Investor Presentation

Disclosure Regarding

Forward-Looking Statements

This

presentation

includes

“forward-looking

statements”

within

the

meaning

Section

27A

the

Securities

Act

and

Section

21E

the

Securities Exchange Act of 1934, as amended, regarding, among other things, our business strategy, our prospects and our financial

position.

These

statements

can

identified

the

use

forward-looking

terminology

such

“believes,”

“estimates,”

“expects,”

“intends,”

“may,”

“will,”

“should,”

“could”

or “anticipates”

or the negative or other variation of these or similar words, or by discussions of

strategy or risks and uncertainties. Forward-looking statements in this presentation may include, among others, statements concerning:

•

projections of our future results of operations, cash flows or financial condition;

•

our business strategy and our ability to capitalize on any of our competitive strengths; and

•

the continued availability of capital resources.

The expectations reflected in these forward-looking statements are inherently subject to risks, uncertainties and assumptions about us and

our

subsidiaries

and

cannot

assure

you

that

such

expectations

will

prove

correct.

Important

factors

that

could

cause

actual

results

differ

materially

from

the

forward-looking

statements

made

herein

are

set

forth

our

filings

with

the

Securities

and

Exchange

Commission

and

include,

without

limitation,

risks

the

following:

•

increasing competition in the communications industry;

•

complex

and

uncertain

regulatory

environment

including

the

potential

impact

proposals

reform

intercarrier

compensation;

•

the impact on our business of the global financial conditions;

•

the

impact

our

business

our

indebtedness

and

the

covenants

relating

this

indebtedness;

and

•

the impact on our financial results of any future goodwill or intangible asset impairment charges.

All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified

in their entirety by the cautionary statements included in this presentation. We undertake no obligation to publicly update or revise

any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and

assumptions, the forward-looking events discussed in this presentation might not occur.

Regulation G Disclosure

In this presentation, we use the operating measure Adjusted EBITDA. Adjusted EBITDA is a non-GAAP

(generally accepted accounting principles) operating measure under Regulation G promulgated by the

Securities and Exchange Commission. We compute Adjusted EBITDA by adding depreciation, amortization

and goodwill and intangible asset impairments to operating income. Each of these GAAP financial measures

are line items in our income statement and thus Adjusted EBITDA can be reconciled to net income, the

most comparable GAAP financial measure to Adjusted EBITDA. Net income is reconciled to Adjusted

EBITDA

for

the

periods

for

which

Adjusted

EBITDA

presented

the

slide

entitled

"Reconciliation

Adjusted

EBITDA

non-GAAP

measure)

Net

Income/(Loss)”

and

Adjusted

EBITDA

for

each

segment

reconciled to segment operating income/(loss) on the slide entitled “Reconciliation of Adjusted EBITDA (a

non-GAAP measure) to Operating Income/(Loss).”

Presentation of Adjusted EBITDA is consistent with how we evaluate performance of our business units

and Adjusted EBITDA is frequently used by securities analysts, investors and other interested parties in the

evaluation of companies in our industry. However, other companies in our industry may calculate Adjusted

EBITDA differently than we do. Adjusted EBITDA is not a measurement of financial performance under

GAAP and should not be considered as a substitute for cash flow from operating activities as a measure of

liquidity or a substitute for net income as an indicator of operating performance or any other measure of

performance derived in accordance with GAAP.

Highlights of Business

Leading rural operator with significant customer loyalty in strong Pennsylvania markets

›

Significant CLEC line / revenue growth with improving margins

›

Broadband growing with penetration upside

›

RLEC line loss less than peer group

›

Systems

Integration

business

improving

steadily

Strong liquidity profile

›

Levered free cash flow before dividends of $19.7 million, or $1.36 per share, in 2008

›

Total debt to 2008 Adjusted EBITDA of 2.9x, lower than most industry peers

State of the art network, rich with fiber

›

IP Core and Softswitch technology

›

MPLS / IP-VPN for layer 3 services

›

100% of RLEC access lines broadband capable

›

Valuable 700 Mhz

spectrum covering vast majority of footprint

Focused business plan leveraging D&E’s strengths

›

Opportunity for IP data / layer 3 revenues

›

CLEC

gaining

scale

and

growing

margin

–

upside

remains

›

Plant upgraded for broader DSL / High-Speed Internet deployment, and if desired, IPTV

›

Exited non-core business over last 24 months to narrow focus

Well positioned to capitalize on market opportunities with defined new growth services

›

Drive growth in RLEC / CLEC customers segment with Co-Location and Wireless Broadband offerings

›

Further

leverage

customer

loyalty

with

Haywire

and

On-Demand

offerings

D&E

Communications

Markets –

RLEC

(1)

Claritas

Site

Reports, 2008 estimate. Population of country, not market served.

(2)

Claritas Site Reports, percent change, 2000 to 2008.

(3)

Claritas Site Reports, 2008 estimate.

(4)

Major Employer data per OneSource.

PARAMETER

CONESTOGA

D&E

BUFFALO VALLEY

Demographics

County

Berks

Lancaster

Union

Population

(1)

407,817

500,119

43,760

Population Growth

(2)

9.2%

6.3%

5.1%

Households

154,782

187,009

14,050

Median Income per Household

$52,544

$54,530

$47,628

Universities

Kutztown University

Albright College

Alvernia

College

Pennsylvania State University

(Berks Campus)

Elizabethtown College

Franklin & Marshall College

Millersville University

Messiah College

Bucknell

University

Major Employers

(4)

(3)

D&E

Communications

Markets

–

CLEC

(1)

Claritas

Site

Reports,

2008

estimate.

