period that includes the enactment
date. A valuation  allowance  is provided  for deferred  income tax assets based
upon the  Company's  assessment  of whether it is more  likely than not that the
deferred  income tax assets will be realized.  No such amounts were  realized in
the quarters  ended  December 31, 2003 and 2002, nor will amounts be realized in
the future unless management  believes the recoverability of deferred tax assets
is  more  likely  than  not.  The  non-monetary   gain  on  the  disposition  of
discontinued  operations  did  not  impact  the  Company's  net  operating  loss
carryforwards  as the  disposition  resulted  in a  non-deductible  loss for tax
purposes.

(6)  Discontinued Operations

On October 17, 2003, the Company  irrevocably  transferred  all of its shares of
iPCS common stock to a trust for the benefit of the  Company's  shareholders  of
record  on the  date of the  transfer.  On the  date of the  transfer,  the iPCS
investment  ($184.1 million credit balance  carrying  amount) was eliminated and
recorded as a gain on disposal of discontinued operations.  The results for iPCS
for all periods  presented are shown as discontinued  operations.  The following
reflects the income (loss) from discontinued operations of iPCS for the quarters
ended December 31, 2003 and 2002 (dollars in thousands):

                                                   For the Quarters Ended
                                                        December 31,
                                               --------------------------------
                                                     2003             2002
                                               ---------------   --------------
Revenue                                            $        -       $   51,535
Cost of revenue                                             -           42,003
Selling and marketing                                       -           12,106
General and administrative                                  -            3,331
Depreciation and amortization                               -           13,271
                                               ---------------   --------------
   Operating expense                                        -           70,711
                                               ---------------   --------------
   Operating loss                                           -          (19,176)
   Interest expense, net                                    -           (9,071)
                                               ---------------   --------------
   Loss from discontinued operations                        -          (28,247)
   Gain on disposal of discontinued
   operations net of $0 income tax expense            184,115                -
                                               ---------------   --------------
      Income (loss) from discontinued
        operations                                 $  184,115       $  (28,247)
                                               ===============   ==============


(7)  Condensed Consolidating Financial Statements

AGW Leasing  Company,  Inc. ("AGW") is a wholly-owned  restricted  subsidiary of
AirGate.  AGW has fully  and  unconditionally  guaranteed  the Old Notes and the
credit  facility.  AGW was  formed  to hold the real  estate  interests  for the
Company's PCS network and retail operations. AGW also was a registrant under the
Company's  registration  statement  declared  effective  by the  Securities  and
Exchange Commission on September 27, 1999.

AirGate Network Services LLC ("ANS") is a wholly-owned  restricted subsidiary of
the Company. ANS has fully and unconditionally  guaranteed the Old Notes and the
credit facility. ANS was formed to provide construction  management services for
the Company's PCS network.

AirGate  Service  Company,  Inc.  ("Service  Co") is a  wholly-owned  restricted
subsidiary of the Company.  Service Co has fully and unconditionally  guaranteed
the Old  Notes  and the  credit  facility.  Service  Co was  formed  to  provide
management services to the Company and iPCS.

The following shows the unaudited condensed  consolidated  financial  statements
for the Company and its guarantor subsidiaries,  as listed above, as of December
31, 2003 and September 30, 2003 and for the quarters ended December 31, 2003 and
2002 (dollars in thousands):




                                                      Unaudited Condensed Consolidating Balance Sheets
                                                                    As of December 31, 2003

                                                                  AirGate
                                                 AirGate PCS,     Guarantor
                                                     Inc.       Subsidiaries   Eliminations    Consolidated
                                                -------------  --------------  -------------   -------------


                                                                                       
Cash and cash equivalents                          $  60,043        $      -      $       -       $  60,043
Other current assets                                 106,300             529        (61,524)         45,305
                                                -------------  --------------  -------------   -------------
Total current assets                                 166,343             529        (61,524)        105,348
Property and equipment, net                          133,264          34,638              -         167,902
Other noncurrent assets                               10,784               -              -          10,784
                                                -------------  --------------  -------------   -------------
Total assets                                       $ 310,391        $ 35,167      $ (61,524)      $ 284,034
                                                =============  ==============  =============   =============

Current liabilities                                $  90,967        $ 61,222      $ (61,524)      $  90,665
Intercompany                                        (113,721)        113,721              -               -
Long-term debt                                       389,734               -              -         389,734
Other long-term liabilities                            7,521               -              -           7,521
Investment in subsidiaries                           139,776               -       (139,776)              -
                                                -------------  --------------  -------------   -------------
Total liabilities                                    514,277         174,943       (201,300)        487,920
                                                -------------  --------------  -------------   -------------

Stockholders' deficit                               (203,886)       (139,776)       139,776        (203,886)
                                                -------------  --------------  -------------   -------------
Total liabilities and stockholders' deficit        $ 310,391        $ 35,167      $ (61,524)      $ 284,034
                                                =============  ==============  =============   =============






                                                    Unaudited Condensed Consolidating Balance Sheets
                                                                 As of September 30, 2003

                                                                AirGate
                                               AirGate PCS,     Guarantor
                                                    Inc.      Subsidiaries   Eliminations    Consolidated
                                                ------------  -------------  -------------   -------------


                                                                                     
Cash and cash equivalents                         $  54,078       $      -      $       -       $  54,078
Other current assets                                108,136            529        (61,478)         47,187
                                                ------------  -------------  -------------   -------------
  Total current assets                              162,214            529        (61,478)        101,265
Property and equipment, net                         141,129         36,941              -         178,070
Other noncurrent assets                              11,581              -              -          11,581
                                                ------------  -------------  -------------   -------------
  Total assets                                    $ 314,924       $ 37,470      $ (61,478)      $ 290,916
                                                ============  =============  =============   =============

Current liabilities                               $  89,036       $ 61,189      $ (61,478)      $  88,747
Intercompany                                       (108,890)       108,890              -               -
Long-term debt                                      386,509              -              -         386,509
Other long-term liabilities                           8,542              -              -           8,542
Investment in subsidiaries                          316,724              -       (132,609)        184,115
                                                ------------  -------------  -------------   -------------
  Total liabilities                                 691,921        170,079       (194,087)        667,913
                                                ------------  -------------  -------------   -------------
Stockholders' deficit                              (376,997)      (132,609)       132,609        (376,997)
                                                ------------  -------------  -------------   -------------
  Total liabilities and stockholders' deficit     $ 314,924       $ 37,470      $ (61,478)      $ 290,916
                                                ============  =============  =============   =============







                                                             Unaudited Condensed Consolidating Statement of Operations
                                                                       For the Quarter Ended December 31, 2003

                                                                               AirGate
                                                                AirGate PCS,  Guarantor
                                                                   Inc.      Subsidiaries  Eliminations  Consolidated
                                                              -------------  ------------  ------------  -------------


                                                                                                
Revenue                                                          $  81,503      $      -       $    -      $  81,503

Cost of revenue                                                     44,850         4,201            -         49,051
Selling and marketing                                               13,615           510            -         14,125
General and administrative                                           6,287           120            -          6,407
Non-cash stock compensation expense                                    106             -            -            106
Depreciation and amortization of property and equipment              9,401         2,366            -         11,767
Gain on disposal of property and equipment                              (2)            -            -             (2)
                                                              -------------  ------------  -----------  -------------
Total operating expense                                             74,257         7,197            -         81,454
                                                              -------------  ------------  -----------  -------------
Operating income (loss)                                              7,246        (7,197)           -             49
Loss in subsidiaries                                                (7,167)            -        7,167              -
Interest income                                                        157             -            -            157
Interest expense                                                   (11,346)           30            -        (11,316)
                                                              -------------  ------------  -----------  -------------
Loss from continuing operations before income tax                  (11,110)       (7,167)       7,167        (11,110)
Income tax                                                               -             -            -              -
                                                              -------------  ------------  -----------  -------------
Loss from continuing operations                                    (11,110)       (7,167)       7,167        (11,110)
Income from discontinued operations                                184,115             -            -        184,115
                                                              -------------  ------------  -----------  -------------
Net income (loss)                                                $ 173,005      $ (7,167)     $ 7,167      $ 173,005
                                                              =============  ============  ===========  =============







            Unaudited Condensed Consolidating Statement of Operations
                     For the Quarter Ended December 31, 2002

                                                                                  AirGate
                                                                  AirGate PCS,   Guarantor
                                                                      Inc.      Subsidiaries    Eliminations    Consolidated
                                                                 -------------  -------------  --------------  --------------


                                                                                                        
Revenue                                                              $ 81,865        $     -          $    -       $  81,865

Cost of revenue                                                        53,898          4,333               -          58,231
Selling and marketing                                                  16,039            758               -          16,797
General and administrative                                              3,347            730               -           4,077
Non-cash stock compensation expense                                       176              -               -             176
Depreciation and amortization of property and equipment                 9,176          2,443               -          11,619
Loss on disposal of property and equipment                                198              -               -             198

                                                                 -------------  -------------  --------------  --------------
Total operating expense                                                82,834          8,264               -          91,098
                                                                 -------------  -------------  --------------  --------------
Operating loss                                                           (969)        (8,264)              -          (9,233)
Loss in subsidiaries                                                   (8,150)             -           8,150               -
Interest income                                                          (114)           114               -               -
Interest expense                                                      (10,194)             -               -         (10,194)
                                                                 -------------  -------------  --------------  --------------
Loss from continuing operations before income tax                     (19,427)        (8,150)          8,150         (19,427)
Income tax                                                                  -              -               -               -
                                                                 -------------  -------------  --------------  --------------
Loss from continuing operations                                       (19,427)        (8,150)          8,150         (19,427)
Loss from discontinued operations                                     (28,247)             -               -         (28,247)
                                                                 -------------  -------------  --------------  --------------
Net loss                                                            $ (47,674)      $ (8,150)        $ 8,150       $ (47,674)
                                                                 =============  =============  ==============  ==============







            Unaudited Condensed Consolidating Statement of Cash Flows
                     For the Quarter Ended December 31, 2003

                                                                               AirGate
                                                                AirGate PCS,  Guarantor
                                                                   Inc.      Subsidiaries   Eliminations   Consolidated
                                                              -------------  -------------  ------------   -------------


                                                                                                    
Operating activities, net                                          $ 8,261            $ -           $ -         $ 8,261
Investing activities, net                                           (1,599)             -             -          (1,599)
Financing activities, net                                             (697)             -             -            (697)
                                                              -------------  -------------  ------------   -------------
Change in cash and cash equivalents                                  5,965              -             -           5,965
Cash and cash equivalents at beginning of period                    54,078              -             -          54,078
                                                              -------------  -------------  ------------   -------------
Cash and cash equivalents at end of period                        $ 60,043            $ -           $ -        $ 60,043
                                                              =============  =============  ============   =============







            Unaudited Condensed Consolidating Statement of Cash Flows
                     For the Quarter Ended December 31, 2002

                                                                               AirGate
                                                                AirGate PCS,   Guarantor
                                                                   Inc.       Subsidiaries   Eliminations   Consolidated
                                                              -------------  --------------  ------------   -------------


                                                                                                    
Operating activities, net                                         $ (2,683)         $ (128)          $ -        $ (2,811)
Investing activities, net                                           (5,626)              -             -          (5,626)
Financing activities, net                                            4,494               -             -           4,494
                                                              -------------  --------------  ------------   -------------
Change in cash and cash equivalents                                 (3,815)           (128)            -          (3,943)
Cash and cash equivalents at beginning of period                     4,769             118             -           4,887
                                                              -------------  --------------  ------------   -------------
Cash and cash equivalents at end of period                           $ 954           $ (10)          $ -           $ 944
                                                              =============  ==============  ============   =============





(8)  Basic and Diluted Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the
weighted-average   number  of  common  shares  outstanding  during  the  period.
Potentially  dilutive  securities  of 17,939  and 8,358 for the  quarters  ended
December 31, 2003 and 2002 respectively, have been excluded from the computation
of dilutive  earnings (loss) per share for the periods because the Company has a
loss from continuing operations and their effect would have been antidilutive.

