Xcelecom, Inc. Remaking Regional Contracting Services Landscape; Completes Major Regional Combination With McPhee Electric Ltd., LLC.

Business/Energy Editors

HAMDEN, Conn.--(BUSINESS WIRE)--Oct. 30, 2000

Xcelecom, Inc., a non-regulated business unit of UIL Holdings Corporation and a leading provider of electrical and voice-data-video services, announced that it has formally acquired McPhee Electric LTD., LLC, an electrical contracting company based in Farmington, CT.

The acquisition also includes McPhee Utility & Power Services (MUPS); a sister company focused on the utility, high voltage and signal segments of the market. The McPhee acquisition is Xcelecom's sixth overall and largest to date as it builds a network of premier contracting and services companies across the Eastern US.

"As the landscape and restructuring of the electric utility industry plays out, so must UIL Holdings' drive to create new value for its shareholders," said Nathaniel Woodson, Chairman, President and Chief Executive Officer of UIL Holdings. "The rigorous and disciplined execution of the Xcelecom acquisition strategy, through exceptional, well-respected companies such as McPhee, is one key component of our plan. Xcelecom is on the right path to make serious contributions to the overall earnings of the corporation in the years to come, and its longer term trajectory positions it as a major part of continued earnings growth," he said.

The acquisition of McPhee is expected to be immediately accretive to earnings. Although the acquisition will add to 2000 earnings, the Company is maintaining its previously announced estimate of $4.25-$4.35 per share for 2000.

For 2001, the Company, as a result of the McPhee acquisition, is raising its total earnings estimate to $4.05-$4.25 per share, up from the previously announced estimate of $3.80-$4.00 per share. The non-regulated business units are expected to contribute $ .30-$ .45 per share of the total revised estimate. The utility is expected to contribute $3.75-$3.85 per share as previously disclosed.

"The McPhee acquisition solidifies Xcelecom's position as leading provider of services throughout the Northeast and Mid-Atlantic regions," said Dennis Dugan, President. "With combined annual revenue at well over $200 million and operations stretching over six states and seven locations, Xcelecom now has the critical mass to bring operating leverage and business discipline, rigor and opportunity, to all of its companies. McPhee will integrate the operations of MUPS, Precision Power of Hamden and Johnson Electric of Stratford, Xcelecom's other Connecticut companies, into a unified, complementary, region-wide operation," said Dugan. The McPhee platform allows Xcelecom to effectively compete from Rhode Island through Connecticut into Western Massachusetts, Southern Vermont and Fairfield and Westchester counties.

McPhee currently employs more than 350 employees and provides a wide range of electrical construction specialties including site utilities, power distribution and generation, wireless communication infrastructure and telecommunication systems. It will retain its name, operating location and management team after the acquisition is complete. The acquisition of McPhee is expected to add approximately $60 million to Xcelecom's annual revenues and will be immediately accretive to UIL Holdings' earnings.

"The Xcelecom team understands and respects our unique and extremely strong position in the regional marketplace and is partnering us with the very best companies across the entire Northeast," said Michael McPhee, President of McPhee. Johnson Electric of CT, Allan Electric of New Jersey, Diefenderfer Electrical Contractors of Allentown and Philadelphia, PA and The Datastore of South Jersey, stand themselves as leaders in the industry with whom we are excited to be associated. The idea is simple - bring additional value to our customers through the construction and services packages we offer - the Xcelecom combination with these other companies gives us a leg up on the local and regional competition - that is what it is all about" he said.

Headquartered in Hamden, CT, Xcelecom, Inc. is the leading single-source provider for integrated electrical services and voice-data-video system integration to customers in the Eastern United States from Boston to Virginia. Xcelecom's website has just been launched at www.xcelecom.com.

UIL Holdings Corporation is the holding company for The United Illuminating Company (UI) and United Resources, Inc. (URI). UI is a New Haven-based regional electric distribution company and URI is the umbrella for UIL Holdings' non-regulated business units, including Xcelecom, American Payment Systems, United Capital and United Bridgeport Energy. UIL Holdings World Wide Web address is www.uil.com and the company is traded on the New York Stock Exchange under the symbol UIL.