Wednesday, July 20, 2005

Level 3 Reports Decline in DSL/Modem Aggregation, Growth in Core Transport & IP

Level 3 Communications reported Q2 consolidated revenue of $910 million, compared to $1.01 billion for Q1 2005. Communications revenue was $371 million in the second quarter versus $510 million for the previous quarter, which included $129 million in termination revenue. Information services revenue was $520 million compared to $483 million for the previous quarter. The net loss for the second quarter 2005 was $188 million, or $0.27 per share, compared to $77 million or $0.11 per share the previous quarter.

Communications services revenue excluding termination revenue decreased by $13 million quarter over quarter primarily due to expected declines in DSL aggregation revenue and managed modem revenue. Additionally, revenue from the company's wholesale voice business declined as a result of one customer's decision to reduce voice termination traffic. These declines in revenue were partially offset by an increase in revenue from the company's transport, wholesale IP, and other wholesale and consumer voice services.

Level 3 Communications said its core transport and IP services continued to see growth and demand primarily from cable operators, content providers, wireless providers and other key customer segments.

Average traffic volume on Level 3's Internet backbone now exceeds 3.0 petabytes per day. The company also continued to see growth in subscribers for its consumer and enterprise oriented VoIP services.

"We exceeded our revenue projections this quarter primarily as a result of growth in our core transport and IP businesses and higher reciprocal compensation," said James Q. Crowe, CEO of Level 3.

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