XO Communications Raises $200 Million Through Preferred Stock Offering
Release Date: 8/9/2004

RESTON, Va., Aug 9, 2004 /PRNewswire-FirstCall via COMTEX/ -- XO Communications, Inc. (OTC Bulletin Board: XOCM.OB) today announced that it completed a private placement of 6% Class A Convertible Preferred Stock and has received total proceeds of $200 million. XO privately offered the shares of preferred stock to XO stockholders that currently hold an aggregate of approximately 85% of XO's outstanding common stock. Affiliates of Carl C. Icahn, XO's chairman and owner of approximately 50% of XO's outstanding common stock, purchased $190 million of the preferred stock, and an affiliate of Amalgamated Gadget, L.P., holder of approximately 9.4% of XO's outstanding common stock, purchased an additional $10 million.

"This agreement demonstrates continued support for XO's ability to execute in the market and our goal of achieving free cash flow positive," said Carl Grivner, XO Communications' CEO. "The proceeds will be used for our ongoing operations, continued investments in new customer solutions like voice over-IP services and potential acquisitions that would provide our business with additional scale and cost synergies."

Each share of preferred stock is initially convertible at $4.62 per share into 10.82251 shares of XO common stock. XO's common stock closed on August 5, 2004 at a trading price of $3.62 per share. The preferred stock private placement was negotiated on behalf of XO by a special committee of its Board of Directors consisting of its independent directors, who received independent legal and financial advice.

Based on the company's review of its business and giving effect to the proceeds from the convertible preferred stock offering, XO believes that it will not be required to raise additional capital to fund its current business plan, subject to funding requirements that may arise in connection with possible future acquisitions.

About XO Communications

XO Communications is a leading provider of national and local telecommunications services to businesses, large enterprises and telecommunications companies. XO offers a complete portfolio of services, including local and long distance voice, dedicated Internet access, private networking, data transport, and Web hosting services as well as bundled voice and Internet solutions. XO provides these services over an advanced, national facilities-based IP network and serves more than 70 metropolitan markets across the United States. For more information, visit http://www.xo.com.

The statements contained in this release that are not historical facts are "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements include those describing XO's expected future business and network operations and results of operations, XO's ability to achieve projected synergies and revenue from the acquisition of allegiance's assets in a timely manner or at all, XO's ability to increase sales, and XO's ability to continue to implement effective cost containment measures. Management cautions the reader that these forward- looking statements are only predictions and are subject to risks and uncertainties and actual results may differ materially from those indicated in the forward-looking statements as a result of a number of factors. These factors include, but are not limited to, those risks and uncertainties described from time to time in the reports filed by XO Communications, Inc. with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2003 and its quarterly reports on Form 10-Q.

SOURCE XO Communications, Inc.

Chad Couser of XO Communications, Inc., +1-703-547-2746, or
chad.couser@xo.com