Level 3 Announces Agreement to Acquire Wholesale
Dial-Up Access Business Assets from McLeodUSA
Acquisition Enables Level 3 to Provide Dial-Up Internet Access Service in All 50 U.S. States; Up from 37 States
BROOMFIELD, Colo., December 7, 2001 3/4 Level 3 Communications, Inc. (Nasdaq:LVLT) today announced it has reached an agreement to acquire the McLeodUSA Incorporated (Nasdaq:MCLD) wholesale dial-up access business assets (formerly Splitrock Services) for $55 million in cash consideration and the assumption of certain operating liabilities related to that business.
Under the terms of the agreement, the acquisition includes customer contracts, approximately 350 POPs (Points of Presence) across the U.S. and the related facilities, equipment and underlying circuits. In addition, the parties entered into certain operating agreements enabling McLeodUSA to continue to support its in-region customers. The acquisition enables Level 3 to provide managed modem service in all 50 states with a coverage area that includes 80 percent of the U.S. population, up from 37 states and 57 percent of the U.S. population.
"We expect our acquisition of the McLeodUSA dial-up access business assets to not only expand the geographic reach of our dial-up Internet access service, but also to increase our revenue opportunities with McLeodUSA's existing wholesale customers," said Kevin O'Hara, Level 3's president and chief operating officer. "We continue to believe that our strong financial position enables us to capitalize on strategic market opportunities as they arise."
Without giving effect to this transaction, Level 3 now handles more than 400 million dial-up Internet access calls per month for its ISP customers, representing more than 10 billion minutes of online usage every month from business and residential end-users over Level 3's 10-gigabit-per-second MPLS network. A gigabit 3/4 equivalent to one billion bits 3/4 represents the amount of information that can be transmitted in one second. Multiprotocol Label Switching (MPLS) is an Internet Protocol (IP) routing technology that allows Level 3 to streamline, simplify and lower the cost structure of its network management.
The transaction is subject to Hart-Scott-Rodino approval and customary closing conditions, and is expected to close during the first part of 2002.
About Level 3 Communications
Level 3 (Nasdaq:LVLT) is a global communications and information services company offering a wide selection of services including IP services, broadband transport, colocation services and the industry's first Softswitch based services. Its Web address is www.Level3.com.
Forward Looking Statement
Some of the statements made by Level 3 in this press release are forward-looking in nature. Actual results may differ materially from those projected in forward-looking statements. Level 3 believes that its primary risk factors include, but are not limited to: changes in the overall economy relating to, among other things, the September 11 attacks and subsequent events, substantial capital requirements; development of effective internal processes and systems; the ability to attract and retain high quality employees; technology; the number and size of competitors in its markets; law and regulatory policy; and the mix of products and services offered in the company's target markets. Additional information concerning these and other important factors can be found within Level 3's filings with the Securities and Exchange Commission. Statements in this release should be evaluated in light of these important factors. |
