TXU Announces Expansion of Telecommunications Business.

Business Editors

DALLAS--(BUSINESS WIRE)--March 13, 2000

TXU (NYSE:TXU), a multinational energy services company based in Dallas, announced today that it will acquire Fort Bend Communication Companies, Inc., based near Houston, in a transaction that values the stock of the company at approximately $167 million. This transaction significantly adds to TXU's growth platform in the rapidly expanding Texas telecommunications business.

Headquartered in Katy, Texas, Fort Bend Communication Companies, Inc. (FBCC) is a privately held company. It has 41,000 access lines in its regulated local exchange territory and 4,000 competitive access lines in adjacent areas in and near Houston. The company provides comprehensive communications services in Fort Bend, Harris, Waller and Brazoria counties.

FBCC was one of the first companies in the United States to install digital, computerized switching equipment and to deploy fiber optics widely in its local network. Founded in 1914, FBCC offers a wide range of products and services to business and residential customers in a 500-square-mile region just west of Houston. Various affiliates of FBCC provide fiber optic services to Houston and other major Texas cities, plus competitive local exchange, long distance, wireless, and Internet services to selected areas of Houston.

Last year, FBCC had access line growth of approximately 17 percent. Business lines grew at 40 percent. Since 1995, regulated access lines have grown at a compound rate of 12 percent with business lines growing at 17 percent. Fort Bend County is the second-fastest growing county in the U.S.; the business employment growth rate ranked fourth nationally.

"This transaction is an important step in the execution of TXU Communications' growth strategy," said Brian Dickie, president of TXU's Emerging Businesses Group, including TXU Communications.

Herb Zureich, president of TXU Communications, observed: "With the acquisition of FBCC, TXU Communications has enhanced its scale and management team and strengthened its position for continued growth into targeted Texas markets. The FBCC management and employees have built one of the best independent communications operations in Texas. We are looking forward to them joining our team and continuing a tradition of growth and quality customer service."

"FBCC is energized to join the TXU family of companies and looks forward to opening a new chapter in its history of delivering quality communications services to our customers," said George Head, president and chief executive officer of FBCC. "We were diligent in ensuring that the two companies share a common strategic vision and good cultural fit."

The agreement has been approved by FBCC shareholders. FBCC common and preferred stock will be exchanged for approximately $90 million of TXU common stock and approximately $77 million in cash. The transaction is expected to close in the second quarter of 2000.

Following the close of the FBCC transaction, TXU will initiate a new off-balance sheet financing with institutional investors that will facilitate the aggressive growth in its communications operations without diluting TXU's earnings or cash flow. TXU will place TXU Communications and FBCC into the financing and receive approximately $1 billion in cash. TXU will use the cash resources to retire debt and repurchase common stock. The financing and acquisition of FBCC will result in mild accretion to earnings per share.

TXU Communications offers local and long distance telephone service, Internet access, web design and hosting, and telecommunications solutions for residential and business needs, including high-speed data communications, local and wide area data networks, and fiber optic connections. With the acquisition of FBCC, TXU Communications will provide local regulated and competitive service to more than 160,000 access lines, long distance to 78,000 customers, Internet service to 32,000 customers, and data transport and related services over 1,100 proprietary route miles of advanced fiber optics. For more information, visit www.txucom.com.

TXU is one of the largest investor-owned energy services companies in the world with assets over $40 billion. The company is a multinational leader in electric and natural gas services, merchant trading, energy marketing, telecommunications and other energy-related services. TXU delivers energy to nine million customers primarily in Texas, the United Kingdom and continental Europe, and Australia. For more information, visit www.txu.com.