Court Approves XO's Stand-Alone Reorganization Plan; National Telecom Provider Set to Emerge From Bankruptcy.

Business Editors/Hi-Tech Writers

RESTON, Va.--(BUSINESS WIRE)--Nov. 15, 2002

XO Communications, Inc. (OTCBB:XOXOQ) announced that the U.S. Bankruptcy Court for the Southern District of New York confirmed the company's stand-alone plan of reorganization on Friday, November 15, 2002, setting the stage for XO to implement that plan and emerge from the Chapter 11 bankruptcy proceedings upon receipt of necessary state and federal regulatory approvals.

XO expects to emerge from bankruptcy with a strong balance sheet appropriate for today's business environment. As of September 30, 2002, XO had cash and cash equivalents on hand of approximately $554 million dollars.

Under the stand-alone plan, restructured XO's long-term debt will be approximately $500 million, but cash interest payments on that debt will not be required until XO achieves specified financial targets. Entities controlled by Carl C. Icahn currently hold approximately 85 percent of XO's senior secured debt and over $1.33 billion face amount of XO's senior notes.

These entities will hold more than 80% percent of the newly issued equity in the company upon completion of the restructuring.

"Confirmation of our plan of reorganization validates our restructuring strategy and allows us, upon completion of the plan, to emerge from bankruptcy as a financially sound company with a strong national presence and the ability to impact the telecommunications industry," said XO Chairman and Chief Executive Officer Dan Akerson. "This restructuring process has been a test of the resolve and dedication of all of our employees, and I believe it is fair to say that the test was passed with flying colors. During this process, we have made steady progress with our innovative product offerings, customer service and operational efficiencies. As a result, we have reduced our capital expenditures and operating expenses to levels that are in line with our operations and the new realities of the telecommunications industry and economy. Our success adding new customers during our restructuring has also demonstrated the value businesses see in our solutions and service and evidences the dedication of our XO employees."

Today XO's operating subsidiaries continue to provide service to more than 215,000 business customers.

In addition to the significant improvements to XO's balance sheet, XO will emerge from bankruptcy with its ever-expanding suite of voice and data products and services for businesses, including the XOptions packages that provide bundles of voice, data, Internet access and Web hosting. To date, more than 10,000 XOptions bundles have been sold to businesses across the United States.

XO also has one of the strongest collections of national intercity and local network assets in the telecommunications industry, with robust metro fiber networks in more than 60 markets throughout the United States and an award-winning OC-192 backbone network that spans the United States.

On November 15, 2002, the Bankruptcy Court also approved the settlement between XO, Telefonos de Mexico, S.A. de C.V. (TELMEX) and certain investment partnerships affiliated with Forstmann Little & Co. to mutually terminate the previously announced Forstmann Little/TELMEX Investment Agreement and to settle any potential claims relating to the Investment Agreement or its termination.

Under the terms of the settlement, the Investment Agreement is terminated, Forstmann Little and TELMEX will each pay XO $12.5 million, for a total of $25 million, and all parties will release any claims they may have relating to the Investment Agreement.

"XO has a strong and loyal customer base, served by robust networks in the key major metropolitan areas. The financial performance the company has achieved during these difficult times is not only a testament to its workforce but is also proof of XO's continuing ability to offer great value to its customers," said Carl Icahn, the financier who will own a controlling position in reorganized XO. "Now that the restructuring process has resulted in a right-sized balance sheet and a strong cash position, XO is poised for continued growth."

"We have continuously analyzed XO Communications for the past four to five years, dating back to the company's origins as Nextlink. We believe that XO has an opportunity to emerge from its restructuring as one of the few service providers in the U.S. capable of competing for and serving business customers on a nationwide basis," stated Mike Smith, Co-Founder and Managing Director of Research with Stratecast Partners, a firm providing analysis of the communications industry. "XO has developed a comprehensive array of network assets, a broad solution portfolio comprised of voice, data and IP service offerings, and is capable of providing broadband access via a variety of means. The company also has a unique ability to meet the needs of multi-location business customers, given its presence in more than 60 markets throughout the U.S. In completing its restructuring, XO has successfully addressed its most significant issue--its debt burden--and has now positioned itself to continue providing high-quality service and customer support."

About XO Communications

XO Communications is a leading broadband communications service provider offering a complete set of communications services, including: local and long distance voice, Internet access, Virtual Private Networking (VPN), Ethernet, Wavelength, Web Hosting and Integrated voice and data services.

XO has assembled an unrivaled set of facilities-based broadband networks and Tier One Internet peering relationships in the United States. XO currently offers facilities-based broadband communications services in more than 60 markets throughout the United States.

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 the expected future operations of XO and the expectations regarding the outcome of the restructuring transactions and the related Bankruptcy Court proceedings described in this release.

Management wishes to caution 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, risks associated with XO's ability to complete the transactions described in this release and those risks and uncertainties described from time to time in the reports filed by XO Communications with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2001 and in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2002.

Other important factors that could cause actual events or results to be materially different from the forward-looking statements include: the ability of the Company to consummate its stand-alone plan of reorganization, including obtaining necessary regulatory approvals; and court approval of motions prosecuted by the Company from time to time in the chapter 11 case.

XO, XO Not Just Talk and the XO design logo are trademarks of XO Communications, Inc. All other trademarks are the property of their respective owners.