LETTER TO THE SHAREHOLDERS We believe our commitment to good customer service, and our expanding PCS coverage area, will provide an advantage as we strive to profitably add customers. The telecommunications industry remains in a period of rapid change, both from technological and regulatory perspectives. While these changes present challenges to our existing operations, they present opportunities as well. As an organization we need to address the continuing shift of minutes and customers away from our traditional networks to newer wireless and Internet Protocol (IP)-based networks. Finding a way to profitably offer Voice Over IP services will be one of our immediate goals. We have rapidly deployed broadband data capabilities, now making DSL access available to over 80 percent of our telephone customers. While DSL is currently provided over our wireline network, we need to look to wireless technologies to deliver broadband services to more customers in a larger footprint. Our video service offerings are increasingly in competition with satellite based services, and thus need enhancements in order to be the preferred choice of our customers. As we work to identify new services to offer, a major objective will also be to find ways to do so profitably. Being able to deliver good financial results over the long term requires the efforts of many talented and dedicated employees. In the pages of this annual report, you will get a glimpse of how many of our employees also make a contribution to their communities. Our Company strives to be a good corporate citizen, a goal which is enhanced by our employees’ own effort to make a positive impact with their volunteer activities. We have had a history of investing heavily in the capabilities of our networks, expanding and enhancing them in order to offer the best service possible. As our business has continued to grow and become more complex, we also need to invest in additional management resources. One of the recent steps in this direction was to hire Earle MacKenzie, who joined our organization as Executive Vice President in June. Earle brings 30 years of telecommunications experience to our Company, having worked for a range of organizations, including Contel, Arthur Andersen, startup ventures, and consulting firms. In his position, he will serve as Chief Financial Officer of the organization, freeing up Larry Paxton to focus on our information technology needs. In addition to the new management positions, we have underway a reorganization of our management structure to more closely align it with our functional areas. In addition to the normal challenges of managing a growing business, our Board of Directors and members of management have spent considerable time and effort to ensure compliance with the numerous new rules and requirements resulting from the various corporate scandals over the past few years. While a valid argument can be made as to whether all the new requirements are necessary, or even if they would have avoided the scandals that were uncovered, we have approached these efforts as an additional opportunity to further improve what we hope is already a well governed organization. The cost of complying with the new rules will be significant, but the cost of not doing what is right would be worse, and certainly not acceptable to you as owners of the Company. As announced last October, the Board of Directors declared a two-for-one stock split to shareholders of record as of  January 30, 2004. The certificates for the new shares were distributed to shareholders February 20, 2004 and the stock began trading on a post-split basis February 23, 2004. With the split, shareholders received one new share for each existing share they held on the record date. While the split results in no change to a shareholder’s ownership of the Company, it is hoped that the lower post-split trading price will make the shares more affordable to a larger number of potential investors. While we cannot predict how our stock’s price will perform, we know that over the long term the price should be a function of our ability to steadily increase earnings for our shareholders. We have generally been successful at doing that in the past, and while our future is always uncertain, generating long-term earnings growth will remain our primary objective. For the Board of Directors, Christopher E. French President SHENANDOAH TELECOMMUNICATIONS COMPANY ■  2