February 13, 2004 Reston VA -- XO Communications, Inc. has been selected as the winning bidder for substantially all of the assets of Allegiance Telecom, Inc. and its subsidiaries except for Allegiance's customer premises equipment sales and maintenance business, its managed modem business, and certain other Allegiance assets and operations.
XO will pay approximately $311 million in cash and approximately 45.38 million shares of XO common stock for the assets. The companies expect to finalize the definitive agreement within the next several days and submit it for approval by the U.S. Bankruptcy Court for the Southern District of New York on February 19, 2004. The transaction is also subject to applicable governmental approvals and termination of applicable waiting periods.
With the acquisition of substantially all of Allegiance's network assets and customer base, XO says it will become the nation's largest independent provider of national local telecommunications and broadband services with approximately 330,000 customers and more than $1.6 billion in revenue. The company will have the largest network of nationwide connections to regional Bell operating companies' networks of any other CLEC, and double the points of presence (PoPs) within the 36 markets where both XO and Allegiance operate.
"The acquisition of Allegiance Telecom's network assets will make XO the nation's largest national local telecommunications services provider," said Carl Grivner, chief executive officer of XO Communications. "The combination of XO and Allegiance is good for both the industry and businesses. It will contribute to increased competition for regional Bell operating companies and give businesses more choices for their end-to-end telecommunications needs. In addition, the acquisition increases the density of our PoPs in local markets, which uniquely positions XO to sell last mile and metro services to all the large long distance companies.
"We have identified approximately $60 million in network cost savings and $100 million in general and administrative costs that could be realized over time as a result of this acquisition," added Grivner.
"The telecommunications industry is ripe for consolidation, and this acquisition strengthens XO's platform for the future acquisition of undervalued assets in the industry," said Carl Icahn, chairman of XO Communications.
Allegiance Telecom is a facilities-based national local exchange carrier headquartered in Dallas, TX. It serves 36 major metropolitan areas in the U.S.