XO Communications Cites Challenging Market Dynamics

XO Communications reported Q1 2010 revenue of $369.5 million, a decrease of $8.3 million, or 2%,
compared to the year-ago period. The company said the revenue drop was primarily from targeted price increases within its wholesale long-distance services, which were implemented to improve margins on selected routes.


"While existing market dynamics continue to be a challenge for the telecommunications industry as a
whole, XO's continued focus on providing best-in-class broadband services and products well positions
the company to execute upon its long-term business plan," said Carl Grivner, chief executive officer of
XO.


In the first quarter of 2010, XO's Broadband offerings generated $209.8 million in revenue, an increase of
$20.4 million, or 11%, from the year-ago period. This increase principally resulted from growth in the IP
VPN, IP Flex, Ethernet and Dedicated Internet Access services, compared to the year-ago period. XO cited a strong demand for secure, low-cost IP access, and said that it continues to focus on moving
customers away from TDM-based solutions. Growth for these services was partially offset by a decline of $3.5 million in wholesale Carrier VoIP termination revenue due to targeted price increases intended to improve margins on selected routes.


The revenue growth in XO's Broadband services is partially offset by the year-over-year decrease in
Integrated/Voice service revenues. This category contains more mature bundled data and voice offerings,
as well as traditional Carrier Long Distance Termination (CLDT). In addition to the continuing demand
shift from older integrated voice and data offerings to Broadband-enabled solutions, CLDT revenue
decreased by $4.6 million compared to the year-ago period. The decline in CLDT revenue was also due to
targeted price increases intended to improve margins on selected routes. Also contributing to the
company's lower revenue year-over-year was the continued decline in XO's traditional Legacy/TDM
services, which decreased $10.8 million, or 9%, compared to the same period last year reflecting XO's
ongoing strategic focus on offering Broadband-enabled solutions to customers and prospects.
http://www.xo.com