Population

county, not market served.

(2)

Claritas Site Reports, percent change, 2000 to 2008.

(3)

Claritas Site Reports, 2008 estimate.

(4)

Major Employer data per OneSource.

PARAMETER

LANCASTER

READING

HARRISBURG

STATE COLLEGE

Demographics

County

Lancaster

Berks

Cumberland

Centre

Population

(1)

500,119

407,817

229,392

141,808

Population Growth

(2)

6.3%

9.2%

7.4%

4.5%

Households

(3)

187,009

154,782

91,136

51,897

Median

Income

per

Household

(3)

$54,530

$52,544

$57,401

$43,052

Universities

Elizabethtown College

Franklin & Marshall College

Millersville University

Messiah College

Kutztown University

Albright College

Alvernia College

Pennsylvania State University

(Berks campus)

Harrisburg University

Central Pennsylvania College

Dickinson College

U.S. Army War College

Pennsylvania State University

(Main campus)

Major Employers

(4)

D&E

Communications

Markets

–

CLEC

WILLIAMSPORT HOSPITAL -

WILLIAMSPORT, PA

(1)

Claritas

Site

Reports, 2008

estimate.

Population

county, not market served.

(2)

Claritas Site Reports, percent change, 2000 to 2008.

(3)

Claritas Site Reports, 2008 estimate.

(4)

Major Employer data per OneSource.

PARAMETER

POTTSTOWN

WILLIAMSPORT

ALTOONA

Demographics

County

Montgomery

Lycoming

Blair

Population

(1)

778,874

117,131

126,015

Population Growth

(2)

3.8%

(2.4%)

Households

(3)

301,141

47,000

51,162

Median

Income

per

Household

(3)

$74,239

$40,296

$39,950

Universities

Arcadia University

Haverford College

Ursinus

College

Lycoming College

Pennsylvania College of Technology

Pennsylvania

State University

(Altoona

campus)

Major Employers

(4)

Comprised of three RLECs covering approximately 240,000 POPs

CLEC edge-out strategy in growing, but competitive markets

Video comprises Coaxial in State College (CLEC) and ADSL2+ in

Union County (RLEC)

Company Overview

Wireline

D&E Communications is an integrated communications provider offering high-speed data, telephone, business

continuity

and

co-location

services,

professional

services,

network

monitoring,

security

solutions,

computer

support services and video services in certain eastern and central Pennsylvania markets

Consolidated revenue for the twelve

months ending December 31, 2008 was $149.5 million with Adjusted

EBITDA of $64.4 million (43% margin)

Systems Integration

Positive EBITDA of $0.03 million generated in 2008

In 1Q07, point-of-sale contract with a retail store

expired, resulting in reduction of 24 employees

›

Net negative contract due to geographic

scope and labor intensity

(1)

Pro forma for expiry of retail store contract in 1Q 2007.

(2)

Adjusted EBITDA defined as operating income plus depreciation and amortization plus

goodwill and intangible asset impairment.

(1)

Including RLEC and CLEC Access Lines, DSL / High-Speed Internet, Cable Modem,

Dial-up, Video and Web Hosting.

(2)

Excluding Directory.

(3)

Adjusted EBITDA defined as operating income plus depreciation and amortization plus

goodwill and intangible asset impairment.

($ in millions)

Year Ended December 31,

Parameter

2007A

2008A

YoY

Growth

Total Connections

(1)

221,184

220,248

(0.4%)

RLEC Access Lines

124,600

119,102

(4.4%)

CLEC Access Lines

46,002

46,436

0.9%

Wireline

Revenue

(2)

$140.4

$139.6

(0.6%)

Wireline

Adj. EBITDA

(2) (3)

61.8

61.2

Margin

44.0%

43.8%

Directory Revenue

$5.2

$4.4

Directory Adj. EBITDA

(3)

4.2

3.7

Margin

81.3%

84.2%

Capex

23.9

22.2

% of revenue

17.0%

15.9%

($ in millions)

Year Ended December 31,

Parameter

2007A

2008A

YoY Growth

Revenue

(1)

$4.6

$3.8

(17.4%)

Adjusted EBITDA

(2)

(1.8)

0.0

Margin

0.8%

Capex

0.1

0.0

% of revenue

2.4%

1.1%

2008 Highlights

Adjusted EBITDA

(1)

of $64.4 M, increased $0.4 M over 2007

Adjusted EBITDA margin of 43.1%, increased 110 basis points

Systems Integration Adjusted EBITDA improved by $2.0 M

Cash and cash equivalents on balance sheet were

$18.3 M at year end

Reduced Long Term Debt by $7.8 M

Initiated Share Repurchase Program

(1)

Adjusted EBITDA is a non-GAAP measure and defined as operating income/(loss) plus depreciation, amortization and goodwill and intangible asset

impairment. See reconciliation of Adjusted EBITDA to net income/(loss) attached.

Net Debt Ratio

(1)

Adjusted EBITDA is a non-GAAP measure and defined as operating income/(loss) plus depreciation, amortization and goodwill and intangible

asset impairment. See reconciliation of Adjusted EBITDA to net income/(loss) attached.

(2)

Long Term Debt includes long term debt maturing within one year.

(3)

Net

Debt

long

term

debt

plus

preferred

stock,

less

cash,

cash

equivalents,

and

short

term

investments.