(9)  Stock-based Compensation Plans

We have elected to continue to account for our  stock-based  compensation  plans
under APB  Opinion  No. 25,  "Accounting  for Stock  Issued to  Employees",  and
disclose  pro forma  effects  of the plans on a net income  (loss) and  earnings
(loss) per share basis as provided by SFAS No. 123,  "Accounting for Stock-Based
Compensation."  Accordingly,  as the fair market  value on the date of grant was
equal to the exercise  price,  we did not  recognize any  compensation  expense.
Consistent  with the  provisions of SFAS No. 123, had  compensation  expense for
these plans been determined based on the fair value at the grant date during the
quarters  ended  December 31, 2003 and 2002, the pro forma net income (loss) and
earnings (loss) per share would have been as follows:




                                                                                              For the Quarters Ended
                                                                                                   December 31,
                                                                                        -----------------------------------
                                                                                             2003               2002
                                                                                        ----------------  -----------------
                                                                                    (Dollars in thousands, except per share data)
                                                                                                          
Net income (loss), as reported                                                             $ 173,005         $ (47,674)
Add: stock based compensation expense included in determination of net income (loss)             106               176
Less: stock based compensation expense determined under the fair value based method           (2,383)           (2,426)
                                                                                     ---------------- -----------------
Pro forma, net income (loss)                                                               $ 170,728         $ (49,924)
                                                                                     ================ =================

Basic and diluted earnings (loss) per share:
             As reported                                                                   $   33.32         $   (9.23)
             Pro forma                                                                     $   32.88         $   (9.67)



(10)  Subsequent Events

Recapitalization Plan

On January 14, 2004, we commenced  public and private  offers to exchange  newly
issued shares of common stock and newly issued  secured notes for all of the Old
Notes.  Under the offers,  each holder of the  Company's Old Notes will receive,
for each $1,000 of aggregate  principal amount due at maturity that is tendered,
110.1384 shares of the Company's pre-split common stock and prior to the reverse
stock-split and $533.33 in principal amount of the Company's New Notes.

On February 12, 2004, at a Special  Meeting of  Shareholders,  our  shareholders
approved (i) the issuance in the exchange  offers of up to 56% of our issued and
outstanding  common stock,  (ii) an amendment and restatement of our certificate
of  incorporation  to  implement  a  1-for-5  reverse  stock  split and (iii) an
amendment and restatement of the 2002 AirGate PCS, Inc. Long Term Incentive Plan
to increase the number of shares available and reserved for issuance thereunder,
to make  certain  other  changes and to approve the grant of certain  restricted
stock units and stock options to certain executives of the Company.

Also on February  12,  2004,  the  exchange  offers  expired and we accepted all
$298,204,000  of Old Notes (or  99.4% of the Old  Notes  outstanding)  that were
validly tendered and not withdrawn in the exchange offers. On February 17, 2004,
our stock  began  trading on a post split  basis.  We  anticipate  settling  the
exchange offers on February 20, 2004.

Reverse Stock Split

As a result of the reverse stock split,  shareholders  will receive one share of
common stock, and cash resulting from the elimination of any fractional  shares,
in exchange for each five shares of common stock currently  outstanding.  Unless
otherwise indicated, all shares and per share amounts have been restated to give
retroactive effect to this 1-for-5 reverse stock split.

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
     of Operations

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations ("MD&A") contains "forward-looking statements." These forward-looking
statements  are  based  on  current  expectations,   estimates,   forecasts  and
projections  about us, our  future  performance,  our  liquidity,  the  wireless
industry, our beliefs and management's  assumptions.  In addition, other written
and oral statements that constitute forward-looking statements may be made by us
or on our behalf. Such  forward-looking  statements include statements regarding
expected  financial results and other planned events,  including but not limited
to,  anticipated  liquidity,  churn rates,  ARPU and CPGA (all as defined in the
Non-GAAP Financial Measures and Key Operating  Metrics),  roaming rates,  EBITDA
(as defined in the Non-GAAP Financial Measures and Key Operating  Metrics),  and
capital   expenditures.   Words  such  as  "anticipate,"   "assume,"  "believe,"
"estimate,"  "expect,"  "intend," "plan," "seek,"  "project,"  "target," "goal,"
variations of such words and similar  expressions  are intended to identify such
forward-looking  statements.  These  statements  are not  guarantees  of  future
performance and involve certain risks,  uncertainties  and assumptions  that are
difficult  to predict.  Therefore,  actual  future  events or results may differ
materially from these statements. These risks and uncertainties include:

o    our dependence on the success of Sprint's wireless business;

o    the  competitiveness  and impact of Sprint's pricing plans and PCS products
     and  services  and  introduction  of pricing  plans and  programs  that may
     adversely affect our business;

o    intense  competition in the wireless market and the unsettled nature of the
     wireless market;

o    the potential to experience a continued high rate of subscriber turnover;

o    the ability of Sprint  (directly or through third  parties) to provide back
     office  billing,  subscriber  care and other  services  and the quality and
     costs of such services or, alternatively, our ability to outsource all or a
     portion  of these  services  at  acceptable  costs and the  quality of such
     services;

o    subscriber credit quality;

o    the ability to successfully leverage 3G products and services;

o    inaccuracies in financial information provided by Sprint;

o    new charges and fees, or increased charges and fees, imposed by Sprint;

o    the impact and outcome of disputes with Sprint;

o    our  ability  to  predict  future  customer  growth,  as well as other  key
     operating metrics;

o    the impact of spending  cuts on network  quality,  customer  retention  and
     customer growth;

o    rates of penetration in the wireless industry;

o    our significant level of indebtedness and debt covenant requirements;

o    the impact and outcome of legal  proceedings  between other Sprint  network
     partners and Sprint;

o    the potential need for additional sources of capital and liquidity;

o    risks  related to our  ability to compete  with  larger,  more  established
     businesses;

o    anticipated future losses;

o    rapid technological and market change;

o    an adequate supply of subscriber equipment;

o    Declines in growth of wireless subscribers; and

o    the volatility of the market price of our common stock.

These  forward-looking  statements  involve a number of risks and  uncertainties
that could cause actual results to differ materially from those suggested by the
forward-looking  statements.  Forward-looking  statements should,  therefore, be
considered in light of various important  factors,  including those set forth in
the  Company's  Annual  Report for the fiscal  year ended  September  30,  2003,
elsewhere in this report and the incorporated reports.  Moreover, we caution you
not to place undue  reliance on these  forward-looking  statements,  which speak
only as of the date  they were  made.  We do not  undertake  any  obligation  to
publicly  release any revisions to these  forward-looking  statements to reflect
events  or  circumstances  after  the  date of this  report  or to  reflect  the
occurrence of unanticipated  events. All subsequent  forward-looking  statements
attributable to us or any person acting on our behalf are expressly qualified in
their entirety by the cautionary  statements contained in or referred to in this
report.

For a further listing and description of such risks and  uncertainties,  see the
Company's  Annual Report for the fiscal year ended  September 30, 2003 and other
reports filed by us with the SEC.  Except as required  under federal  securities
law and the rules and  regulations  of the SEC, we do not have any  intention or
obligation to update publicly any forward looking  statements after distribution
of this report,  whether as a result of new information,  future events, changes
in assumptions or otherwise.

You should read this discussion in conjunction with our  consolidated  financial
statements and  accompanying  notes  contained in our Annual Report for the year
ended September 30, 2003.

Overview

AirGate PCS,  Inc. and its  subsidiaries  and  predecessors  were formed for the
purpose  of  becoming  a  leading   regional   provider  of  wireless   Personal
Communication  Services, or "PCS." We are a network partner of Sprint PCS, which
is a group of  wholly-owned  subsidiaries  of Sprint  Corporation (a diversified
telecommunications  service  provider),  that  operate and manage  Sprint's  PCS
products and services.

Sprint  operates a 100%  digital PCS wireless  network in the United  States and
holds the licenses to provide PCS nationwide using a single frequency band and a
single technology. Sprint, directly and indirectly through network partners such
as us,  provides  wireless  services in more than 4,000  cities and  communities
across  the  country.   Sprint  directly  operates  its  PCS  network  in  major
metropolitan markets throughout the United States.  Sprint has also entered into
independent  agreements with various network  partners,  such as us, under which
the network partners have agreed to construct and manage PCS networks in smaller
metropolitan areas and along major highways.

As of December 31, 2003, the Company had 359,898  subscribers  and total network
coverage of approximately 6.2 million residents,  representing approximately 83%
of the residents in its territory.

iPCS, Inc.

On November 30, 2001, we acquired iPCS in a merger. In light of consolidation in
the  wireless  communications  industry in general and among  Sprint PCS network
partners in  particular,  we believed  that the merger  represented  a strategic
opportunity to significantly expand the size and scope of our operations, attain
access to attractive markets,  and provide greater operational  efficiencies and
growth  potential  than we  would  have  had on our  own.  The  transaction  was
accounted for under the purchase method of accounting.

Although  iPCS's growth rates  through March 2002 met or exceeded  expectations,
the slowdown in growth in the wireless industry,  increased  competition,  iPCS'
dependence  on Sprint and the  reimposition  and  increase  of the  deposit  for
sub-prime credit  customers,  all contributed to slower than expected growth. In
addition, iPCS' problems were compounded because it was earlier in its lifecycle
when growth slowed,  had  approximately  one-third  fewer  subscribers  than the
Company, and a less complete network.

On February 23, 2003, iPCS filed a Chapter 11 bankruptcy  petition in the United
States  Bankruptcy Court for the Northern District of Georgia for the purpose of
effecting a court administered reorganization.  Subsequent to February 23, 2003,
the Company no longer  consolidated  the accounts and results of  operations  of
iPCS and the  accounts  of iPCS were  recorded as an  investment  using the cost
method of accounting.

In   connection   with  the   issuance   of  common   stock  in  the   Company's
Recapitalization  Plan,  the Company will  undergo an  ownership  change for tax
purposes.  Such ownership  change would also have caused an ownership  change of
iPCS,  which  could  have had a  detrimental  effect on the use of  certain  net
operating  losses of iPCS.  Consequently,  on  October  17,  2003,  the  Company
irrevocably  transferred  all of its shares of iPCS common  stock to a trust for
the benefit of the Company's  shareholders of record as of the date of transfer.
On October 17, 2003, the iPCS investment ($184.1 million credit balance carrying
amount) was  eliminated  and recorded as a  non-monetary  gain on disposition of
discontinuing  operations.  The results for iPCS for all periods  presented  are
shown as  discontinued  operations.  The results  for AirGate  only are shown as
continuing operations.

The following description of the Company's business is limited to AirGate alone,
and does not reflect the business of iPCS.

Critical Accounting Policies

The Company relies on the use of estimates and makes assumptions that impact its
financial  condition and results.  These  estimates and assumptions are based on
historical results and trends as well as the Company's forecasts as to how these
might  change in the  future.  While we believe  that the  estimates  we use are
reasonable, actual results could differ from those estimates. The Company's most
critical accounting policies that may materially impact the Company's results of
operations include:

Revenue Recognition

The Company  recognizes  revenue  when  persuasive  evidence  of an  arrangement
exists,  services have been rendered or products have been delivered,  the price
to the  buyer  is fixed  and  determinable,  and  collectibility  is  reasonably
assured.  Effective July 1, 2003 the Company adopted EITF No. 00-21, "Accounting
for Revenue Arrangements with Multiple Element  Deliverables." The EITF guidance
addresses   how  to  account  for   arrangements   that  may  involve   multiple
revenue-generating  activities,  i.e.,  the delivery or  performance of multiple
products,  services,  and/or rights to use assets.  In applying  this  guidance,
separate  contracts with the same party,  entered into at or near the same time,
will be  presumed to be a bundled  transaction,  and the  consideration  will be
measured  and  allocated  to the  separate  units based on their  relative  fair
values.  The consensus  guidance is  applicable  to agreements  entered into for
quarters  beginning after June 15, 2003. The adoption of EITF 00-21 has resulted
in substantially all of the activation fee revenue generated from  Company-owned
retail  stores and  associated  costs being  recognized  at the time the related
wireless  handset is sold and it is classified as equipment  revenue and cost of
equipment,  respectively.  Upon  adoption  of EITF  00-21,  previously  deferred
revenues and costs will continue to be amortized  over the  remaining  estimated
life of a subscriber, not to exceed 30 months. Revenue and costs for activations
at other retail  locations will continue to be deferred and amortized over their
estimated lives.

