December 28, 2004
Level(3) and France Telecom have replaced their 2000 twenty-year leased dark fiber contract with a new transport and colocation services agreement expected to bring higher cash receipts to Level(3).
Level(3) Communications (NASDAQ:LVLT) today announced an agreement with France Telecom replacing a contract signed in 2000 under which France Telecom leased dark fiber from Level(3) for 20 years.
Under the new agreement, the previously leased fiber will revert to Level(3), which will become France Telecom’s primary contract provider of broadband transport and colocation services in North America. Level 3 will supply identified private line and wavelength circuits across its 19,400-mile fiber optic network in the US, which France Telecom Group will use, particularly though its Equant susidiary, as a platform to support its US customers.
France Telecom believes the new agreement will enable it to continue delivering the same services with the same levels of quality to customers in the retail and wholesale sectors, but at lower cost.
Level 3 expects to recognize approximately $40 million in deferred, non-cash termination revenue in the first quarter of 2005 when this transaction completes, and anticipates monthly cash receipts thereafter under the new contract to exceed those previously received under the prior one.