($ in Millions)

Ratio

$177.6

$186.1

$207.0

$193.9

$169.3

$197.6

$64.0

$62.6

$64.4

2.63X

3.16X

2.78X

$50

$100

$150

$200

$250

2006

2007

2008

2.4X

2.6X

2.8X

3.0X

3.2X

3.4X

3.6X

Long Term Debt

Net Debt

Adjusted EBITDA

Net Debt Ratio

(1)

(2)

(3)

Comparative Performance

Source:

Public filings and Wall Street research.

(1)

Includes

DSL,

high

speed

Internet

via

fiber

and

satellite

broadband.

For

D&E,

based

total

DSL/HSI

subscribers

divided

total

RLEC

and

CLEC

access

lines.

(2)

Revenue and EBITDA includes small wireless reseller business.

(3)

Includes

CLEC

business

detailed

RLEC

and

CLEC

segment

data

not

disclosed.

(4)

Access

lines

and

HSI

metrics

are

pro

forma

for

acquisitions:

Fairpoint

Verizon,

CenturyTel

Madison

River,

Frontier

Commonwealth,

Windstream

CT,

Consolidated

North

Pittsburgh.

(5)

Y-o-Y change in revenue and EBITDA not pro forma for acquisitions (includes partial year results post-closing).

(6)

Access lines for RLEC only. Broadband for total company.

(7)

Excludes Bishop Communications and Sherburne Tele Systems acquisitions.

(8)

Fairpoint

suspended dividend as of 3/4/09.

(9)

EBITDA is a non-GAAP measure and defined as operating income/(loss) plus depreciation and amortization. For D&E, based on Adjusted EBITDA, which is a non-GAAP measure

defined as operating income/(loss) plus depreciation, amortization and goodwill and intangible asset impairment. See reconciliation of Adjusted EBITDA to net income/(loss) attached.

Y-o-Y Access Line Growth

Y-o-Y HSI Growth

Q408 HSI

2008 snapshot (wireline

only)

Company

4Q07

4Q08

4Q07

4Q08

% lines

Rev. Y-o-Y

EBITDA Y-o-Y

Margin

Conventional

ILECs

CenturyTel

(4) (5)

(6.1%)

(6.4%)

38.6%

15.5%

32.1%

(0.3%)

(2.6%)

48.4%

Embarq

(8.6%)

(9.8%)

25.6%

10.6%

24.8%

(3.8%)

2.9%

43.0%

Cincinnati Bell

(3)

(7.7%)

(8.2%)

11.7%

5.3%

32.9%

(2.2%)

(3.1%)

47.5%

D&E

(4.0%)

(4.4%)

20.1%

12.3%

26.0%

(1.2%)

(1.8%)

45.1%

Fairpoint

(4) (8)

(8.1%)

(11.7%)

1.6%

20.7%

(9.1%)

(9.0%)

43.8%

Hickory Tech

(3)

(4.7%)

(8.9%)

10.8%

7.3%

31.7%

(4.5%)

(11.8%)

39.4%

High-Dividend

ILECs

Alaska

(3)

(4.7%)

(6.0%)

7.8%

0.3%

27.3%

(0.9%)

(7.3%)

28.1%

Consolidated

(4)

(3.6%)

(7.6%)

11.5%

12.9%

34.7%

(1.5%)

0.3%

41.1%

Frontier

(4) (5)

(5.8%)

(7.2%)

30.7%

10.9%

25.7%

(2.2%)

0.1%

54.3%

Iowa Telecom

(6) (7)

(6.1%)

(7.6%)

25.6%

12.7%

31.3%

(1.8%)

(4.4%)

52.0%

Windstream

(4) (5)

(4.6%)

(5.2%)

32.8%

12.3%

32.2%

(0.1%)

(1.4%)

52.7%

RBOCs

AT&T

(7.4%)

(9.7%)

16.3%

6.5%

27.1%

(2.4%)

(6.0%)

34.8%

Qwest

(2)

(7.3%)

(9.6%)

22.1%

9.0%

24.6%

(2.2%)

(1.3%)

33.7%

Verizon

(8.3%)

(9.3%)

18.9%

8.2%

24.0%

(1.9%)

(3.9%)

26.7%

(1)

(9)

Corporate Focus

Grow IP Data Services Revenue

›

IP Infrastructure

›

Enhanced Data offerings: MPLS, IP VPN

›

Wireless Metro-Ethernet

Continue growth in CLEC Revenue

›

Further penetrate markets

›

Build value into offerings

Continued Improvement in

Systems Integration

›

Leverage technical skills to implement

new products

›

Provide network support, assessment

and design services

Integrate Haywire Service

›

Improve performance

›

Continue to align technology with customers’

needs

Network Overview

RLEC Network

›

IP / MPLS core and FTTN architecture

›

1 Nortel CS2000 Softswitch –

Ephrata

›

1 Nortel DMS 500 switch –

Birdsboro

›

1 Nortel DMS 100/200 switch –

Lititz

›

1 Nortel DMS 100 switch -

Lewisburg

›

All remote switches and broadband loop carriers connected with

fiber optic cable

›

Last mile connection provided over copper or fiber outside plant

CLEC Network

›

Leverages RLEC C.O. switching architecture with all remotes

fiber connected

›

95% of access lines connected to D&E switches

›

36% of access lines completely on D&E network

Video Network

›

Coaxial in State College –

~11,000 homes passed

›

ADSL2+ in Buffalo Valley –

~9,500 homes passed

›

IPTV (GigE) to Bucknell University –

~1,000 rooms

›

Video Head-end in State College

›

21 HD channels in State College and 20 in BVT

Fiber route miles

(1)

›

Owned:

1,480

›

Leased:

277

›

Total

1,757

Added 108 route miles of owned fiber

in 2008

Average loop length is approximately

10,000 feet

100% Digitally Switched

Network is 100% Broadband capable

4 C.O. Switches

Key Network Metrics

(1) As of 12/31/08.