The Company  recognizes  service  revenue from its  subscribers  as they use the
service.  The  Company  provides a  reduction  of  recorded  revenue for billing
adjustments,   and   estimated   uncollectible   late  payment  fees  and  early
cancellation  fees.  The Company also reduces  recorded  revenue for rebates and
discounts given to subscribers on wireless handset sales in accordance with EITF
Issue No. 01-9  "Accounting  for  Consideration  Given by a Vendor to a Customer
(Including  a Reseller of the  Vendor's  Products)."  For  industry  competitive
reasons, the Company sells wireless handsets at a loss. The Company participates
in the Sprint  national and  regional  distribution  programs in which  national
retailers  such as  Radio  Shack  and  Best Buy sell  Sprint  PCS  products  and
services.  In order to facilitate  the sale of Sprint PCS products and services,
national retailers purchase wireless handsets from Sprint for resale and receive
compensation from Sprint for Sprint PCS products and services sold. For industry
competitive  reasons,  Sprint  subsidizes the price of these handsets by selling
the handsets at a price below cost. Under the Company's Sprint Agreements,  when
a national retailer sells a handset purchased from Sprint to a subscriber in the
Company's  territory,  the  Company is  obligated  to  reimburse  Sprint for the
handset  subsidy.  The Company  does not  receive  any revenue  from the sale of
handsets and  accessories  by such national  retailers.  The Company  classifies
these  handset  subsidy  charges as a selling  and  marketing  expense for a new
subscriber  handset sale and classifies these subsidies as a cost of service and
roaming for a handset upgrade to an existing subscriber.

The Company records  equipment revenue from the sale of handsets and accessories
to subscribers in its retail stores upon delivery in accordance with EITF 00-21.
The  Company  does not record  equipment  revenue on  handsets  and  accessories
purchased from national  third-party  retailers such as Radio Shack and Best Buy
or directly from Sprint by subscribers in its territory.

Sprint retains 8% of collected  service  revenue from  subscribers  based in the
Company's  markets and from  non-Sprint  subscribers who roam onto the Company's
network.  The amount of affiliation  fees retained by Sprint is recorded as cost
of  service  and  roaming.  Revenue  derived  from  the  sale  of  handsets  and
accessories by the Company and from certain roaming services  (outbound  roaming
and roaming revenue from Sprint PCS and its PCS network partner subscribers) are
not subject to the 8% affiliation fee from Sprint.

Allowance for Doubtful Accounts

Estimates are used in  determining  the allowance for doubtful  accounts and are
based on historical collection and write-off experience,  current trends, credit
policies, accounts receivable by aging category and current trends in the credit
quality of its subscriber  base. In  determining  these  estimates,  the Company
compares historical  write-offs in relation to the estimated period in which the
subscriber was originally  billed.  The Company also looks at the historical and
projected  average length of time that elapses between the original billing date
and the date of  write-off in  determining  the  adequacy of the  allowance  for
doubtful accounts by aging category. From this information, the Company provides
specific amounts to the aging categories.  The Company provides an allowance for
substantially all receivables over 90 days old.

Using historical  information,  the Company provides a reduction in revenues for
certain billing adjustments,  late payment fees and early cancellation fees that
it anticipates will not be collected. The reserves for billing adjustments, late
payment  fees and early  cancellation  fees are  included in the  allowance  for
doubtful  accounts  balance.  If the  allowance  for  doubtful  accounts  is not
adequate,  it could have a material  adverse affect on the Company's  liquidity,
financial position and results of operations.

First Payment Default Subscribers

Prior to March 2003,  the Company  estimated the  percentage of new  subscribers
that would never pay a bill and reserved for the related  percentage  of monthly
revenue  through a reduction in revenues.  In 2002,  the Company  reinstated the
deposit  requirement  for sub-prime  credit  customers,  and then  increased the
deposit amounts in February 2003. The Company believes that the re-imposition of
and increase in deposit requirements and the continuation of spending limits for
sub-prime  credit  customers  are  sufficient to mitigate the  collection  risk.
Additionally,  the Company has experienced improvements in the credit quality of
its subscriber  base.  Accordingly,  in March 2003 the Company ceased  recording
this  reserve.  At December  31,  2002,  there was  approximately  $0.7  million
reserved for 4,187 first payment default subscribers.

Valuation and Recoverability of Long-Lived Assets

Long-lived assets such as property and equipment represent  approximately 59% of
the Company's  total assets as of December 31, 2003.  Property and equipment are
stated  at  original  cost,  less  accumulated  depreciation  and  amortization.
Depreciation  is recorded  using the  straight-line  method  over the  estimated
useful lives of up to 15 years for towers, 3 to 5 years for computer  equipment,
5 years  for  furniture,  fixtures  and  office  equipment  and 5 to 7 years for
network assets (other than towers).  The Company reviews  long-lived  assets for
impairment in accordance  with the provisions of SFAS No. 144,  "Accounting  for
the Impairment or Disposal of Long-Lived Assets."

We review our  long-lived  assets for impairment  whenever  events or changes in
circumstances  indicate that the carrying amount may not be recoverable.  If the
total of the expected  undiscounted  future cash flows is less than the carrying
amount of the asset, a loss, if any, is recognized  for the  difference  between
the fair value and the  carrying  value of the asset.  Impairment  analyses  are
based on our current business and technology strategy, our views of growth rates
for the business,  anticipated  future  economic and  regulatory  conditions and
expected  technological  availability.  Assets to be disposed of are reported at
the lower of the carrying amount or fair value less costs to sell the asset.

Significant New Accounting Pronouncements

See  Note  2 to the  consolidated  financial  statements  for a  description  of
significant new accounting pronouncements and their impact on the Company.

Results of Operations

For the quarter ended December 31, 2003 compared to the quarter ended December
31, 2002:

Revenues

We derive our revenue from the following sources:

Service. We sell wireless personal communications services. The various types of
service revenue associated with wireless communications services include monthly
recurring  access and  feature  charges and  monthly  non-recurring  charges for
local,  wireless  long  distance  and  roaming  airtime  usage in  excess of the
subscribed usage plan.

Roaming.  The Company  receives roaming revenue at a per-minute rate from Sprint
and other Sprint PCS network partners when Sprint's or its network partner's PCS
subscribers from outside of the Company's  territory use the Company's  network.
The Company  pays the same  reciprocal  roaming rate when  subscribers  from its
territories  use the  network of Sprint or its other PCS network  partners.  The
Company also  receives  non-Sprint  roaming  revenue when  subscribers  of other
wireless service  providers who have roaming  agreements with Sprint roam on the
Company's network.

Equipment.  We sell wireless  personal  communications  handsets and accessories
that are used by our  subscribers  in  connection  with our  wireless  services.
Equipment  revenue is derived  from the sale of handsets  and  accessories  from
Company  owned  stores,  net of sales  incentives,  rebates and an allowance for
returns.  The Company's handset return policy allows subscribers to return their
handsets  for a full  refund  within  14 days of  purchase.  When  handsets  are
returned to the  Company,  the  Company  may be able to reissue the  handsets to
subscribers at little  additional cost. When handsets are returned to Sprint for
refurbishing, the Company receives a credit from Sprint.

                                  For the Quarters Ended December 31,
                    ------------------------------------------------------
                                                   Increase    Increase
                         2003         2002        (Decrease)  (Decrease)%
                    ------------  ------------  ------------  ------------
                             (Dollars in thousands)

Service revenue        $ 62,173      $ 59,933      $ 2,240       3.7%
Roaming revenue          16,483        18,910       (2,427)    (12.8%)
Equipment revenue         2,847         3,022         (175)     (5.8%)

                    ------------  ------------  ------------   -----------
Total                  $ 81,503      $ 81,865      $  (362)     (0.4%)
                    ============  ============  ============   ===========


Service Revenue

The increase in service revenue for the quarter ended December 31, 2003 over the
same  quarter  in  the  previous  year  reflects  a  higher  average  number  of
subscribers  using  our  network,  relatively  consistent  average  revenue  per
subscriber and higher monthly recurring  revenue and feature charges,  partially
offset by lower  revenue from "minutes over plan," or airtime usage in excess of
the subscribed usage plans. In late calendar year 2002, Sprint implemented a new
PCS to PCS product offering under which subscribers receive unlimited quantities
of minutes for little or no  additional  cost for any calls made from one Sprint
PCS subscriber to another ("PCS to PCS"). Pursuant to our Sprint Agreements,  we
are  required  to  support  this  program  in  our  territory.   The  number  of
minutes-over-plan  charged to subscribers  for plan overages used and associated
revenues of our  subscribers  has decreased while the number of minutes used for
PCS to PCS calls has increased from an average of 6 million to  approximately 80
million minutes per month.

Roaming Revenue

The decrease in roaming revenue for the quarter ended December 31, 2003 over the
same  quarter  in the  previous  year is  attributable  primarily  to the  lower
reciprocal  roaming  rate  charged  among  Sprint and its PCS network  partners,
partially offset by increased volume in inbound roaming traffic.  The reciprocal
roaming rate among Sprint and its PCS network  partners,  including the Company,
declined from $0.10 per minute of use to $0.058 in calendar years 2002 and 2003,
respectively. In December 2003, Sprint reduced the rate to $0.041 per minute for
calendar year 2004. The Company  believes that these reductions are in violation
of our agreements with Sprint.  Roaming revenue was also adversely  affected for
the  quarter  ended  December  31, 2003 as a result of the $0.9  million  charge
resulting  from  a  correction  to  Sprint's  billing  system  with  respect  to
data-related inbound roaming revenues.  For the quarter ended December 31, 2003,
the Company's roaming revenue from Sprint and its PCS network partners was $15.7
million, or approximately 96% of the roaming revenue,  compared to $17.7 million
or approximately 94% for the quarter ended December 31, 2002.

Equipment Revenue

Equipment  revenue for the quarter ended  December 31, 2003  decreased  over the
same quarter in the previous  year,  primarily due to lower gross  additions and
higher  handset  rebates,  partially  offset by higher  sales of new or upgraded
handsets to existing subscribers.

Cost of Service and Roaming

Cost of  service  and  roaming  principally  consists  of costs to  support  the
Company's subscriber base including:

*    Roaming expense;

*    Network operating costs (including salaries, cell site lease payments, fees
     related to the connection of the Company's  switches to the cell sites that
     they  support,  inter-connect  fees and other  expenses  related to network
     operations);

*    Bad debt expense related to estimated uncollectible accounts receivable;

*    Wireless handset subsidies on existing subscriber upgrades through national
     third-party retailers; and

*    Other cost of service, which includes:

     *    Back office services provided by Sprint such as customer care, billing
          and activation;

     *    The  8%  of  collected   service  revenue   representing   the  Sprint
          affiliation fee; and

     *    Long  distance  expense  relating to inbound  roaming  revenue and the
          Company's own  subscriber's  long distance  usage and roaming  expense
          when subscribers from the Company's  territory place calls on Sprint's
          or its network partners' networks.



                                           For the Quarters Ended December 31,
                                   ----------------------------------------------------
                                                                Increase      Increase
                                       2003          2002      (Decrease)    (Decrease)%
                                   ------------  ------------  ------------  -----------
                                            (Dollars in thousands)

                                                                    
Roaming expense                       $ 13,788      $ 15,667     $ (1,879)      (12.0%)
Network operating costs                 15,969        15,151          818         5.4%
Bad debt expense                           405         2,186       (1,781)      (81.5%)
Wireless handset subsidies                 790         1,583         (793)      (50.1%)
Other cost of service                   11,513        16,797       (5,284)      (31.5%)
                                   ------------  ------------  -----------   ----------
Total cost of service and roaming     $ 42,465      $ 51,384     $ (8,919)      (17.4%)
                                   ============  ============  ===========   ==========



Roaming Expense

Roaming  expense  decreased for the quarter ended  December 31, 2003 compared to
the same  quarter  in the  previous  year as a  result  of the  decrease  in the
reciprocal  roaming rate charged among Sprint and its network partners.  Cost of
roaming of 96% and 95% was  attributable to Sprint and its network  partners for
the quarters ended December 31, 2003 and 2002, respectively.

