Warwick Valley Telephone Announces Agreement With Verizon Wireless of the East LP

WARWICK, NY--(Marketwire - Jun 2, 2011) - Warwick Valley Telephone Company (NASDAQ: WWVY) (the "Company" or "WVT") announced today it has entered into an agreement with Verizon Wireless of the East LP ("Verizon"), the general partner and a limited partner, and Cellco Partnership, the other limited partner, in the Orange County - Poughkeepsie Limited Partnership (the "O-P") to make certain changes to the O-P partnership agreement which, among other things, specifies that the O-P will provide 4G cellular services (the "4G Agreement"). Specifically, the 4G Agreement provides that the O-P's business will be converted from a wholesale business to a retail business that provides wireless radio telecommunications using any spectrum licensed by the Federal Communications Commission (the "FCC") under Parts 20, 22, 24 or 27 of FCC rules and any commercial mobile radio service and commercial mobile data service using such spectrum as may in the future be made available by the FCC for such purpose. Cellco Partnership, one of the O-P's limited partners, agreed to lease to the O-P certain spectrum to be used in the O-P's service area.

The 4G Agreement provides for guaranteed annual cash distributions to the Company from the O-P through 2013. For 2011, annual cash distributions from the O-P will be $13,600,000 and for 2012 and 2013 the annual cash distribution will be $13,000,000. Annual cash distributions will be paid in equal quarterly amounts.

The 4G Agreement also gives the Company the right (the "Put") to require Cellco Partnership, one of the O-P's limited partners, to purchase all of the Company's ownership interest in the O-P during April 2013 or 2014 for an amount equal to the greater of (a) $50,000,000 or (b) the product of five (5) times 0.081081 times the O-P's EBITDA for the calendar year preceding the exercise of the Put.

The Company agreed not to sell, transfer, assign or encumber any part of its partnership interest in the O-P through May 1, 2014. The general partner of the O-P agreed to not withdraw as general partner or otherwise cause a liquidation of the O-P anytime prior to May 26, 2017.

Duane Albro, President and Chief Executive Officer of WVT, stated, "We are excited about our enhanced relationship with Verizon. This improved relationship which includes guaranteed payments provides a solid financial basis for the continued transformation of the Company by increasing our ILEC broadband Internet business and seeking opportunities outside our ILEC business through a combination of organic growth and acquisitions, while continuing our commitment to our shareholders."