Channel

Bandwidth

Household

POP

License

Market Name

FCC Market

Frequency

Block

(MHz)

POPs

income

density

growth

WPYZ994

Lancaster, PA

CMA 105

710-716 / 740-746

470,658

$48,576

497

0.72%

WPYZ995

Reading, PA

CMA 118

710-716 / 740-746

373,638

47,731

455

0.97%

WPYZ996

Altoona, PA

CMA 225

710-716 / 740-746

129,144

35,357

239

(0.45%)

WPYZ997

Williamsport, PA

CMA 251

710-716 / 740-746

120,044

36,422

(0.39%)

WPYZ998

State College, PA

CMA 259

710-716 / 740-746

135,738

38,724

128

0.87%

WPWV360

Lebanon, PA

CMA 623

710-716 / 740-746

120,327

43,413

337

0.31%

National average

$46,583

1.06%

(1) Based on FCC Auction 73 data.

(2) Based on Kagan 2005.

(3) Measured as POPs / square mile.

(4) Annual growth from 2003 - 2008.

(1)

(2)

(3)

(4)

(2),

Today,

D&E

holds

licenses

for

700

MHz

spectrum

covering

approximately

1,349,500

people

(1)

›

Five licenses acquired in June, 2003 and effective December 11, 2003 as part of Auction #49

›

Lebanon, PA license acquired in market transaction on December 9, 2008

›

Spectrum is not currently utilized and no network build out has begun

›

State

College

and

Altoona

are

clear

and

available

for

use

–

rest

are

available

June

2009

D&E’s 700 MHz Wireless Spectrum

RLEC

CLEC

MARKET

MSO

COMPETITORS

MARKET

CLEC

COMPETITORS

D&E

Blue Ridge

Lancaster

Conestoga

Service Electric / Comcast

Reading

Buffalo Valley

CATV / Atlantic Broadband

Harrisburg

State College

Pottstown

Williamsport

Altoona

Current Competitive Environment

Verizon, AT&T, Sprint Nextel and T-Mobile Wireless are the most active wireless operators in D&E

territories

›

In addition, Keystone Wireless is doing business as IMMIX principally in the Conestoga RLEC

and to a lesser extent Buffalo Valley and D&E RLECs

Verizon is principal competitor to our CLEC as well as to varying degrees of competitiveness

Frontier, XO, One Communications and Level 3 in certain markets

VOIP competition from MSOs

›

Service Electric, CATV, and Atlantic Broadband are offering a VOIP product in portions of the

Conestoga and Buffalo Valley RLEC footprints

Verizon

Frontier

One Communications

Level 3

Historical Systems Integration Quarterly Results

(1)

Sold Voice Systems Business segment in 3Q 2006

›

Low margin, highly people and inventory intensive business

In 1Q07, expired point-of-sale contract with regional retail chain resulting in reduction of 24 employees

Today, focused on professional data and information technology services, security design and network

monitoring services

›

Provides more comprehensive solutions to customers and integrated with access services

(1)

Not pro forma for Voice Systems Business, which was sold in 3Q 2006 and pro forma in 1Q and 2Q 2007 for expiry of retail store contract.

Revenue

(1)

$1.1

$0.9

$3.8

$1.8

$1.0

$1.4

$1.2

$0.9

$3.8

1Q 06

2Q 06

3Q 06

4Q 06

1Q 07

2Q 07

3Q 07

4Q 07

1Q 08

2Q 08

3Q 08

4Q 08

EBITDA

(1)

$0.1

$0.0

($0.7)

($0.9)

($0.7)

($0.6)

($0.4)

($0.1)

$0.1

($1.3)

1Q 06

2Q 06

3Q 06

4Q 06

1Q 07

2Q 07

3Q 07

4Q 07

1Q 08

2Q 08

3Q 08

4Q 08

($ in millions)

Historical Financial Summary

Consolidated Revenue, Adjusted EBITDA, Operating Income/(Loss) and Net Income

/(Loss)

(1) Adjusted EBITDA is a non-GAAP measure and defined as operating income/(loss) plus depreciation, amortization and goodwill and intangible asset impairments.

See reconciliation of Adjusted EBITDA to net income/(loss) attached.

($ in millions)

2006

2007

2008

162.1

152.6

149.5

64.4

64.0

62.6

22.5

24.6

(10.9)

(11.0)

6.7

10.6

-$50

$50

$100

$150

$200

Revenue

Operating Income/(Loss)

Net Income/(Loss)

Adjusted EBITDA

(1)

Historical Financial Summary

Wireline

Segment

Revenue, Adjusted EBITDA and Operating Income/(Loss)

(1)

Adjusted EBITDA is a non-GAAP measure and defined as operating income/(loss) plus depreciation, amortization and

goodwill

and

intangible

asset

impairments.

See

reconciliation

Adjusted

EBITDA

net

income/(loss)

attached.