Network Operating Costs

Network  operating  costs  increased  for the quarter  ended  December  31, 2003
compared to the same quarter in the previous year as a result of higher property
taxes and increased subscriber usage including long distance service,  partially
offset by decreased interconnect charges.

Bad Debt Expense

Bad debt expense  decreased for the quarter ended  December 31, 2003 compared to
the same quarter in the previous year. We believe the improvements in the credit
quality and payment profile of our subscriber base since we re-imposed  deposits
for sub-prime credit  subscribers in early 2002 and the subsequent  increases in
February 2003 have resulted in significant  improvements in accounts  receivable
write-off experience,  increased collections, and the associated decrease in bad
debt expense for the quarter.

Wireless Handset Subsidies

Despite  an  increase  in the  number  of  subscribers  making  handset  upgrade
purchases,  wireless handset subsidies on existing  subscriber  upgrades through
national third-party retailers decreased for the quarter ended December 31, 2003
compared  to the same  quarter in the  previous  year as a result of reduced per
subscriber  subsidies paid to national third-party  retailers.  The reduction in
subsidies paid to national  third-party  retailers for upgrades decreased as the
amounts of rebates and promotions  offered directly to our customers through our
national third party channels increased.

Other Cost of Service

Other cost of service decreased for the quarter ended December 31, 2003 compared
to the same quarter in the previous year. The decrease was attributable to lower
customer service costs, a $2.6 million customer service  settlement  credit from
Sprint for calendar year 2003 and a $1.2 million  special  settlement  resulting
from Sprint's decision to discontinue their billing system conversion.

Cost of Equipment, Interest and Other Operating Expenses



                                                                            For the Quarters Ended December 31,
                                                              ----------------------------------------------------------
                                                                  2003             2002       (Decrease)    (Decrease) %
                                                              --------------  -------------  ------------  -------------
                                                                          (Dollars in thousands)

                                                                                                  
Cost of equipment                                                $ 6,586        $ 6,847        $ (261)        (3.8%)
Selling and marketing expense                                     14,125         16,797        (2,672)       (15.9%)
General and administrative expense                                 6,407          4,077         2,330         57.1%
Non-cash stock compensation expense                                  106            176           (70)       (39.8%)
Depreciation and amortization of property and equipment           11,767         11,619           148          1.3%
Loss (gain) on disposal of property
   and equipment                                                      (2)           198           200        101.0%
Interest income                                                      157              -           157         N/M
Interest expense                                                  11,316         10,194         1,122         11.0%




Cost of Equipment

We purchase  handsets and  accessories to resell to our  subscribers  for use in
connection  with our services.  To remain  competitive  in the  marketplace,  we
subsidize  the price of the  handset  sales;  therefore  the cost of handsets is
higher than the retail price to the subscriber.  Cost of equipment decreased for
the quarter ended December 31, 2003 compared to the same quarter in the previous
year primarily as a result of decreased  subscriber gross  additions,  partially
offset by increased retail upgrade sales for handsets to existing subscribers.

Selling and Marketing Expense

Selling and marketing  expense  includes retail store costs such as salaries and
rent,  promotion,  advertising and commission  costs,  and handset  subsidies on
units sold by national  third-party  retailers,  the  Company's  business  sales
channel and Sprint sales channels for which the Company does not record revenue.
Under the Company's  agreements with Sprint,  when a national  retailer or other
Sprint  distribution  channel  sells  a  handset  purchased  from  Sprint  to  a
subscriber from the Company's  territory,  the Company is obligated to reimburse
Sprint for the handset subsidy and related selling costs that Sprint  originally
incurred.  Selling  and  marketing  expenses  decreased  for the  quarter  ended
December 31, 2003 compared to the same period in 2002  reflecting  the effect of
reduced  subscriber gross additions,  reduced  advertising and promotion expense
and staff  reductions and store closings  implemented in fiscal 2003,  partially
offset by increased  expenses of approximately  $1.1 million for handset upgrade
costs through our national third party channels.

General and Administrative Expense

General and administrative  expense increased for the quarter ended December 31,
2003 compared to the same period in 2002 primarily reflecting increased spending
for costs associated with the proposed Recapitalization Plan of $2.3 million.

Depreciation and Amortization of Property and Equipment

The Company  capitalizes network development costs incurred to ready its network
for use and costs  incurred to  build-out  its retail  stores and office  space.
Depreciation  of these costs begins when the equipment is ready for its intended
use and is amortized over the estimated  useful life of the asset.  Depreciation
expense  increased  slightly for the quarter ended December 31, 2003 compared to
the same  quarter  of the  previous  year  primarily  as a result of  additional
network  assets  placed in service in the later  part of fiscal  year 2003.  The
Company  purchased  $1.6 million of property and  equipment in the quarter ended
December 31, 2003,  which  included  approximately  $0.03 million of capitalized
interest,  compared to property  and  equipment  purchases  of $5.6  million and
capitalized interest of $0.1 million in the quarter ended December 31, 2002.

Interest Expense

Interest  expense  increased for the quarter ended December 31, 2003 compared to
the same quarter of the previous year as a result of increased  borrowings under
the credit facility and amortization of the discount on the Old Notes, partially
offset by a decline in interest  rates on the credit  facility.  The Company had
outstanding  credit facility  borrowings of $151.0 million at a weighted average
interest  rate of 4.99% at December  31, 2003,  compared to $141.0  million at a
weighted average interest rate of 5.5% at December 31, 2002.

Income Tax

No income tax expense was realized for the quarters  ended December 31, 2003 and
2002.

Loss from Continuing Operations

For the  quarter  ended  December  31,  2003,  loss from  continuing  operations
improved to $11.1 million  compared to $19.4 million for the same quarter of the
previous  year.  The  improvement  is the result of lower  cost of  service  and
selling and marketing expense,  offset by increased spending associated with the
proposed Recapitalization Plan of $2.3 million.

Income (Loss) from Discontinued Operations

Discontinued  operations  is  comprised of a $184.1  non-monetary  gain from the
elimination  of the  investment in iPCS for the quarter ended  December 31, 2003
and a loss from iPCS of $28.3  million  during the quarter  ended  December  31,
2002.

Net Income (Loss)

For the quarter ended December 31, 2003, net income of $173.0 million included a
non-monetary  gain of $184.1  million  related to the  disposal of  discontinued
operations of iPCS and a $11.1 million loss from continuing operations.  For the
quarter  ended  December 31, 2002,  net loss of $47.7  million  included a $19.4
million  loss  from  continuing  operations  and a loss of  $28.3  million  from
discontinued operations.

Non-GAAP Financial Measures and Key Operating Metrics

We use certain  operating  and  financial  measures  that are not  calculated in
accordance with accounting principles generally accepted in the United States of
America, or GAAP. A non-GAAP financial measure is defined as a numerical measure
of a company's financial performance that (i) excludes amounts, or is subject to
adjustments that have the effect of excluding amounts,  that are included in the
comparable  measure  calculated  and  presented in  accordance  with GAAP in the
statement of income or statement of cash flows; or (ii) includes amounts,  or is
subject to  adjustments  that have the  effect of  including  amounts,  that are
excluded from the comparable measure so calculated and presented.


Terms such as  subscriber  net  additions,  average  revenue per user  ("ARPU"),
churn, and cost per gross addition ("CPGA") are important operating metrics used
in the wireless  telecommunications  industry.  These  metrics are  important to
compare  us to other  wireless  service  providers.  ARPU and CPGA  also  assist
management in budgeting  and CPGA also assists  management  in  quantifying  the
incremental  costs  to  acquire  a new  subscriber.  Except  for  churn  and net
subscriber additions,  we have included a reconciliation of these metrics to the
most directly  comparable  GAAP  financial  measure.  Churn and  subscriber  net
additions are operating  statistics with no comparable  GAAP financial  measure.
ARPU and CPGA are  supplements to GAAP financial  information  and should not be
considered an alternative to, or more meaningful than, revenues,  expenses, loss
from  continuing  operations,  or net income  (loss) as determined in accordance
with GAAP.

Earnings before interest, taxes, depreciation and amortization,  or "EBITDA," is
a  performance  metric we use and which is used by other  companies.  Management
believes that EBITDA is a useful adjunct to loss from continuing  operations and
other  measurements under GAAP because it is a meaningful measure of a company's
performance,   as  interest,  taxes,  depreciation  and  amortization  can  vary
significantly  between  companies  due in  part  to  differences  in  accounting
policies, tax strategies,  levels of indebtedness,  capital purchasing practices
and interest  rates.  EBITDA also assists  management  in  evaluating  operating
performance  and  is  sometimes  used  to  evaluate  performance  for  executive
compensation.  We have  included  below a  presentation  of the  GAAP  financial
measure  most  directly  comparable  to  EBITDA,  which is loss from  continuing
operations,  as well as a  reconciliation  of  EBITDA  to loss  from  continuing
operations. We have also provided a reconciliation to net cash provided by (used
in) operating activities as supplemental information.  EBITDA is a supplement to
GAAP financial  information  and should not be considered an alternative  to, or
more meaningful than, net income (loss), loss from continuing  operations,  cash
flow or operating  income (loss) as determined in accordance  with GAAP.  EBITDA
has  distinct  limitations  as compared to GAAP  information  such as net income
(loss), loss from continuing  operations,  cash flow or operating income (loss).
By excluding interest and income taxes for example,  it may not be apparent that
both  represent  a  reduction  in  cash  available  to  the  Company.  Likewise,
depreciation and  amortization,  while non-cash items,  represent  generally the
decreases in the value of assets that produce revenue for the Company.

ARPU, churn,  CPGA, and EBITDA as used by the Company may not be comparable to a
similarly titled measure of another company.

The following terms used in this report have the following meanings:

o    "ARPU"  summarizes the average monthly service revenue per user,  excluding
     roaming  revenue.  The  Company  excludes  roaming  revenue  from  its ARPU
     calculation  because this revenue is generated from customers of Sprint and
     other carriers that use our network and not directly from our  subscribers.
     ARPU is computed by dividing average monthly service revenue for the period
     by the average subscribers for the period.

o    "Churn"  is the  average  monthly  rate of  subscriber  turnover  that both
     voluntarily  and  involuntarily  discontinued  service  during the  period,
     expressed as a percentage of the average subscribers for the period.  Churn
     is computed by dividing the number of subscribers that discontinued service
     during the period,  net of 30-day returns,  by the average  subscribers for
     the period.

o    "CPGA"  summarizes the average cost to acquire new  subscribers  during the
     period.  CPGA is  computed  by adding the income  statement  components  of
     selling and marketing expense  (including  commissions),  cost of equipment
     and activation  costs (which are included as a component of cost of service
     and roaming) and reducing  that amount by the equipment  revenue  recorded.
     That net  amount is then  divided  by the total  new  subscribers  acquired
     during the period.

o    "EBITDA"  means  earnings  before   interest,   taxes,   depreciation   and
     amortization.

The tables,  which follow present and reconcile  non-GAAP financial measures and
key operating  metrics for the Company for the quarters  ended December 31, 2003
and 2002.

