BROOMFIELD, Colo. -- Level 3 Communications, Inc. (Nasdaq: LVLT - News) announced today that it will exit the managed hosting portion of the business it acquired through its recent transaction with Genuity, Inc. Level 3 has signed an agreement under which its hosting customers and operations will be served by Computer Sciences Corporation (NYSE: CSC - News) of El Segundo, California. CSC will assume certain lease obligations for data centers in Chantilly, Va., and Cambridge, Mass., and service Level 3's managed hosting customers. As part of the transaction, CSC will also use Level 3's network services to serve hosting customers. CSC expects to offer employment to approximately 125 of Level 3's hosting employees. Level 3 and CSC expect the transaction to close by the end of the second quarter of 2003. Level 3 acquired the managed hosting business as part of its larger transaction with Genuity, Inc., earlier this year. Hosting operations were expected to generate revenues of approximately $40 million, and EBITDA of negative $5 million, for the full year 2003. Hosting operations serve about 2 percent of the approximately 5,000 customer contracts acquired by Level 3 through the Genuity transaction. "Hosting was not profitable for us, and as a result the agreement we are announcing today will improve Level 3's cash flow," said Jack Waters, group vice president of managed services and chief technology officer for Level 3. "Genuity's hosting operations lack sufficient scale on a stand-alone basis to achieve profitability in an appropriate time frame. Additionally, hosting does not fully leverage the investment we have made in our network infrastructure. Consequently, we sought a partner like CSC that already has the scale required to make this line of business profitable and, importantly, the expertise to ensure a smooth transition for customers. "Having analyzed all the Genuity lines of business, we believe it makes sense for us to support those Genuity services that do leverage the inherent efficiency and operational capabilities of the Level 3 network; including dedicated Internet access, remote dial access, virtual private networks and security services." Level 3 Communications Inc. Genuity Inc.