McLeodUSA Sells Wholesale ISP Assets

McLeodUSA Inc. said it has agreed to sell to Level 3 Communications Inc. some of its Internet/data assets and wholesale dial-up Internet service provider (ISP) customer base for $55 million.

Terms of the agreement call for Level 3 to purchase approximately 350 POPs (points of presence) across the U.S., along with the related facilities, equipment and underlying circuits, plus the wholesale ISP customer base. McLeodUSA will retain its Level 3 fiber indefeasible right of use (IRU).

The parties will also enter into operating agreements enabling McLeodUSA to continue providing service and support to its in-region customers. Level 3 will also assume certain operating liabilities associated with the assets.

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

With the buy, Level 3 will be able 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 before the purchase, officials said.

For its part, McLeodUSA said it continues to focus on its 25-state footprint as it sells non-core assets to raise cash and achieve “profitable growth.”

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