The table  below  sets  forth key  operating  metrics  for the  Company  for the
quarters ended December 31, 2003 and 2002 (dollars in thousands, except unit and
per unit data):


                                            For the Quarters Ended December 31,
                                    -------------------------------------------------------
                                                                   Increase      Increase
                                       2003           2002        (Decrease)$   (Decrease) %
                                    ----------   -------------   ------------   -------------

                                                                       
Total subscribers, end of period     359,898        352,809         7,089          2.0%
Subscriber gross additions            35,601         55,621       (20,020)       (36.0%)
Subscriber net additions                 438         13,670       (13,232)       (96.8%)
ARPU                                $  57.62        $ 57.74       $ (0.12)        (0.2%)
Churn                                   3.10%          3.43%        (0.33%)        N/M
CPGA                                $    508        $   375       $   133         35.6%
EBITDA                              $ 11,816        $ 2,386       $ 9,430        395.2%



The reconciliation of ARPU to service revenue,  as determined in accordance with
GAAP, is as follows (dollars in thousands, except per unit data):

                                     For the Quarters Ended December 31,
                                 ----------------------------------------------
                                                          Increase    Increase
                                    2003        2002     (Decrease)$ (Decrease)%
                                 ---------   ---------   -----------  ---------

Average Revenue Per User (ARPU):
Service revenue                   $ 62,173     $ 59,933     $ 2,240      3.7%
Average subscribers                359,679      345,974      13,705      4.0%
ARPU                              $  57.62     $  57.74     $ (0.12)    (0.2%)



The  reconciliation of CPGA to selling and marketing  expense,  as determined in
accordance with GAAP, is calculated as follows (dollars in thousands, except per
unit data):

                                      For the Quarters Ended December 31,
                               -------------------------------------------------
                                                         Increase     Increase
                                   2003        2002    (Decrease)$  (Decrease)%
                               -----------  ----------  ----------  ----------

Cost Per Gross Addition (CPGA):
Selling and marketing expense    $ 14,125   $ 16,797     $ (2,672)    (15.9%)
Plus: activation costs                221        214            7       3.3%
Plus: cost of equipment             6,586      6,847         (261)     (3.8%)
Less: equipment revenue            (2,847)    (3,022)         175       5.8%
                                ---------  ---------    ---------  ---------
Total acquisition costs          $ 18,085   $ 20,836     $ (2,751)    (13.2%)
                                =========  =========   ==========  =========
Gross additions                    35,601     55,621      (20,020)    (36.0%)
CPGA                                $ 508      $ 375        $ 133      35.6%


The reconciliation of EBITDA to our reported loss from continued operations,  as
determined in accordance with GAAP, is as follows (dollars in thousands):


                                      For the Quarters Ended December 31,
                                 -----------------------------------------------
                                                          Increase    Increase
                                     2003       2002     (Decrease)$ (Decrease)%
                                  ----------  ---------- ----------  -----------

Loss from continuing operations   $ (11,110)  $ (19,427)  $ 8,317       42.8%
Depreciation and amortization of
  property and equipment             11,767      11,619       148        1.3%
Interest income                        (157)          -      (157)       N/M
Interest expense                     11,316      10,194     1,122       11.0%
                                 ----------- ----------- ---------  ----------
EBITDA                            $  11,816   $   2,386   $ 9,430      395.2%
                                 =========== =========== =========  ==========


The  reconciliation  of  EBITDA  to net cash  provided  by (used  in)  operating
activities,  as determined in  accordance  with GAAP, is as follows  (dollars in
thousands):

                                       For the Quarters Ended December 31,
                                  ----------------------------------------------
                                                         Increase     Increase
                                     2003       2002    (Decrease)$ (Decreasee)%
                                  ----------  --------- -----------  -----------

Net cash provided by (used in)
   operating activities             $ 8,261   $ (2,811)  $ 11,072     393.9%
Change in operating assets
   and liabilities                    2,360      5,835     (3,475)    (59.6%)
Interest income                        (157)         -       (157)      N/M
Interest expense                     11,316     10,194      1,122      11.0%
Accretion of interest                (9,150)    (7,970)    (1,180)    (14.8%)
Provision for doubtful accounts        (405)    (2,186)     1,781      81.5%
Other                                  (409)      (676)       267      39.5%
                                  ----------  ---------  ---------  ---------
EBITDA                             $ 11,816    $ 2,386    $ 9,430     395.2%
                                  ==========  =========  =========  =========


Subscriber Gross Additions

Subscriber  gross  additions  decreased for the quarter ended  December 31, 2003
compared to the same quarter in 2002. This decrease is due to the re-institution
of and  increase in the  deposit for  sub-prime  credit  customers,  the loss of
distribution  from closing retail stores,  and Sprint's loss of certain national
third-party distribution channels.

Subscriber Net Additions

Subscriber  net additions  decreased  for the quarter  ended  December 31, 2003,
compared to the same quarter in 2002.  This  decrease is due to the reduction in
subscriber gross additions.

Average Revenue Per User

ARPU remained  unchanged for the quarter ended December 31, 2003 compared to the
same quarter for 2002  primarily as a result of an increase in customer  monthly
recurring charges, offset by a reduction in revenue from customers using minutes
in excess of their subscriber usage plans.

Churn

Churn  decreased for the quarter ended  December 31, 2003,  compared to the same
quarter for 2002. The Company has focused on improving the credit quality of the
subscriber base. In February 2003, management increased the deposit requirements
for sub-prime  credit customers who begin service with the company to $250 in an
effort to reduce churn and improve the  percentage of prime credit  customers in
the  Company's  customer  base.  We  believe  these and other  factors  may have
influenced  the  reduction  in churn for the  quarter  ended  December  31, 2003
compared to the same period in 2002.

Cost per Gross Addition

CPGA  increased  for the quarter  ended  December 31, 2003  compared to the same
quarter in 2002. The increase reflects  increased costs for marketing,  selling,
advertising,  handset sales incentives, handset upgrade costs through our retail
and  national  third party  channels  and rebates  that were spread over a lower
number of gross additions.

EBITDA

EBITDA for the quarter ended December 31, 2003 increased from the same period in
2002.  This increase is a result of a slight increase in revenues and an overall
decrease  in  spending,  particularly  in  cost  of  services  and  selling  and
marketing.

Liquidity and Capital Resources

As of  December  31,  2003,  the  Company  had  $60.0  million  in cash and cash
equivalents  compared to $54.1 million in cash and cash equivalents at September
30, 2003. The Company's working capital for December 31, 2003 was $12.1 million,
compared to working capital of $12.5 million at September 30, 2003. The improved
cash  position of $6.0  million is  attributable  to the  following  (dollars in
thousands):

                                          For the Quarter Ended
                                               December 31,
                                                   2003
                                          -----------------------
Operating Activities
Cash received from Sprint                  $              64,908
Cash paid to Sprint                                      (18,425)
Cash paid to vendors and employees                       (35,776)
Credit facility interest payments                         (2,446)
                                          -----------------------
                                                           8,261
                                          -----------------------
Investing Activities
                                          -----------------------
Capital expenditures                                      (1,599)
                                          -----------------------

Financing Activities
Credit facility principal payments                          (506)
Other financing costs                                       (191)
                                          -----------------------
                                                            (697)
                                          -----------------------
Increase in cash and cash equivalents       $              5,965
                                          =======================



                                                        For the Quarters Ended December 31,
                                                 -----------------------------------------------
                                                                        Increase    Increase
                                                    2003       2002    (Decrease)$ (Decrease)%
                                                  -------    -------   -------------------------

                                                      (Dollars in thousands)

                                                                            
Cash provided by (used in) operating activities   $ 8,261   $ (2,811)  $  11,072     393.9%
Cash used in investing activities                  (1,599)    (5,626)      4,027      71.6%
Cash provided by (used in) financing activities      (697)     4,494      (5,191)   (115.5%)
                                                 ---------  ---------    --------  ---------

Net increase (decrease)                           $ 5,965   $ (3,943)  $  (9,908)    251.3%
                                                 =========  ========    ==========  =========




Net Cash Provided By (Used In) Operating Activities

The $8.3 million of cash provided by operating  activities for the quarter ended
December  31,  2003 was the result of the  Company's  $173.0  million net income
offset  by  non-cash   items   including   gain  on   discontinued   operations,
depreciation,  amortization of note discounts,  financing  costs,  provision for
doubtful  accounts,  non-cash stock  compensation and loss (gain) on disposal of
property and  equipment  totaling  $162.4  million.  These  non-cash  items were
partially offset by working capital changes of $2.4 million. The working capital
changes  were  primarily  impacted  by an  increase  in prepaid  expenses  and a
decrease in  accounts  payable  and  accrued  expenses,  offset by a decrease in
accounts  receivable and increase in payables due to Sprint. The $2.8 million of
cash used in operating  activities  for the quarter ended  December 31, 2002 was
the result of the  Company's  $47.7  million net loss offset by $50.7 million of
loss on discontinued operations,  depreciation,  amortization of note discounts,
financing  costs,  provision  for doubtful  accounts  and non-cash  stock option
compensation,  loss  (gain) on  disposal  of  property  and  equipment  that was
partially offset by negative net cash working capital changes of $5.8 million.

Net Cash Used in Investing Activities

The $1.6  million of cash used in  investing  activities  for the quarter  ended
December 31, 2003 represents  purchases of property and equipment.  Purchases of
property  and  equipment  for the quarter  ended  December  31, 2003  related to
expansion of switch capacity and expansion of service coverage.  For the quarter
ended December 31, 2002, cash used in investing  activities was $5.6 million for
purchases of property and equipment.

Net Cash Provided by (used in) Financing Activities

The $0.7 million in cash used in financing  activities  during the quarter ended
December 31, 2003, consisted of $0.5 for a principal payment associated with the
credit facility offset by $0.2 in fees  capitalized in association with amending
the credit facility.  The $4.5 million of cash provided by financing  activities
during the quarter ended  December 31, 2002  consisted of $5.0 million  borrowed
under  the  credit  facility,  offset by $0.5  million  for  principal  payments
associated with the credit facility.

Liquidity, Financial Restructuring and Going Concern

The financial  statements  have been prepared on a going  concern  basis,  which
contemplates  the  realization of assets and  satisfaction of liabilities in the
normal  course  of  business.  The  financial  statements  do  not  include  any
adjustments  relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might result should
the Company be unable to continue as a going concern.

As shown in the  consolidated  financial  statements,  the Company has generated
significant  net losses since  inception and has an accumulated  deficit of $1.1
billion and  stockholders'  deficit of $203.9  million at December 31, 2003. For
the  quarter  ended  December  31,  2003,  the  Company's  loss from  continuing
operations  amounted to $11.1 million.  In addition to its capital needs to fund
operating  losses,  the Company has  invested  large  amounts to  build-out  its
networks and for other capital assets. Since inception, the Company has invested
$303.6 million to purchase  property and equipment.  While much of the Company's
network is now complete,  and capital expenditures are expected to be lower than
in prior years, such expenditures will continue to be necessary.  As of December
31,  2003,  the Company had working  capital of $14.7  million and cash and cash
equivalents of $60.0  million,  and no remaining  availability  under its credit
facility. As a result, the Company is completely dependent on available cash and
operating  cash flow to pay debt service and meet its other  capital  needs.  If
such  sources  are  not  sufficient,  alternative  funding  sources  may  not be
available.

Due to the factors  described in the Company's Annual Report for the fiscal year
ended September 30, 2003, management made changes to the assumptions  underlying
its long-range  business plan. These factors include slower  subscriber  growth,
increased  competition  and churn and our  dependence  on  Sprint  and  Sprint's
changes to various  programs and fees.  These  factors led the Company to revise
its business strategy and take actions to cut costs.  These actions included the
following:

o    Restructuring  the Company's  organization  and  eliminating  more than 150
     positions;

o    Reducing capital expenditures;

o    Reducing spending for sales and marketing activities; and

o    Reducing  per  minute  network  operating  costs by more  closely  managing
     connectivity costs.

These actions improved operating cash flow, however,  under the current business
plan, our compliance with the financial  covenants under our credit facility was
not assured and the Company's  ability to generate  sufficient cash flow to meet
its  financial  covenants  and  payment  obligations  in  2005  and  beyond  was
substantially  uncertain.  There was  substantial  risk that  under its  current
business plan, the Company would not have sufficient  liquidity to meet its cash
interest  obligations  under the Old Notes in 2006.  As a  result,  the  Company
proposed the  Recapitalization  Plan.  In light of these  circumstances  and the
possibility of the Prepackaged  Plan, in connection with their audit of our 2003
financial statements,  KPMG LLP, the Company's independent auditors, included an
explanatory   paragraph  for  "going  concern"  in  their  audit  opinion.  Such
explanatory  paragraph  would  have  resulted  in a  default  under  our  credit
facility;  however,  the Company obtained an amendment of its credit facility to
permit this explanatory  paragraph and prevent a default.

The completion of the  Recapitalization  Plan will improve the Company's capital
structure and reduce the required  payments under the Company's Old Notes and we
believe we will have  sufficient  cash and cash  equivalents  and cash flow from
operations to satisfy the Company's liquidity needs for at least the next twelve
months.

Upon  completing the  Recapitalization  Plan, the existing  credit facility will
remain in place with a final  maturity in 2008. The 13.5% Old Notes tendered and
maturing in 2009 will be replaced by the 9 3/8% New Notes  maturing in 2009. The
principal  amount at  maturity  of the Old Notes is expected to decrease by $140
million  and annual cash  interest  payments  are  expected to decrease by $25.5
million  per  year  after  2004.  As  a  result,   after  2004,   the  financial
restructuring  would  provide  cumulative  cash savings of $255 million  through
2009.

