XO Reports Q3

RESTON, Va. -- XO Holdings, Inc. (OTC:XOHO.OB) (BULLETIN BOARD: XOHO.OB) today reported its third quarter 2006 financial and operational results. For the third quarter ended September 30, 2006, XO Holdings (XOH) reported $352.3 million in revenue, $33.9 million in adjusted EBITDA(2) and a net loss of $23.0 million. XOH operates two business segments, XO Communications, LLC (XOC), its wireline business, and Nextlink Wireless, Inc. (Nextlink), its wireless business.

XO Communications Highlights for the Quarter

Nextlink Highlights for the Quarter

"We continue to see strong demand for XO Communications' core communications services, including commercial and wholesale voice over IP services and high-bandwidth network transport services," said Carl Grivner, Chief Executive Officer of XO Holdings. "We expect that XO Communications' position in the market will benefit from the initiatives we have undertaken to focus around enterprise and carrier services markets, the enhancements to our long haul network and the positive impacts of consolidation in the market. Nextlink also continues to expand its addressable market by building out networks in more cities, developing carrier partnerships and its new reseller program.

"On November 3, 2006, XOC obtained a waiver of compliance with respect to the minimum consolidated EBITDA covenant contained in XOC's credit facility for the fiscal quarter ended September 30, 2007. This waiver prevents the lenders under the credit facility from accelerating repayment of the outstanding indebtedness for a breach of the covenant for which the waiver was granted under the credit facility until the end of the fiscal quarter ended December 31, 2007. The waiver was obtained from the affiliate of Mr. Carl Icahn which holds a majority of XOC's loans outstanding under that agreement.

Revenue

Consolidated revenue for XOH in the third quarter of 2006 was $352.3 million compared to $354.3 million in the second quarter of 2006 and $358.7 million in the third quarter of 2005. Revenue from XOC in the third quarter of 2006 was $351.8 million compared to $354.2 million in the second quarter of 2006 and $358.6 million in the third quarter of 2005. Revenue from Nextlink was $0.8 million in the third quarter of 2006 compared to $0.1 million in both the second quarter of 2006 and the third quarter of 2005. During the third quarter of 2006, Nextlink recognized one-time revenue of $0.5 million due to a contract restructuring with a major customer.

Revenue from voice services -- consisting of local, long distance and other voice services -- was $179.3 million in the third quarter of 2006, compared with $180.3 million in the second quarter of 2006 and $182.0 million for the third quarter of 2005. Revenue from data services -- consisting of Internet access, network access and web hosting -- was $107.2 million in the third quarter of 2006, compared with $107.0 million in the second quarter of 2006 and $108.8 million for the third quarter of 2005. Revenue from integrated services -- consisting of integrated data and voice services -- was $65.9 million in the third quarter of 2006, compared with $66.9 million in the second quarter of 2006 and $67.9 million for the third quarter of 2005.

XO Communications Inc.