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Level 3 Announces Agreement to Acquire Wholesale Dial-Up Access Business Assets from McLeodUSA

Acquisition Enables Level 3 to Provide Dial-Up Internet Access Service in All 50 U.S. States; Up from 37 States

Dec 7, 2001

BROOMFIELD, Colo., December 7, 2001 - Level 3 Communications, Inc. (Nasdaq:LVLT) today announced it has reached an agreement to acquire the McLeodUSA Incorporated (Nasdaq:MCLD) wholesale dial-up access business assets (formerly Splitrock Services) for $55 million in cash consideration and the assumption of certain operating liabilities related to that business.

Under the terms of the agreement, the acquisition includes customer contracts, approximately 350 POPs (Points of Presence) across the U.S. and the related facilities, equipment and underlying circuits. In addition, the parties entered into certain operating agreements enabling McLeodUSA to continue to support its in-region customers. The acquisition enables Level 3 to provide managed modem service in all 50 states with a coverage area that includes 80 percent of the U.S. population, up from 37 states and 57 percent of the U.S. population.

"We expect our acquisition of the McLeodUSA dial-up access business assets to not only expand the geographic reach of our dial-up Internet access service, but also to increase our revenue opportunities with McLeodUSA\'s existing wholesale customers," said Kevin O\'Hara, Level 3\'s president and chief operating officer. "We continue to believe that our strong financial position enables us to capitalize on strategic market opportunities as they arise."

Without giving effect to this transaction, Level 3 now handles more than 400 million dial-up Internet access calls per month for its ISP customers, representing more than 10 billion minutes of online usage every month from business and residential end-users over Level 3\'s 10-gigabit-per-second MPLS network. A gigabit - equivalent to one billion bits - represents the amount of information that can be transmitted in one second. Multiprotocol Label Switching (MPLS) is an Internet Protocol (IP) routing technology that allows Level 3 to streamline, simplify and lower the cost structure of its network management.

The transaction is subject to Hart-Scott-Rodino approval and customary closing conditions, and is expected to close during the first part of 2002.


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.