Since our inception in 1998,  we have  generated  significant  tax net operating
losses,  ("NOLs").  We expect to use these  NOLs to offset the  cancellation  of
indebtedness  income  that we will  realize as a result of the  Recapitalization
Plan.  However,  if we were to experience  an ownership  change for tax purposes
prior to our completion of the  Recapitalization  Plan,  such  ownership  change
would  severely  restrict  our use of the NOLs to  offset  the  cancellation  of
indebtedness  ("COD") income.  As a result,  we could have  insufficient NOLs to
fully   offset  our   realization   of  COD  income  upon   completion   of  the
Recapitalization  Plan and,  therefore,  could be  subject to  material  federal
income  taxes.  Because  we will not know if we have  experienced  an  ownership
change for tax purposes until our 5%  stockholders  file their  Schedules 13D or
13G, we cannot  assure you that we will not be subject to tax on the COD income.
If we are  required  to pay tax on  significant  COD  income,  we may  not  have
sufficient funds to pay the tax or meet our other obligations. As of the date of
this report, and based on information  available to us, we estimate that we have
experienced a 40% change in ownership.

Over time,  Sprint has  increased  fees charged to the Company and other network
partners and has added fees that were not  anticipated  when the agreements with
Sprint were entered  into.  Sprint also sought to collect  money from us that we
believe is not authorized  under the  agreements.  In addition,  Sprint has also
imposed  additional  programs,  requirements  and conditions that have adversely
affected our financial performance.  If these increases,  additional charges and
changes continue,  our operating results,  liquidity and capital resources could
be adversely affected.  As of December 31, 2003, we have disputed  approximately
$9.2 million in invoices for such  increases and additional  charges,  but those
issues have not been resolved. While we believe that we have adequately reserved
for these disputed amounts,  if they are resolved in favor of Sprint and against
the  Company,  the payment of this amount of money  could  adversely  affect our
liquidity  and capital  resources.  The  resolution  of all disputes in favor of
Sprint  and  payment of  disputed  amounts  will  reduce  our cash  position  by
approximately $9.2 million.


Capital Resources

As of  December  31,  2003,  the  Company  had  $60.0  million  of cash and cash
equivalents.  During the quarter ended  September 30, 2003, the Company drew the
final $9.0 million of  availability on the credit  facility,  leaving no further
borrowing available under the credit facility.

Contractual Obligations

The Company is obligated to make future payments under various  contracts it has
entered into, including amounts pursuant to the credit facility,  the Old Notes,
capital leases and  non-cancelable  operating lease agreements for office space,
cell sites,  vehicles and office equipment.  Expected future minimum contractual
cash  obligations  for the next five years and in the aggregate at September 30,
2003, are as follows (dollars in thousands):



                                                       Payments Due By Period for Years Ending September 30,
                                        --------------------------------------------------------------------------------------

                                            Total      2004        2005         2006       2007         2008      Thereafter
                                        -----------  ----------  ----------  ----------- ----------  ----------- -------------

                                                                                                 
Credit facility, principal (1)           $ 151,475    $ 17,775    $ 23,700     $ 30,107   $ 39,893     $ 40,000     $       -
Credit facility, interest (2)               24,696       7,991       6,756        5,327      3,430        1,192             -
Old Notes, principal                       300,000           -           -            -          -            -       300,000
Old Notes, interest (3)                    202,500           -      40,500       40,500     40,500       40,500        40,500
Operating leases (4)                        60,262      18,899      14,396        9,485      6,632        5,159         5,691
                                        -----------  ----------  ----------  ----------- ----------  ----------- -------------

                                         $ 738,933    $ 44,665    $ 85,352     $ 85,419   $ 90,455     $ 86,851     $ 346,191
                                        ===========  ==========  ==========  =========== ==========  =========== =============


(1)  Total repayments are based upon borrowings  outstanding as of September 30,
     2003.

(2)  Interest  rate  is  assumed  to be  5.5%.  As of  December  31,  2003,  the
     weighted-average interest rate on the credit facility was 4.99%.

(3)  Interest  rate on Old Notes is 13.5% with  payments  starting in 2005.

(4)  Operating leases do not include payments due under renewals to the original
     lease term.

On August 16, 1999,  the Company  entered into a $153.5  million  senior  credit
facility.  The credit  facility  provides for (i) a $13.5 million senior secured
term loan  ("Tranche  I Term  Loan")  which  matures  on June 6, 2007 and (ii) a
$140.0  million  senior secured term loan ("Tranche II Term Loan") which matures
on September 30, 2008.  Mandatory  quarterly  payments of principal  began as of
December 31, 2002 for the Tranche I Term Loan.  Mandatory  quarterly payments of
principal  begin March 31, 2004 for the Tranche II Term Loan payments  initially
in the  amount of $5.3  million  or 3.75% of the loan  balance  outstanding  and
increasing  thereafter.  No amounts  remain  available for  borrowing  under the
credit facility. The credit facility is secured by all the assets of the Company
and its restricted  subsidiaries.  The interest rate for the credit  facility is
determined  on a margin above either the prime lending rate in the United States
or the London Interbank Offer Rate.

The credit facility contains ongoing  financial  covenants,  including  reaching
covered  population  targets,  maximum annual spending on capital  expenditures,
attaining  minimum  subscriber  revenues,  and maintaining  certain leverage and
other ratios such as debt to total capitalization, debt to EBITDA (as defined in
credit facility agreement,  "Bank EBITDA") and Bank EBITDA to fixed charges. The
credit  facility  restricts  the  ability  of the  Company  and  its  restricted
subsidiaries  to:  create  liens;  incur  indebtedness;  make certain  payments,
including  payments of dividends and  distributions in respect of capital stock;
consolidate,  merge  and  sell  assets;  engage  in  certain  transactions  with
affiliates;  and fundamentally change its business. As of December 31, 2003, the
Company was in compliance in all material  respects with covenants  contained in
the credit facility.

In contemplation of the restructuring,  the Company entered into an amendment to
the credit  facility on November 30, 2003.  Certain  changes are  effective  for
periods  ended  December 31, 2003 and are used in  determining  compliance  with
financial  covenants for periods ended December 31, 2003 and  thereafter.  These
changes  include (i) changes to the  definition  of Bank EBITDA to provide that,
among other things, in determining Bank EBITDA, certain additional items will be
added back to our  consolidated  net income or loss (to the extent  deducted  in
determining  such income or loss),  including any charges incurred in connection
with the restructuring, up to $2.0 million per year to pursue claims against, or
dispute  claims by,  Sprint;  up to $5.0 million in start-up costs in connection
with any outsourcing  billing and customer care services,  and (ii)  calculating
the ratio of total debt to Bank  EBITDA and senior  secured  debt to Bank EBITDA
based on the four most recent fiscal quarters, rather than the last two quarters
annualized and (iii) deleting the minimum subscriber covenant. In addition,  the
amendment  provides  for  a  waiver,   effective  September  30,  2003,  of  the
requirement  that the Company  obtain an opinion from its  independent  auditors
with respect to the financial  statements for the year ended  September 30, 2003
that does not contain a going concern or other similar qualification.

The  effectiveness  of other  changes made by the amendment is  conditioned  on,
among other things,  at least 90% of the face value of the Old Notes having been
exchanged  in  the  restructuring.  These  changes  include:  (i)  revising  the
threshold  requirements  for minimum revenues and most of the ratios that we are
required to maintain;  (ii) providing the ability to incur certain other limited
indebtedness and related liens;  make certain  investments and form subsidiaries
under  limited  circumstances  that  are  not  subject  to  certain  restrictive
covenants  contained in the credit  facility or required to guarantee the credit
facility and (iii) permitting us to repurchase,  at a discount, the Old Notes or
the New Notes  from our cash on hand in an  aggregate  amount  not to exceed $25
million  in value of those  notes,  provided  that we at the same time  incur an
equal amount of permitted subordinated indebtedness.

The  amendment  will  not  affect  any of the  other  provisions  of the  credit
facility,  including  those  which  restrict  the  Company's  ability  to merge,
consolidate  or sell  substantially  all of its assets.  In connection  with the
amendment, the Company has agreed to prepay $10.0 million in principal under the
credit facility, which will be credited against principal payments otherwise due
in fiscal  years 2004 and 2005 in the amount of $7.5  million and $2.5  million,
respectively.  The amendment will not otherwise affect the Company's  obligation
to pay  interest,  premium,  if any, or any other of the principal on the credit
facility, when due.

In connection with the  consummation of the Company's  Recapitalization  Plan on
February 20, 2004, the Company expects to issue approximately  $159.4 million in
aggregate principal amount of new senior subordinated  secured notes that mature
on September 1, 2009. The New Notes will bear interest at the rate of 9 3/8% per
year, accruing from January 1, 2004, which is payable each January 1 and July 1,
beginning  on July 1, 2004.  The Company may redeem some or all of the New Notes
at any time on or after January 1, 2006 at specified redemption prices.

The New Notes will be  subordinated  to up to $175.0  million  of the  Company's
senior  debt under its  credit  facility  and will be fully and  unconditionally
guaranteed on a senior  subordinated  basis by the Company's  subsidiaries  that
guarantee the Company's obligations under the credit facility. In addition,  the
New  Notes  will be  secured  by a  second-priority  lien,  subject  to  certain
exceptions and permitted liens, on all the collateral that secures the Company's
and its guarantor subsidiaries' obligations under the Company's credit facility.
If the Company  undergoes a change of control (as defined in the indenture  that
will govern the New  Notes),  then it must make an offer to  repurchase  the New
Notes at 101% of the principal amount of the notes then outstanding.

The New Notes  will  contain  covenants,  subject to  certain  exceptions,  that
prohibit the Company's  ability to, among other things,  incur more debt; create
liens; repurchase stock and make certain investments;  pay dividends, make loans
or transfer  property  or assets;  enter into sale and  leaseback  transactions,
transfer or dispose of substantially  all of the Company's  assets; or engage in
transactions  with  affiliates.  Some  exceptions  to  the  restrictions  on the
Company's ability to incur more debt include: up to $175 million of indebtedness
under  the  Company's  credit  facility;  up  to $5  million  of  capital  lease
obligations; and up to $50 million of additional general indebtedness.

The Company has no off-balance  sheet  arrangements and has not entered into any
transactions  involving   unconsolidated,   limited  purpose  variable  interest
entities or commodity contracts.

Debt  restructuring  costs were $3.0 million for the quarter ended September 30,
2003 and $2.3 million for the quarter ended December 31, 2003.  Remaining  costs
to complete the restructuring are estimated to be approximately $5.8 million.

As of December 31, 2003,  two major credit  rating  agencies  rate the Company's
unsecured debt. The ratings were as follows:

  Type of facility                                S&P           Moody's
  ----------------                                ---           -------
  Old Notes                                        C              Caa2

On September 25, 2003, S&P announced that upon  completion of the  restructuring
it would lower the  Company's  corporate  rating to "SD" and lower the Company's
subordinated debt rating to "D." On October 15, 2003,  Moody's announced that it
placed the Company's  subordinated  debt on review for a possible rating upgrade
to B3.

Related Party Transactions

Transactions with Sprint.

See  Note  3 to the  consolidated  financial  statements  for a  description  of
transactions with Sprint.


Item 3.    Quantitative And Qualitative Disclosure About Market Risk

In the normal  course of  business,  the  Company's  operations  are  exposed to
interest  rate  risk  on  its  credit   facilities  and  any  future   financing
requirements.  The Company's fixed rate debt consists  primarily of the accreted
carrying  value of the Old Notes  ($262.1  million at December  31,  2003).  The
Company's  variable  rate debt  consists  of  borrowings  made  under the credit
facility  ($151.0 million  outstanding at December 31, 2003). As of December 31,
2003, the weighted  average  interest rate under the credit  facility was 4.99%.
Our primary  interest  rate risk  exposures  relate to (i) the interest  rate on
long-term borrowings; (ii) our ability to refinance the Old Notes at maturity at
market rates;  and (iii) the impact of interest rate movements on our ability to
meet  interest  expense  requirements  and  financial  covenants  under our debt
instruments.

