Covad Announces Fourth Quarter and Year End Operating Statistics for 2001; 351,000 Lines In Service; Cash Usage Below $60 Million for the Fourth Quarter.

Business Editors

SANTA CLARA, Calif.--(BUSINESS WIRE)--Jan. 16, 2002

Covad Communications (OTCBB:COVD), the leading national broadband services provider utilizing DSL (Digital Subscriber Line) technology, today announced operating statistics as of December 31, 2001.

-- Covad has approximately 351,000 lines in service on its network, a one
percent increase from September 30, 2001 and a 28 percent increase from the
274,000 lines in service at December 31, 2000.

-- Approximately 52 percent of Covad's total lines are business lines and 48
percent are consumer or residential lines at the end of the fourth quarter
compared to a business to consumer mix of 51 percent versus 49 percent at the
end of 2000.

-- Covad's wholesale channel represents 96 percent of Covad's total lines while
its direct channel represents four percent, which is a slight improvement from
the 97 percent versus three percent wholesale to consumer mix at the end of
2000.

-- Thirteen percent of Covad's total lines are served through resellers for
whom Covad recognizes revenue only when it is paid. The percentage of lines
affected by these partners is unchanged from the previous quarter and is down
from 33 percent of lines in service at the end of 2000.

-- For completed orders, Covad's average installation time for its
business-class services averaged approximately 23 days during the fourth
quarter, a 39% improvement over the fourth quarter of 2000. Its average
installation time for its consumer-class services averaged approximately 11
days during the fourth quarter, a 72% improvement over the fourth quarter of
2000.

-- Cash usage for the fourth quarter was under $20 million per month, excluding
bankruptcy related payments and the funding received from SBC.

-- The cash balance as of December 31, 2001 was approximately $290 million.

During the year, Covad implemented initiatives which reduced delivery times and reduced the company's cash usage quarter over quarter. Covad expects its monthly cash usage to continue to improve in the future and expects its current cash to fully fund the business through cash flow positive in the second half of 2003.

"During this recent difficult economic period, we have continued to strengthen and grow our business including improving our balance sheet by eliminating $1.4 billion in debt and raising capital to fully fund our business plan," said Charles E. Hoffman, Covad CEO and president. "We have lowered our cost structure, increased revenue and decreased losses by focusing on small business lines and have continued to manage our distressed partner lines. This quarter we also introduced new business-class services and are now better positioned to control our future as we continue to provide high quality broadband services nationwide."

About Covad Communications

Covad is the leading national broadband service provider of high-speed Internet and network access utilizing Digital Subscriber Line (DSL) technology. It offers DSL, IP and dial-up services through Internet Service Providers, telecommunications carriers, enterprises, affinity groups, PC OEMs and ASPs to small and medium-sized businesses and home users. Covad services are currently available across the United States in 94 of the top Metropolitan Statistical Areas (MSAs). Covad's network currently covers more than 40 million homes and business and reaches approximately 40 to 45 percent of all US homes and businesses. Corporate headquarters is located at 3420 Central Expressway, Santa Clara, CA 95051. Telephone: 1-888-GO-COVAD. Web Site: www.covad.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

The statements contained in this press release that are not historical facts are "forward-looking statements," including statements concerning Covad's anticipated reduction of costs, ability to continue as a going concern, sufficiency of Covad's cash on hand, additional capital requirements, and the statements made by the president and CEO in this release. Actual events or results may differ materially as a result of risks facing Covad or actual results differing from the assumptions underlying such statements. Such risks and assumptions include, but are not limited to, Covad's ability to raise additional capital and address its financial issues, to continue as a going concern, to continue to service and support its customers, to successfully market its services to current and new customers, to manage the consolidation of sales to a fewer number of wholesale customers, to successfully migrate end users, Covad's ability to generate customer demand, to achieve acceptable pricing, to respond to competition, to develop and maintain strategic relationships, to manage growth, to receive timely payment from customers, to access regions and negotiate suitable interconnection agreements, all in a timely manner, at reasonable costs and on satisfactory terms and conditions, as well as regulatory, legislative, and judicial developments and the absence of an adverse result in litigation against Covad. All forward-looking statements are expressly qualified in their entirety by the "Risk Factors" and other cautionary statements included in Covad's SEC Annual Report on Form 10-K for the year ended December 31, 2000 and in Covad's SEC Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.