(2)

Does not adjust for inter-company transactions

($ in millions)

2006

2007

2008

143.9

145.7

153.9

66.0

66.1

64.9

(9.4)

32.9

29.2

-$50

$50

$100

$150

$200

Revenue

Adjusted EBITDA

Operating Income/(Loss)

(1)

(2)

Historical Financial Summary

Systems Integration Segment

Revenue, Adjusted EBITDA and Operating Income/(Loss)

(1)

Adjusted EBITDA is a non-GAAP measure and defined as operating income/(loss) plus depreciation, amortization and

goodwill

and

intangible

asset

impairments.

See

reconciliation

Adjusted

EBITDA

net

income/(loss)

attached.

(2)

Does not adjust for inter-company transactions

($ in millions)

2008

2006

2007

(2)

(1)

3.8

5.4

6.6

(3.7)

(2.0)

0.0

(0.1)

(7.4)

(6.3)

-$10

-$5

$10

Revenue

Adjusted EBITDA

Operating Income/(Loss)

Wireline Segment Results

(1)

Note:

Wireline results exclude Directory Advertising.

(1)

Including Co-Location service.

(2)

Excluding depreciation and amortization and intangible asset impairment.

(3)

Adjusted EBITDA defined as operating income plus depreciation and amortization plus goodwill and intangible asset impairment.

($ in thousands)

Parameter

2007

2008

2007

2008

Wireline

Revenue

Local Telephone Service

48,976

49,506

2.6

1.1

Network Access

45,288

41,393

(4.8)

(8.6)

Long Distance Network Services

20,804

20,282

(3.2)

(2.5)

Communication Services

23,337

25,746

19.7

10.3

Other

2,042

2,635

29.0

Total Revenue

140,447

139,562

1.5

(0.6)

Direct Expenses

$45,430

$44,905

1.3

(1.2)

Gross Profit

$95,017

$94,656

1.6

(0.4)

% Margin

67.7

67.8

Indirect Expenses

(2)

$33,176

$33,482

2.3

0.9

Adjusted EBITDA

(3)

$61,841

$61,174

0.1

(1.8)

% Margin

43.8

Capex

$23,945

$22,225

(9.5)

(7.2)

% of Revenue

15.9

Adjusted EBITDA - Capex

$37,896

$38,949

9.6

2.8

Directory Advertising

Directory Advertising Revenue

$5,211

$4,380

(66.4)

(15.9)

Directory Expenses

$973

$691

(90.8)

(29.0)

Directory EBITDA

$4,238

$3,689

(14.6)

(12.9)

% Margin

81.3

84.2

Fiscal Year Ended December 31

YoY Growth

Systems Integration Segment Results

(1)

Pro forma for retail store contract expiry in 1Q 2007.

(2)

Excluding depreciation and amortization and intangible asset impairment.

(3)

Adjusted EBITDA defined as operating income plus depreciation and amortization plus goodwill and intangible asset impairment.

($ in thousands)

Parameter

2007

2008

2007

2008

Systems Integration

Revenue

4,586

3,789

15.6

(17.4)

Direct Expenses

$3,669

$2,701

6.8

(26.4)

Gross Profit

$917

$1,088

72.0

18.7

% Margin

20.0

28.7

Indirect Expenses

(2)

$2,668

$1,056

(1.9)

(60.4)

Adjusted EBITDA

(3)

($1,752)

$31

% Margin

0.8

Capex

$109

$40

(80.6)

(63.3)

% of Revenue

2.4

1.1

Adjusted

EBITDA

Capex

($1,861)

($9)

YoY

Growth

Fiscal Year Ended December 31

Corporate and Other Segment Results

(1)

Including Haywire ™

service.

(2)

Excluding depreciation and amortization and intangible asset impairment.

(3)

Adjusted EBITDA defined as operating income plus depreciation and amortization plus goodwill and intangible asset impairment.

($ in thousands)

Parameter

2007

2008

2007

2008

Corporate and Other

Revenue

1,532

1,759

(3.5)

14.8

Direct Expenses

$1,072

$1,407

27.6

31.2

Gross Profit

$460

$352

(38.5)

(23.4)

% Margin

30.0

20.0

Indirect Expenses

(2)

$579

$856

23.7

47.8

Adjusted EBITDA

(3)

($119)

($504)

% Margin

(28.6)

Capex

$230

$307

33.5

% of Revenue

15.0

17.5

Adjusted EBITDA - Capex

($349)

($811)

Fiscal Year Ended December 31

YoY Growth

Consolidated Results

(1)

Including dial-up, video, DSL / High-Speed Internet and web hosting subscribers.

(2)

Excluding inter-segment, but including Directory and Co-location service.

(3)

Excluding inter-segment. 2007 pro forma for retail store contract expiry in 1Q 2007.

(4)

Including Haywire ™ service.