The  following  table  presents the  estimated  future  balances of  outstanding
long-term  debt projected at the end of each period and future  required  annual
principal  payments for each period then ended associated with the Old Notes and
credit facility based on projected levels of long-term  indebtedness (dollars in
thousands):



                                                          Years Ending September 30,
                         -----------------------------------------------------------------------------------------

                              2004            2005           2006             2007            2008        Thereafter
                         -----------     -------------  --------------    -------------   -------------- --------------

                                                                                        
Old Notes                   $ 297,191      $ 297,289       $ 297,587      $ 298,115       $ 298,906       $      -
Fixed interest rate              13.5%          13.5%           13.5%          13.5%           13.5%           13.5%
Principal payments          $       -      $       -       $       -      $       -       $       -       $ 300,000

Credit facility             $ 133,700      $ 110,000       $  79,893      $  40,000       $       -       $       -
Variable interest rate (1)        5.5%           5.5%            5.5%           5.5%            5.5%
Principal payments          $  17,775      $  23,700       $  30,107      $  39,893       $  40,000       $       -


(1)  The  interest  rate on the credit  facility  equals  the  London  Interbank
     Offered  Rate  ("LIBOR")  +3.75%.  LIBOR is assumed to equal  1.75% for all
     periods  presented,  which is the LIBOR rate as of December  31, 2003. A 1%
     increase  (decrease)  in the variable  interest rate would result in a $0.8
     million  increase  (decrease) in the related interest expense on an average
     annual basis (based upon borrowings outstanding as of December 31, 2003).


Item 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain  disclosure controls and procedures that are designed to ensure that
information  required to be  disclosed  in our Exchange Act reports is recorded,
processed,  summarized  and reported  within the time  periods  specified in the
Commission's  rules and forms,  and that such  information  is  accumulated  and
communicated to our management,  including our Chief Executive Officer and Chief
Financial Officer, as appropriate,  to allow timely decisions regarding required
disclosure.

As of the end of the  period  covered by this  report,  December  31,  2003 (the
"Evaluation Date"), we carried out an evaluation, under the supervision and with
the  participation  of the Company's  management,  including our Chief Executive
Officer and Chief  Financial  Officer,  of the  effectiveness  of the design and
operation of our disclosure controls and procedures. Based upon this evaluation,
the  President  and Chief  Executive  Officer  and the Chief  Financial  Officer
concluded that our disclosure  controls and procedures  were effective as of the
Evaluation Date.

Our Relationship with Sprint

Under our  long-term  (up to 50 year)  agreements  with  Sprint,  we market  PCS
products and  services  under the Sprint  brand names in our  territory  and our
business  currently  consists solely of Sprint  wireless  products and services.
Under our agreements,  Sprint exercises  extensive control over our business and
our relationship with Sprint is unique in many ways. For example:

o    Our network must interface  seamlessly  with the national  Sprint  wireless
     network.

o    Our network must be built, maintained and upgraded to include Sprint's most
     current  technology  in  accordance  with  Sprint-approved  plans and using
     Sprint-approved equipment.

o    Under our  management  agreement  with  Sprint,  we are required to provide
     services such as customer care,  billing and collections in accordance with
     program   requirements   established  by  Sprint  in  accordance  with  the
     management agreement.  Any third party vendor must receive Sprint approval,
     comply with Sprint's  program  requirements  with respect to these services
     and interface with Sprint's systems.

o    Sprint must approve our marketing and sales materials.

o    Sprint develops  products and services that we are required to offer in our
     territory  and it must  approve all  products  and services we offer in our
     territory, subject to certain limitations.

o    Our stores must conform to Sprint's  requirements for retail stores and are
     identical to Sprint retail stores in Sprint's markets.

o    Sprint  develops  and  implements  pricing  and  credit  plans  that we are
     required to offer in our territory.

o    We are  required  to absorb  the cost of  promotional  plans  developed  by
     Sprint, which we must offer in our territory (e.g., rebates or discounts to
     customers for handset purchases).

o    Our subscribers call Sprint customer care.

o    Our subscribers receive bills from, and make payments to, Sprint.

Under our agreements with Sprint, Sprint provides us with billing,  collections,
customer care and other back office services. As a result,  approximately 95% of
our revenues are paid through Sprint. In addition,  approximately 64% of cost of
service and roaming in our consolidated  financial  statements relate to charges
by or through  Sprint for its  affiliation  fee,  charges for services  provided
under our agreements with Sprint such as billing, collections and customer care,
roaming  expense,  long-distance,  and pass-through and other fees and expenses.
Under our  agreements,  Sprint is  responsible  to keep and  maintain  books and
records  to  support  and  document  any  fees,  costs or other  charges  due in
connection  with the  agreements  and to  provide  a monthly  true-up  report of
amounts  required  to be  remitted  to the  Company  with  respect to  collected
revenues. Due to this relationship,  the Company necessarily relies on Sprint to
provide accurate,  timely and sufficient data and information to properly record
our revenues,  expenses and accounts  receivable,  which  underlie a substantial
portion of our periodic  financial  statements and other financial  disclosures.
Nevertheless, the Company continues to dedicate significant Company resources to
ensure its disclosure  controls and procedures,  as integrated with Sprint,  are
effective.

Information  provided  by  Sprint  includes  reports  regarding  our  subscriber
accounts receivable. Sprint provides us monthly accounts receivable, billing and
cash receipts, expense detail and settlements information.  Under our agreements
with  Sprint,  we are  entitled to only a portion of the cash  receipts,  net of
items such as taxes,  government  surcharges and the 8% Sprint  affiliation fee.
Sprint has  developed  and used a tool called the "revenue  profile" to estimate
the payments due to us. We regularly  review and reconcile these various reports
to identify discrepancies or errors and address those issues with Sprint.

Our Disclosure Controls and Procedures - Fiscal 2002

Because of our reliance on Sprint for financial information, we depend on Sprint
to design adequate internal  controls with respect to the processes  established
to provide this data and  information  to the Company and Sprint's other network
partners.  As part of this  control  process,  Sprint  engages  its  independent
auditors to perform a periodic  evaluation  of these  controls  and to provide a
"Report on Controls Placed in Operation and Tests of Operating Effectiveness for
Affiliates"  under guidance  provided in Statement of Auditing  Standards No. 70
("Type II SAS 70 reports"). The Type II SAS 70 report is provided to us annually
and covers our entire fiscal year.

In addition, at least annually, we review the prior year's Type II SAS 70 report
in light of events that have occurred during the year. We also provide  comments
to Sprint and its  independent  auditors  regarding  issues and  information the
report  should  address  that may not have been  addressed  in the prior  year's
report.

During the fourth quarter of fiscal 2002, it became apparent that  discrepancies
between  various  accounts  receivable  reports  provided  by Sprint  had become
significant.  To address these issues,  we conducted a lengthy  inquiry into the
causes of the discrepancies. Among other things, we had numerous discussions and
meetings with Sprint's  accounting staff,  requested and received additional and
more detailed reports and demanded reconciliations with our records.

In connection with our review of the accounts  receivable issue at September 30,
2002 for  purposes of  finalizing  our  financial  statements,  we  reclassified
approximately  $10.0 million of AirGate subscriber  accounts  receivable for the
fiscal year ended September 30, 2002 to a receivable from Sprint. We provided an
allowance  to reflect  the  receivable  at its net  realizable  value,  which we
collected from Sprint subsequent to September 30, 2002.

At  September  30,  2002,  we and our  independent  auditors  believed  that the
accounts  receivable issue resulted from a reportable  condition in our internal
controls.  Reportable  conditions are significant  deficiencies in the design or
operation of internal  controls which could adversely  affect an  organization's
ability to record, process,  summarize and report financial data consistent with
the  assertions  of  management  in  the  consolidated   financial   statements.
Nonetheless,  we concluded  that our  disclosure  controls and  procedures  were
effective as of September 30, 2002. We came to this conclusion for the following
reasons:

o    The controls and procedures in place during fiscal year 2002 were effective
     in detecting the accounts receivable issue.

o    Even with the accounts  receivable  issue, we believed it was reasonable to
     rely on the reports and  information  we received from Sprint.  Sprint is a
     public reporting  company that certifies its financial  information and its
     controls  and  procedures.  In  addition,  compared  to any  single  Sprint
     affiliate,  Sprint has  significantly  greater  resources and efficiencies,
     both  financially  and with  respect  to  personnel,  with which to gather,
     analyze and control its information.

o    We  relied on the Type II SAS 70 report  discussed  above and the  controls
     discussed in the report.

o    During the entire fiscal year 2002,  the Company used a program to automate
     a portion of the process  utilized  to record the  Company's  revenues  and
     accounts  receivable  from the files  received  from  Sprint.  The  program
     summarizes the files  received from Sprint to mirror the Company's  general
     ledger  accounts.  The  Company  performs a  reasonableness  check prior to
     recording the amounts in the Company's  general ledger.  The Company relies
     on the program and the  inherent  system  controls  and the  reasonableness
     checks to ensure the consistency of the information  downloaded from Sprint
     with the information reflected in the Company's general ledger.

o    During the entire fiscal year 2002,  Company personnel  reviewed  financial
     information  and data  provided by Sprint.  The Company has  performed  and
     continues to perform  reasonableness  checks regarding information provided
     by Sprint  on a  monthly  basis by  evaluating  trends  in key  performance
     indicators  to  detect  trending  anomalies.   The  Company's  finance  and
     operations  groups  evaluate  these  trends and the Company  relies on this
     process as a compensating  control to detect errors in the data provided by
     Sprint.  The Company's  finance and operations groups work closely with the
     Company's  accounting  group to reconcile  differences  and make  necessary
     corrections and follow up with Sprint as necessary.

o    During the entire  fiscal year 2002,  the Company  reviewed and  reconciled
     certain  information  provided by Sprint to detect  inconsistencies  in the
     data.

o    In July 2002, we  established  a disclosure  control  committee  made up of
     senior members of management and key employees.  The committee  assists the
     Company's senior officers in fulfilling their  responsibility for oversight
     of the accuracy and timeliness of the disclosures made by the Company.  The
     committee,  among  other  things,  designs  and  establishes  controls  and
     procedures   regarding  the  accuracy  and  dissemination  of  information,
     monitors  the  integrity  and  effectiveness  of the  Company's  disclosure
     controls,   reviews  and   supervises   the   preparation  of  filings  and
     announcements  made by the Company and evaluates the  effectiveness  of the
     Company's  disclosure  controls.  The committee  includes  members who have
     information pertaining to Sprint to ensure that appropriate disclosures are
     made pertaining to Sprint.

o    During  December  2002,  prior to the  issuance of our annual  report,  the
     Company  worked with Sprint to identify  the sources of the  discrepancies.
     The  Company  then  developed  a  reconciliation  process  of the  accounts
     receivable  aging  report  provided by Sprint with the  Company's  accounts
     receivable account. The reconciliation was developed to identify the nature
     of the  differences  and quantify the amount of the error in the  Company's
     accounts receivable  account.  The Company continues to use and refine this
     reconciliation  process  to  detect  errors  on a timely  basis.  Given the
     controls   described  above,  and  the  discrete  nature  of  the  accounts
     receivable  issue,  we  concluded,   at  the  time  our  certifications  of
     disclosure  controls were made, that our disclosure controls and procedures
     were effective.


Our Disclosure Controls and Procedures - Fiscal 2003 and 2004

Although we concluded that our disclosure controls and procedures were effective
at the end of fiscal 2002 and in each interim period of fiscal 2003 and 2004, we
recognized   that  further   improvements   were  necessary  to  better  address
information provided by Sprint.  Beginning in fiscal 2003, we focused additional
resources on reviewing and analyzing  information  provided by Sprint and worked
with Sprint to identify other  information and reports that would assist us with
this review and analysis,  particularly as it relates to accounts receivable and
the application of cash.

