Form 10-Q for XO HOLDINGS INC
10-Nov-2008
Quarterly Report
Executive Summary
We are a leading nationwide facilities-based competitive telecommunications services provider that delivers a comprehensive array of telecommunications solutions to businesses, large enterprises, government customers, established telecommunications carriers and other communications service providers. The items we believe differentiate us from the competition include our nationwide high-capacity network, advanced IP and converged communications services, broadband wireless capabilities, and a responsive, customer-focused orientation. We offer customers a broad range of managed voice, data and IP services in more than 75 metropolitan markets across the United States. We operate our business in two reportable segments: XOC for wireline and Nextlink for wireless telecommunications.
On July 25, 2008 we issued $780.0 million of preferred shares through the sale of two new series of preferred stock to affiliates of the Chairman. As a result we retired all of our outstanding long-term debt and accrued interest totaling $473.0 million. We plan to use the remaining proceeds to fund our business plans and future growth initiatives, provide ongoing working capital for our business and pursue additional opportunities which would be expected to create value for our shareholders.
We have demonstrated significant progress over the past year growing our strategically important Data and IP revenues. Our sales and marketing focus is on larger customers in mid-market and enterprise segments. Our strategically important customers have been receptive to our offers as demonstrated by the growing percentage of our new monthly sales coming from these customer segments. Our IP-VPN service continues to gain traction and is now one of the top three services we sell. Additionally, during 2008 we have added customers to our long haul and metro networks.
During the third quarter of 2008, XOC added high profile customers and expanded its product line. Our Flex service offering continues to sell well. In addition, our Multiprotocol Label Switching ("MPLS") service, launched one year ago, is already among our top five selling service offerings. Direct Internet Access ("DIA") sales have substantially moved to higher bandwidth requirements, further reflecting our emphasis on moving up-market. Our capital infrastructure investments in inter-city and IP networks enabled us to achieve significant sales into media, internet and international customers.
In the third quarter, we continue to see the results from a number of initiatives we implemented in previous quarters including the lighting of our long haul fiber network, development of the carrier/wholesale channel and expansion of our portfolio of services to business customers. Our prior capital expenditure investments are resulting in significant revenue growth for our core services. We continue to see opportunities to invest our capital and continue to invest for long-term growth. During 2008, we have expanded our network footprint of Ethernet over Copper Technology to 75 major metropolitan markets. This local loop technology enables us to serve off-net businesses to take advantage of Ethernet services at speeds from 10 Megabits/second (Mbps) to 88 Mbps. We demonstrated 100 Gigabits/second Ethernet (GbE) service over our long haul network. We support customers on our nationwide network today with services including 10 Gigabits/second (Gb/s) wavelengths and 10 GbE, which demonstrates the power and scalability of its advanced optical network.
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