Here is the Omaha World Herald's slant on the story:
Scott
Level 3 Says Services, Revenue Grow
BY MELINDA NORRIS
WORLD-HERALD STAFF WRITER
Level 3 Communications said Tuesday that the new Internet-based telecommunications system it has been designing and building for the past year will generate revenues of $250 million to $300 million in 1999.
The Omaha company also said that it possibly may show an operating profit by the end of 2000.
In a New York meeting with analysts and investors, the Omaha company provided financial projections as well as construction updates on its plans to build an international network based on what the industry calls Internet-protocol, or IP, technology. With this technology, Level 3 is offering low-cost, high-speed voice, Internet and data connections for businesses, competing with Baby Bells and other telecommunication providers.
At the end of 1998, Level 3 was offering services in 17 U.S. cities and in Frankfurt, Germany.
Last month, the company began offering services in London and expects to begin offering service in Paris and Amsterdam.
Domestically, Level 3 expects to offer services in 27 U.S. cities by the end of the year.
In a statement issued before the meeting with analysts, Level 3 said that it expects sales in these markets will generate $250 million to $300 million. The figures exclude Level 3's interests in coal properties and toll-road facilities.
Despite the revenue, Level 3 said it anticipates an operating loss in 1999. The company will spend about $2.3 billion this year building its network and operating expenses will equal 140 percent to 165 percent of revenue.
Next year, revenues will more than double and construction costs will dip slightly, the company said. This could lead to a possible operating profit. Level 3 anticipates revenues will reach $650 million to $700 million in 2000. Construction costs will decline to $2 billion. And expenses will equal 80 percent to 100 percent of revenue.
By 2001, Level 3 said it expects expenses will equal 20 percent of revenue.
Other highlights of the meeting:
Last month, Level 3 completed construction and began transmitting on its fiber-optic "loops," or inner-city networks, in three cities: Dallas, Denver and Seattle. Networks in five other cities are expected to be operational before July.
The company has signed an agreement to extend its network into Canada using about 750 miles of Canadian Pacific Railway right-of-way. The routes will link Albany, N.Y., with Montreal and Montreal with Buffalo, N.Y., creating a "key component" in connecting New York City and Chicago.
An agreement with Norfolk Southern Corp. will allow Level 3 to build its network east of the Mississippi River along 1,200 miles of the railroad company's right- -of-way.
Level 3 expects to complete construction of 6,500 miles of its intercity fiber-optic connections this year, up from an earlier projected 4,000 miles. So far, 400 miles of the network has been built
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