During  the  fiscal  years  2003 and 2004,  in order to more  timely  and better
monitor,  verify  and  analyze  information  provided  by  Sprint,  we took  the
following  actions to further  enhance our disclosure  controls and  procedures.
While we believe that,  in the  aggregate,  these  actions  improved our overall
internal  controls,  we do not believe that any individual action was a material
change to our internal controls.

o    During the fiscal year ended 2003, we reconciled  accounts receivable aging
     reports from Sprint to our general ledger on a quarterly basis.  During the
     quarter  ended  December 31, 2003, we  reconciled  the accounts  receivable
     aging reports from Sprint to our general ledger on a monthly basis.

o    In January, 2003, the Company engaged a consultant with  telecommunications
     settlement   experience  to  develop  a  plan  for  a  Sprint   settlements
     department,  to analyze  and  interface  with  Sprint to resolve  financial
     disputes  with  Sprint,  to review the method of  calculating  the  revenue
     profile and to review the Sprint  settlements  processes and facilitate the
     transition of Sprint  settlements and review  processes from the accounting
     department  in  Geneseo,  Illinois  to the new  settlements  department  in
     Atlanta, Georgia. In May 2003, we internally staffed and broadened the role
     of the settlements  department.  The department has two full-time employees
     (hired in May and  August  2003)  and one  contract  person  (hired in June
     2003). The manager of the settlements group serves as the primary interface
     with Sprint regarding all issues related to the Sprint settlements process.
     The  settlements  group  reviews and analyzes  financial  data  provided by
     Sprint, including the components of the revenue profile that Sprint uses to
     determine  the amount of  collected  revenues  paid to us. The  settlements
     group assists us in verifying amounts charged by Sprint as well as revenues
     and other amounts settled with Sprint.

o    During the fourth  quarter of fiscal 2003, we completed an in-depth  review
     of the  procedures  undertaken  in  prior  Type  II SAS 70  reports  and we
     requested and Sprint agreed to provide and include additional procedures in
     2003 and future Type II SAS 70 Reports.

o    In  September  2003,  we  requested  additional  "agreed  upon  procedures"
     pertaining to accounts  receivable from Sprint's  independent  accountants.
     Sprint's independent  accountants  performed such procedures during October
     2003.

o    Beginning in the fourth quarter of fiscal 2003, we analyzed, documented and
     implemented  file audit and assurance  processes  for certain  Sprint files
     used in recording financial information.

o    We  obtained  for the first  time from  Sprint an account  level  detail of
     subscriber accounts receivable as of September 30, 2003. In September 2003,
     we  requested  this  detail on at least a  quarterly  basis in the  future.
     Sprint provided this same level of detail at December 31, 2003.

o    In September  2003,  Sprint  agreed to provide  semi-annual  SAS 70 reports
     beginning in 2004.

o    In September  2003,  Sprint informed us that it will request SAS 70 reports
     from key  service  providers,  including  the  third-party  provider of its
     billing  systems and services.  In January 2004, we received an unqualified
     Type II SAS 70 report  from  Sprint's  third-party  provider of its billing
     system that covered the period from January to October 31, 2003.

Although we refined  and  improved  our  internal  controls in 2002,  we and our
independent  auditors believe that a reportable  condition (as defined above) in
internal controls relating to accounts  receivable  continued during fiscal year
2003 because most of the procedures  described above were not in place until the
end of the fiscal year.  As a result of the improved  processes  and  procedures
described  above,  the Company  believes  no  reportable  condition  in internal
controls  existed  by the end of the fiscal  year,  September  30,  2003 but our
independent auditors have not made that finding.

Because the procedures  outlined under "Our Disclosure Controls and Procedures -
Fiscal 2002"  continued  during Fiscal 2003 and 2004, we believe our  disclosure
controls  and  procedures  were  effective  throughout  Fiscal  2003  and  2004,
including as of December 31, 2003.

In order to avoid a reportable condition in the future, the Company will need to
continue  the  processes  described  above and continue to obtain or perform the
following:

o    Obtain from Sprint access to a detailed  listing of subscriber  receivables
     at the  account  level on a quarterly  basis and  validate  its  integrity.
     Sprint  provided  this  same  level of  detail at  September  30,  2003 and
     December 31, 2003 and the Company validated the report's integrity.

o    Perform a full  reconciliation of the subscriber  receivables detail to the
     general  ledger  balance,   including  a  complete   understanding  of  all
     reconciling items.  During the quarter ended December 31, 2003, the Company
     performed a full  reconciliation of the subscriber  receivables detail on a
     monthly basis.

o    Perform a rollforward of the accounts receivable information to be provided
     by Sprint and compare these amounts to our general ledger accounts.  During
     the quarter ended December 31, 2003, the Company performed a rollforward of
     the accounts  receivable  information  provided by Sprint and validated the
     accuracy and completeness of the Company's general ledger.

The Company  will  continue to monitor and  evaluate  the  effectiveness  of its
improvements in controls related to information  provided by Sprint and continue
to improve these processes.

On January 9, 2004,  we were informed by Sprint of a table mapping error related
to 3G data  settlements,  which resulted in a $0.9 million  reduction of roaming
revenue.  Sprint's data settlement system  erroneously linked IP addresses of 3G
subscribers to the wrong owners. Sprint identified the source of the problem and
solicited input from the affiliates to devise a system of detective  controls to
ensure that this error would not go undetected  beyond a single billing cycle in
the future.  The following  procedures were put in place during January 2004, to
ensure that future  modifications  to the table  mapping are validated by Sprint
and audited and verified by the affiliates on a timely basis:

o    Sprint will perform a quarterly  review  between  Sprint and the  Company's
     Engineering  and Settlement  Departments to validate the 3G data assignment
     tables used for affiliate settlements for accuracy and completeness and

o    The Company's  Settlement and Engineering  Departments have added a process
     to  validate  the  accuracy  and  completeness  of its 3G data  IP  address
     assignments.

Standing  alone,  the Company does not believe that this issue raises a material
change  in  internal  controls.   However,   because  of  the  Company's  unique
relationship  with Sprint,  we plan to disclose all changes in internal controls
with respect to financial information provided by Sprint which involves an error
in excess of $1,000,000.

In preparation  for the  requirements  imposed under Section 404 of the Sarbanes
Oxley  Act of 2002,  we  retained  an  outside  accounting  firm to assist us in
reviewing and improving our internal control processes,  including the processes
to  verify  data  provided  by  Sprint.  Beginning  January  2004,  the  outside
accounting  firm we retained  began  reviewing  our internal  controls  with the
Company's management.

Changes in Internal Control over Financial Reporting

We refer you to information discussed above in Evaluation of Disclosure Controls
and Procedures.


PART II. OTHER INFORMATION


Item 1.  Legal Proceedings

See Note 4 to the consolidated financial statements in this document.


Item 2.  Changes in Securities and Use of Proceeds

In connection with the Recapitalization Plan described elsewhere in this Report,
the Company  obtained  consents of holders of 99.4% of the outstanding Old Notes
to:

o    amend the Indenture governing the Old Notes to eliminate  substantially all
     of the  restrictive  covenants  contained in the Old Notes  Indenture,  and
     release all  collateral  securing the Company's  obligations  under the Old
     Notes Indenture; and

o    the  waiver  of any  defaults  and  events of  default  under the Old Notes
     Indenture  that may have occurred in connection  with the  Recapitalization
     Plan.

Upon settlement of the Recapitalization Plan, which the Company expects to occur
on February  20,  2004,  the Company  will enter into a  Supplemental  Indenture
regarding the Old Notes.  Among other things,  the  Supplemental  Indenture will
delete the provisions of the Old Notes Indenture that relate to:

o    the Company's ability to incur indebtedness;

o    the Company's ability to make restricted payments;

o    the Company's ability to make permitted investments;

o    the Company's ability to issue and sell capital stock of subsidiaries;

o    the Company's ability to enter into transactions with affiliates;

o    the Company's ability to enter into sale and leaseback transactions;

o    the Company's ability to create liens;

o    the Company's ability to declare and pay dividends;

o    the Company's and its subsidiaries' business activities;

o    other payment restrictions affecting subsidiaries; and

o    most events of default.

The foregoing summary of the Supplemental Indenture is qualified in its entirety
to the actual terms of the document, which the Company will file with the SEC.


Item 3.  Defaults Upon Senior Securities

None.


Item 4.  Submission of Matters to a Vote of Security Holders

On  February  12,  2004,  a special  meeting  of our  shareowners  was called to
consider  and  vote  upon  the  following   proposals  in  connection  with  the
restructuring:




----------------------------------------------------------------- --------------------- --------------------- ---------------------
                            Proposal                                   Votes FOR           Votes AGAINST          ABSTENTIONS
----------------------------------------------------------------- --------------------- --------------------- ---------------------

                                                                                                               
The  issuance of an  aggregate  of up to 56% of our common stock       15,489,917              89,282                48,268
in the restructuring transactions.
----------------------------------------------------------------- --------------------- --------------------- ---------------------

The   amendment   and   restatement   of  our   certificate   of       15,356,304             220,897                50,265
incorporation  to  implement  the  approximate  1 for 5  reverse
stock split of our capital stock.
----------------------------------------------------------------- --------------------- --------------------- ---------------------

A proposed  amendment and  restatement  of our 2002 AirGate PCS,       14,799,856             531,440               296,171
Inc. Long-Term  Incentive Plan to, among other things,  increase
the number of shares  reserved  and  available  for  issuance to
6,025,000  (pre-split)  shares that may be issued thereunder and
to approve the  issuance of  restricted  stock units and options
to certain executive officers.



In  addition,   shareholders   were  asked  to  accept  a  prepackaged  plan  of
reorganization   to   effect   the  same   transactions   contemplated   by  the
Recapitalization  Plan.  Holders of  2,355,192  shares of common  stock voted to
accept and holders of 43,641 shares of common stock voted to reject.

In connection with our  Recapitalization  Plan, we solicited the consents of all
holders  of our Old  Notes to (i) amend the Old  Notes  indenture  to  eliminate
substantially  all of the  restrictive  covenants  contained  in the  Old  Notes
indenture,  and release all collateral  securing our  obligations  under the Old
Notes  indenture and (ii) the waiver of any defaults and events of default under
the Old Notes indenture that may occur in connection  with the  Recapitalization
Plan. We received the consents of an aggregate of  $298,204,000 of Old Notes (or
99.4% of Old Notes outstanding.)

We also solicited  acceptances of the prepackaged  plan of  reorganization  from
holders of the Old Notes.  Holders of  $259,359,300 of Old Notes voted to accept
and holders of $950,000 of Old Notes voted to reject.


Item 5.  Other Information

Subsequent Events

See Note 8 to the consolidated financial statements in this document.


Item 6.  Exhibits and Reports on Form 8-K

(a)       Exhibits

3.1  Corrected Amended and Restated Certificate of Incorporation

31.1 Rule 13a-14(a) certification of Chief Executive Officer of AirGate filed in
     accordance with Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Rule 13a-14(a) certification of Chief Financial Officer of AirGate filed in
     accordance with Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Section 1350  certification of Chief Executive Officer of AirGate furnished
     in accordance with Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Section 1350  certification of Chief Financial Officer of AirGate furnished
     in accordance with Section 906 of the Sarbanes-Oxley Act of 2002.

(b)      Reports on Form 8-K

The  following  Current  Reports on Form 8-K were  filed by  AirGate  during the
quarter ended December 31, 2003:

On November  3, 2003,  AirGate  furnished a Current  Report on Form 8-K with the
Securities and Exchange  Commission under Item 2 - Acquisition or Disposition of
Assets relating to its transfer of all of its shares of iPCS common stock into a
trust  organized  under  Delaware  law. On the date of the  transfer,  generally
accepted accounting principles require this disposition to be accounted for as a
discontinued operation.

On December 19, 2003,  AirGate  furnished a Current  Report on Form 8-K with the
Securities and Exchange Commission under Item 9 - Regulation FD Disclosure (also
provides information required under Item 12 "Results of Operations and Financial
Condition")  relating to issuance of a press release regarding its financial and
operating  results for its fourth  quarter and fiscal year ended  September  30,
2003, and the filing of its Annual Report on Form 10-K/A.






                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned officer thereunto duly authorized.


        AIRGATE PCS, INC.

                          By:  /s/ William H. Seippel
                              ___________________________________________
                                    William H. Seippel
                                    Title: Chief Financial Officer
                                           (Duly Authorized Officer,
                                           Principal Financial
                                           and Chief Accounting Officer)

       Date:  February 17, 2004