Agreement Expands Level 3’s Relationship with Leading ISPs
Incremental Revenue of $35 Million Expected For Level 3 In 2004
BROOMFIELD, Colo., April 1, 2004 – Level 3 Communications, Inc. (Nasdaq:LVLT) today announced that it has acquired the wholesale dial access business of ICG Communications, Inc. (OTC:ICGC), a Denver-based communications company.
Level 3 will pay approximately $35 million in cash to acquire the business, which provides dial-up Internet access to America Online, EarthLink, MSN, United Online and other leading ISPs. The purchase price is subject to post-closing adjustments, but those adjustments are not expected to be material. Level 3 expects the acquisition to add incremental revenue of approximately $35 million in 2004.
“This agreement further expands Level 3’s position as one of the leading providers of Internet dial access service in North America,” said James Q. Crowe, Level 3’s chief executive officer. “While the dial access business is undoubtedly maturing, it continues to generate very strong margins and cash flow for our company, given the unique architecture and efficiencies of our softswitch platform. From both a financial and strategic standpoint, we believe the ICG transaction will generate real value for Level 3.”
“We are pleased to be expanding our relationship with Level 3,” said Henry Kim, Vice President, Telecom Services of United Online. “Level 3 has long been a valued vendor of United Online and has demonstrated a strong track record as a high-quality, highly dependable managed modem services provider.”
Level 3 plans to migrate a majority of ICG’s customer traffic onto its own network infrastructure over the course of the next two quarters. In addition, the transaction will permit Level 3 to expand into select secondary markets not currently served by the Level 3 network. As a result of the transaction, Level 3 will increase national network coverage for its managed modem business in select markets.
“Given Level 3’s substantial experience integrating network assets, we expect customers to receive the highest level of service both during and after the transition,” said Jack Waters, executive vice president and chief technology officer for Level 3. “We believe that applying best practices demonstrated during past integrations should result in significant value creation for both Level 3 and our customers.”
About Level 3 Communications
Level 3 Communications, Inc. (NASDAQ: LVLT), an international communications company, operates one of the largest Internet backbones in the world, connecting 180 markets in 18 countries. The company serves a broad range of wholesale, enterprise and content customers with a comprehensive suite of services including: Internet Protocol (IP) services, broadband transport and infrastructure services, colocation services, voice and voice over IP services, content delivery and media distribution services. These services provide the building blocks to enable Level 3’s customers to meet their growing demands for advanced communications solutions. The company’s Web address is www.Level3.com.
"Level 3 Communications,” "Level 3," the red 3D brackets and the Level 3 Communications logo are registered service marks of Level 3 Communications, LLC in the United States and/or other countries. Level 3 services are provided by wholly owned subsidiaries of Level 3 Communications, Inc. Any other service, product or company names recited herein may be trademarks or service marks of their respective owners.
Forward-Looking Statement
Some of the statements that we make in this press release are forward looking in nature. These statements are based on management’s current expectations or beliefs. These forward looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside our control, which could cause actual events to differ materially from those expressed or implied by the statements. The most important factors that could prevent us from achieving our stated goals include, but are not limited to our ability to: successfully integrate acquisitions; increase the volume of traffic on our network; defend our intellectual property and proprietary rights; develop new products and services that meet customer demands and generate acceptable margins; successfully complete commercial testing of new technology and information systems to support new products and services; attract and retain qualified management and other personnel; and meet all of the terms and conditions of our debt obligations. 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 press release should be evaluated in light of these important factors. Level 3 is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