($ in thousands)

Parameter

2007

2008

2007

2008

Consolidated

Total Access Lines

170,602

165,538

(1.7)

(3.0)

Total Broadband Connections

(1)

50,582

54,710

10.8

8.2

Total Customer Connections

221,184

220,248

0.9

(0.4)

Revenue

Wireline

(2)

145,633

143,902

(5.3)

(1.2)

Systems Integration

(3)

4,586

3,789

15.7

(17.4)

Corp & Other

(4)

1,532

1,759

(3.5)

14.8

Total Revenue

151,751

149,450

(4.8)

(1.5)

Direct Expenses

Wireline

(2)

46,403

45,596

(16.2)

(1.7)

Systems Integration

(3)

3,667

2,698

6.9

(26.4)

Corp & Other

(4)

1,072

1,407

27.6

31.2

Direct Expenses

51,142

49,701

(14.3)

(2.8)

Gross Profit

Wireline

(2)

99,230

98,306

0.8

(0.9)

Systems Integration

(3)

919

1,091

72.5

18.7

Corp & Other

(4)

460

352

(38.5)

(23.4)

Gross Profit

100,609

99,749

0.9

(0.9)

Gross Margin

Wireline

(2)

68.1%

68.3%

Systems Integration

(3)

20.0%

28.8%

Corp & Other

(4)

30.0%

20.0%

Gross Margin

66.3%

66.7%

YoY

Growth

Fiscal Year Ended December 31

Consolidated Results (cont’d)

Excluding inter-segment, but including Directory and Co-location service.

(1)

Excluding inter-segment. 2007 pro forma for retail store contract expiry in 1Q 2007.

(2)

Including Haywire ™ service.

(3)

Excluding depreciation and amortization and intangible asset impairment.

(4)

Adjusted EBITDA defined as operating income plus depreciation and amortization plus goodwill and intangible asset impairment.

($ in thousands)

Parameter

2007

2008

2007

2008

Consolidated

Indirect Expenses

Wireline

(2)

33,176

33,482

2.3

0.9

Systems Integration

(3)

2,646

1,022

(2.7)

(61.4)

Corp & Other

579

856

23.7

47.8

Indirect Expenses

36,401

35,360

2.2

(2.9)

Adjusted EBITDA

(2)

66,054

64,825

0.1

(1.9)

Systems Integration

(3)

(1,727)

Corp & Other

(119)

(503)

Adjusted EBITDA

64,208

64,392

0.2

0.3

Adjusted EBITDA Margin

Wireline

(2)

45.4%

45.0%

Systems Integration

(3)

1.8%

Corp & Other

Adjusted EBITDA Margin

42.3%

43.1%

Capex

Wireline

(2)

23,945

22,225

(9.5)

(7.2)

Systems Integration

(3)

109

(80.6)

(63.3)

Corp & Other

230

307

33.5

Capex

24,284

22,572

(10.2)

(7.0)

Adjusted EBITDA -

Capex

Wireline

(2)

42,109

42,600

6.5

1.2

Systems Integration

(3)

(1,836)

Corp & Other

(349)

(810)

Adjusted EBITDA -

Capex

39,924

41,820

7.7

4.7

Fiscal Year Ended December 31

YoY

Growth

Wireline

(4)

Levered Free Cash Flow

(1)

Represents difference between book and paid Capex in a given year.

(2)

Represents discretionary distributions from lender under the terms of D&E’s credit facility.

(3)

Represents pension plan contributions in excess of pension plan expense included in Adjusted EBITDA.

($ in millions)

Parameter

2007A

2008A

Adjusted EBITDA

$64.0

$64.4

Plus: Pension expense adjustment

Less: Capex

(24.8)

(22.5)

Less: Capex

change in working capital

(1)

1.7

(2.2)

Plus: Capex

proceeds

0.8

Less: Changes in working capital

1.3

(1.0)

Less: Interest expense

(15.2)

(11.7)

Plus: Interest expense adjustment

Plus: Interest income

1.6

0.4

Plus: Patronage refund

(2)

0.3

Plus: Patronage refund adjustment

Plus: Stock compensation expense

0.4

0.5

Plus: Collection of notes receivable

5.9

0.1

Plus: Life insurance proceeds

1.0

Less: Income taxes

(8.0)

(9.4)

Levered Free Cash Flow

$29.0

$19.7

Less: Mandatory Debt Retirement

(7.1)

Less: Discretionary Debt Retirement

(6.0)

(0.7)

Less: Pension Plan Contribution

(3)

(2.2)

(3.9)

Plus: Proceeds from stock issuance

0.2

0.1

Less: Purchase of treasury stock

(0.8)

Cash Available to Pay Dividends

$13.9

$7.3

Less: Dividends

(6.9)

Levered Free Cash Flow after Dividends

$7.0

$0.4

($ in millions)

Scheduled

Average

Balance as of

Annual

Tranche

Interest Rate

Maturity

12/31/2008

Amortization

Senior Secured Revolving Loan

P+0.5%-1.0% or L+1.5%-2.0%

N/A

June 30, 2011

–

Senior Secured Term Loan A

P+0.5%-1.0% or L+1.5%-2.0%

5.21%

June 30, 2011

$27.6

$2.0

Senior Secured Term Loan B

P+0.75% or L+1.75%

5.96%

December 31, 2011

136.2

1.5

First CEI Term Loan

9.00%

December 31, 2014

12.0

2.0

Second CEI Term Loan

9.00%

December 31, 2014

9.0

1.5

Capital Leases

1.4

0.1

Total debt

6.19%

$186.2

Less current maturities

(7.1)

Total long term debt

$179.1

Current Capital Structure

12/31/08,

cash

balance

was

$18.3

million

(1)

The Company is in compliance with its financial covenants and its total capitalization ratio is below 60%

›

From 2007 to 2008, indebtedness to capitalization ratio increased from 50.6% to 54.6%, which resulted from

reduction in retained earnings from impairment charge and decline in funded status of pension plans

The Company has interest rate swap agreements with a total notional amount of $132.0 million and a liability with a

fair value of $3.7 million as of 12/31/08

No contingent liabilities

›

In 1Q '08, Crown Castle International released the Company from a guarantee of lease obligations on tower

sites which the Company sold to Keystone Wireless in 2003

(1) Including short-term investments.

