BROOMFIELD, Colo., -- November 5, 2004 -- Level 3 Communications, Inc. (Nasdaq:LVLT) and McLeodUSA Incorporated (Nasdaq:MCLD) announced today that they have executed an agreement to terminate a dark fiber contract the two companies signed in 1999.
Under the original 20-year agreement, McLeodUSA leased a nationwide dark fiber backbone from Level 3 comprising between eight and 36 fibers across most of Level 3’s North American network infrastructure.
McLeodUSA will transfer the fibers back to Level 3 in exchange for a cash payment and other consideration. In addition, the companies have entered into an agreement under which McLeodUSA will provide network services to Level 3 at discounted rates. Certain fibers along a small number of network routes will be retained by McLeodUSA to fulfill pending and existing IRU agreements with other companies.
As disclosed in the business outlook provided by Level 3 on Oct. 27, the company expects to recognize approximately $100 million in non-cash termination revenue in the fourth quarter of 2004 because of this transaction.
“This agreement successfully resolves negotiations with McLeodUSA regarding the 1999 dark fiber contract under terms that we believe are mutually beneficial,” said Sunit Patel, Level 3’s chief financial officer.
About McLeodUSA
McLeodUSA provides integrated communications services, including local services, in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The Company is a facilities-based telecommunications provider with, as of June 30, 2004, 38 ATM switches, 39 voice switches, 696 collocations, 435 DSLAMs and 2,510 employees. As of April 16, 2002, Forstmann Little & Co. became a 58% shareholder in the Company.
About Level 3 Communications
Level 3 (Nasdaq:LVLT) is an international communications and information services company. The company operates one of the largest Internet backbones in the world, is one of the largest providers of wholesale dial-up service to ISPs in North America and is the primary provider of Internet connectivity for millions of broadband subscribers, through its cable and DSL partners. The company offers a wide range of communications services over its 23,000-mile broadband fiber optic network including Internet Protocol (IP) services, broadband transport and infrastructure services, colocation services, and patented softswitch managed modem and voice services. Its Web address is www.Level3.com.
