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  • Level 3 to Acquire Progress Telecom for $137M
Jan 2006
BROOMFIELD, Colo., Jan. 31, 2006 -- Level 3 Communications Inc. has agreed to acquire all of the membership interests of Progress Telecom LLC, a regional wholesale network services company based in St. Petersburg, Fla., which is jointly owned by Progress Energy Inc. and Odyssey Telecorp Inc.

Under the terms of the agreement, Level 3 expects to pay $137 million, with half, $68.5 million, being in unregistered shares of Level 3 stock and the other half in cash. The actual number of shares will be determined immediately prior to closing.

Progress Telecom's network spans 9000 miles, includes 29 metro networks and connects to international cable landings in south Florida and 31 mobile switching centers in the southeast. Progress Telecom serves approximately 200 customers, with a significant concentration of international and wireless carrier customers. Progress Energy is its largest customer. The company generates yearly revenues of approximately $70 million.

"This transaction represents a unique opportunity to expand Level 3's footprint in the southeastern region of the United States, where we have seen strong demand for our services," said Kevin O'Hara, president and COO of Level 3. "More importantly, we serve a number of the same large, key customers, particularly certain wireless and international customers. We believe that the completion of this transaction will enable us to expand our relationship with these customers and offer them a broader set of services in more markets outside the southeast. Progress Telecom is a very successful wholesale carrier in the southeastern United States and this acquisition will increase the extent of our network coverage in the region."

The agreement provides that Level 3 will not acquire certain assets and liabilities related to Progress Telecom's wireless tower attachment business and its interests in affiliates focused on providing distributed antennae systems and tower backhaul services to wireless providers. Level 3 plans to have commercial services agreements in place to provide transport services and operation support to these former Progress Telecom affiliates and to cooperate with them on the development of complementary service offerings to better serve the wireless carrier segment.

The purchase price is subject to certain customary working capital adjustments, and Level 3 has the right to substitute cash in lieu of delivering common stock. The closing is expected to occur early in the second quarter of 2006, assuming it receives state and federal regulatory approvals.

The company expects to provide additional information concerning this transaction during its announcement of fourth quarter 2005 earnings on Tuesday, Feb. 7. For more information, visit:

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