Pension Plan Contributions

Market value of pension assets declined by approximately 29% or approximately $15.6 million in 2008

Plan contributions were $6.3 million in 2008

The Company will discontinue future benefit accruals for participants in the Non-Union Pension Plan as of

January 1, 2010

2009 Plan Valuation Calculation

›

Based on actuarial calculations performed in first quarter of 2009

›

Key assumptions:

8.5% return on plan assets starting in March 2009

FAS discount rate of 6.25%

Valuation data as of 1/1/09

Segment rates funding liability method

(1)

Approximately

88%

pension

plan

costs

are

expensed

and

12%

are

capitalized.

(2)

Represents gross contributions.

(3)

Net of $982,000 curtailment gain due to pension freeze starting in 2010.

(4)

$10.0 million of $14.3 million relates to 2008 plan year.

($ in millions)

Parameter

2007

2008

2009E

Pension Plan Costs (1)

$3.8

$2.7

$0.5

Pension Plan Contributions (2)

$5.6

$6.3

$14.3

Fiscal Year Ended December 31,

Overview of 2008 Impairment Charges

For 2008, the Company recorded non-cash franchise

intangible asset impairment charges totaling $45.8

million ($26.8 million after tax)

›

The impairment charge resulted from the

decline of estimated future regulated cash

flows of the Conestoga

and Buffalo Valley

RLECs in the Wireline segment

›

Management estimated decrease in future

network access revenues, access lines,

associated minutes of use, local and long

distance revenues

›

The Company recognized a non-cash

intangible asset impairment charge of $26.2

and $19.6 million in 2Q’08 and 4Q’08,

respectively

The impairment charge was the main reason for net

loss of $11.0 million in 2008 vs. net income of $10.6

million in 2007

›

Excluding the impact of the impairment charge

and other charges, adjusted net income was

$11.6 million in both 2008 and 2007

(1)

connection

with

the

sale

the

Voice

Systems

Business

eCommunications

Systems

Corp.

(“eComm”) on 9/29/2006, the Company received a $2.5 million promissory note with a fair value of

$2.4

million.

Based

the

Company’s

negotiations

with

eComm

restructure

the

terms

the

note,

the Company recorded a pre-tax non-cash impairment charge of $0.9 million ($0.5 million after tax)

during 2008 and reduced the carrying value of the note to $1.0 million as of 12/31/08.

($ in millions)

Fiscal Year Ended Dec. 31,

Parameter

2007A

2008A

Adjusted EBITDA

$64.0

$64.4

Depreciation and Amortization

(34.2)

(29.4)

Goodwill and Intangible Asset Impairments

(5.2)

(45.8)

Interest Expense

(14.9)

(12.3)

Other Income (Expense), Net

(1)

8.2

2.9

Income Taxes

(7.2)

9.3

Dividends on Utility Preferred Stock

(0.1)

Reported Net Income (Loss)

$10.6

($11.0)

Items Impacting Comparability:

Decrease in Depreciation, Net of Tax, Compared to 2007

–

(3.0)

Intangible Asset Impairment, Net of Tax

–

26.8

Note Receivable Reserve, Net of Tax

(1)

0.1

0.5

Lease Guarantee Termination, Net of Tax

–

(1.7)

Goodwill Impairment, Net of Tax

4.7

–

Note Receivable, Collected, Net of Tax

(3.2)

–

Life Insurance Gain, Net of Tax

(0.6)

–

Adjusted Net Income

$11.6

2006

2007

2008

Wireline Adjusted EBITDA

66,015

$

66,079

$

64,863

$

Systems Integration Adjusted EBITDA

(3,651)

(1,955)

31

Corp, Other & Elim Adjusted EBITDA

281

(119)

(503)

 D&E Communications Adjusted EBITDA

62,645

64,005

64,391

Depreciation & amortization

(38,241)

(34,208)

(29,442)

Goodwill and intangible asset impairments

(1,892)

(5,158)

(45,800)

Equity in net losses of affiliates

(180)

(3)

0

Interest expense

(15,274)

(14,928)

(12,312)

Loss on early extinguishment of debt

(1,103)

0

0

Gain on investments

1,035

0

0

Other income/(expense), net

4,790

8,245

2,944

Income (taxes) benefit

(3,465)

(7,249)

9,330

Dividend on utility preferred stock

(65)

(65)

(65)

Loss from operations of Voice Systems business

 net of income tax benefits of ($253)

(488)

0

0

Loss on sale of Voice Systems business, net of

 income tax of $164

(1,020)

0

0

Net income/(loss)

6,742

$

10,639

$

(10,954)

$

Year Ended December 31,

Reconciliation of Adjusted EBITDA

(a non-GAAP measure)

to Net Income/(Loss)

($ in Thousands)

Reconciliation of Adjusted EBITDA

(a non-GAAP measure)

to Operating Income/(Loss)

($ in Thousands)

Year Ended December 31, 2006

Systems

Corporate

Wireline

Integration

& Other

Consolidated

Adjusted EBITDA

66,015

$

(3,651)

$

281

$

62,645

$

Depreciation & amortization

(36,772)

(714)

(755)

(38,241)

Intangible asset impairment

0

(1,892)

0

(1,892)

Operating income/(loss)

