INDEPENDENT AUDITOR’S REPORT The Board of Directors and Shareholde rs Shenandoah Telecommunications Comp any: We have audited the accompanying  consolidated balance sheets of Shenandoah Telecommunications Company and subsidiaries (the Company), as of De cember 31, 2003, 2002, and 2001, and the related consolidated statements of income, shareholders’ equity and comprehensive income, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our res ponsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Shenandoah Telecommunication s Company and subsidiaries as of December 31, 2003, 2002 and 2001, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. As discussed in note 1 to the consolidated financial statements, the Company changed its method of accounting for goodwill in 2002. As further discussed in note 1 to the consolidated financial statements, the Company changed its method of accounting for asset retirement obligations in 2003. 11 ■  2003 ANNUAL REPORT Richmond, Virginia February 6, 2004 KPI, LEP SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES 2003 Financial Statements