29,243

$

(6,257)

$

(474)

$

22,512

$

Year Ended December 31, 2007

Systems

Corporate

Wireline

Integration

& Other

Consolidated

Adjusted EBITDA

66,079

$

(1,955)

$

(119)

$

64,005

$

Depreciation & amortization

(33,206)

(272)

(730)

(34,208)

Goodwill impairment

0

(5,158)

0

(5,158)

Operating income/(loss)

32,873

$

(7,385)

$

(849)

$

24,639

$

Year Ended December 31, 2008

Systems

Corporate

Wireline

Integration

& Other

Consolidated

Adjusted EBITDA

64,863

$

31

$

(503)

$

64,391

$

Depreciation & amortization

(28,483)

(155)

(804)

(29,442)

Intangible asset impairments

(45,800)

0

0

(45,800)

Operating income/(loss)

(9,420)

$

(124)

$

(1,307)

$

(10,851)

$

Thomas

Morell:

Sr.

VP,

CFO

Secretary

&Treasurer

–

Morell

has

held

management

roles

D&E's

finance

department

for

years,

including

years

the

company’s

CFO.

worked with Coopers & Lybrand LLP prior to his arrival at D&E and is a Certified Public

Accountant.

Albert

Kramer:

Sr.

Vice

President,

Chief

Operating

Officer

–

Kramer

served

President

Conestoga Enterprises, Inc., when it merged with D&E in 2002, and he has 25 years of

experience in the telecom industry.

James

Morozzi:

President

Chief

Executive

Officer

–

Morozzi

has

worked

the

regulated

and competitive utility industry for 18 years. Before joining D&E in March 2005, he led

Exelon Corp.'s development of CLEC and wireless operations.

Executive Team

James W. Morozzi, President & CEO

Mr.

Morozzi,

age

46,

has

served

President

and

Chief

Executive

Officer

D&E

Communications, Inc. since April 2005 and was hired as Chief Executive Officer in

March 2005. He had served as President of Exelon Communications,

a division of

Exelon Enterprises, LLC, from 2001 to 2004. From 1986 to 2001, he worked in

various management roles at PECO Energy Company, including Business

Leader/Vice President of PECO Wireless, LLC and corporate strategist for Corporate

Planning and Development. He formerly served as chairman of the management

committee of PECO Telcove

Communications and as a Board member of AT&T

Wireless PCS of Philadelphia, LLC. Mr. Morozzi is a member of the Board of

Directors of the Pennsylvania Telephone Association and the Lancaster Chamber of

Commerce and Industry.

Management Biographies

Thomas E. Morell, Senior Vice President, Chief Financial Officer, Secretary

& Treasurer

Mr. Morell, age 48, has been Chief Financial Officer and Treasurer since 1995, Senior

Vice President since May 2002 and was appointed Secretary in October 2007. He was

a Vice President from 1996 to May 2002. Mr. Morell has been employed by the

Company

since

1984,

serving

Assistant

Controller

from 1984

1990

and

Controller

from

1990

1995.

From

1982

1984,

was

employed

Coopers

and

Lybrand

auditor.

Mr.

Morell

was

Managing

Director

PenneCom

B.V.

until

its

dissolution in January 2007 and was a Supervisory Board member of Pilicka

Telephone Company until its sale in December 2005. He was elected to the Board of

Directors of Hospice of Lancaster County in January 2008. Mr. Morell is a Certified

Public Accountant and is a member of the Pennsylvania Institute of Certified Public

Accountants.

Management Biographies

Albert H. Kramer, Senior Vice President, Chief Operating Officer

Mr. Kramer, age 54, was appointed Senior Vice President and Chief Operating Officer of D&E in

March 2009. Prior to that he was Senior Vice President of Operations of D&E Communications, Inc

since May 2002, when Conestoga Enterprises, Inc. merged with D&E Communications, Inc. Prior

to the merger, Mr. Kramer was President of Conestoga Enterprises, Inc. from May 1998 to May

2002. He was employed by Conestoga Enterprises, Inc. from September 1995, and served as Vice

President, Finance and Administration until August 1997. In August 1997, he was appointed

Executive Vice President and served in that capacity until May 1998. From 1984 until September

1995, Mr. Kramer had been employed by Denver and Ephrata Telephone and Telegraph Company

and served as Controller, and then Chief Financial Officer and Treasurer during the last five years

of his employment. Mr. Kramer was employed by Coopers and Lybrand as Senior Accountant from

1980 to 1984. He has been a Board member of the United States Telecom Association since 1998

and currently serves as Treasurer and Chairman of the Leadership Committee. He served as a

Board member of the Pennsylvania Telephone Association from 1998 to 2002, and served on the

Executive Committee during that time. Mr. Kramer has been a member of the Berks County

Workforce Investment Board since 1999. In 2002, Mr. Kramer was appointed to the board of the

Berks Economic Partnership and also to the Penn State Harrisburg Board of Advisors. Mr. Kramer

served on the Board of Directors of National Penn Bancshares, Inc., a public company subject to

SEC periodic reporting requirements, from April 2007 to February 2008 and from April 2009 to the

present. Additionally, he has served on the board of its wholly owned subsidiary, National Penn

Bank, since 2000 and is currently serving on the Audit Committee. Also in 2007, Mr. Kramer was

appointed to the Board of Directors and the Executive Committee of the Greater Reading Chamber

of Commerce & Industry. Mr. Kramer is a Certified Public Accountant.

Management Biographies