December 16, 2004 16:05:00 (ET)

CEDAR RAPIDS, Iowa, Dec 16, 2004 (BUSINESS WIRE) -- McLeodUSA (MCLD, Trade), one of the nation's largest independent competitive telecommunications services providers, today announced that it has reached a three-year renewable wholesale agreement with MCI (MCIP, Trade) whereby McLeodUSA will enable MCI to provide local telephone services to its residential customers using McLeodUSA facilities. In the first quarter of 2005, MCI and McLeodUSA will begin migrating a minimum of 200,000 local lines onto the McLeodUSA UNE-L network with a goal to complete the transition by the third quarter.

"This opportunity with MCI evidences the operational excellence and cost efficiencies that we have achieved over the past few years as we successfully executed on our strategy to be a world-class facilities-based communications services provider," said Chris Davis, Chairman and CEO of McLeodUSA. "We are committed to providing both our retail and our wholesale customers with cost effective, high quality services and a great customer experience. We look forward to working with MCI to that end."

"This agreement is designed to help us reach customers in the McLeodUSA service area through a facilities-based approach," said Wayne Huyard, MCI President of U.S. Sales & Service. "As the regulatory environment becomes more difficult and we continue to seek alternatives to UNE-P, this kind of relationship can be mutually beneficial."

MCI is a leading global communications provider, delivering innovative, cost-effective, advanced communications connectivity to businesses, governments and consumers. McLeodUSA is one of the nation's leading facilities-based competitive telecommunications providers serving 25 Midwest, Southwest, Northwest and Rocky Mountain states.

Since the passage of the Telecom Act in 1996, almost 30 million lines, representing more than 20 million consumers and small businesses, are receiving local phone service from a non-RBOC service provider. Studies have shown that purchasers of local phone service save over $11 billion a year because competition brings better pricing and improved service offerings.

About McLeodUSA

McLeodUSA provides integrated communications services, including local services, in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The Company is a facilities-based telecommunications provider with, as of September 30, 2004, 38 ATM switches, 39 voice switches, 696 collocations, 435 DSLAMs and 2,474 employees. As of April 16, 2002, Forstmann Little & Co. became a 58% shareholder in the Company. Visit the Company's Web site at www.mcleodusa.com

Some of the statements in this press release include statements about our future expectations. Statements that are not historical facts are "forward-looking statements" for the purpose of the safe harbor provided by Section 21E of the Exchange Act and Section 27A of the Securities Act. Such statements may include projections of financial and operational results and goals, including revenue, EBITDA, Adjusted EBITDA, profitability, savings and cash. In some cases, you can identify these so-called "forward-looking statements" by our use of words such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "project," "intend" or "potential" or the negative of those words and other comparable words. These forward-looking statements are subject to known as well as unknown risks and uncertainties that may cause actual results to differ materially from our expectations. Our expectations are based on various factors and assumptions and reflect only our predictions. Factors that could cause actual results to differ materially from the forward-looking statement include technological, regulatory, public policy or other developments in our industry, availability and adequacy of capital resources, current and future economic conditions, the existence of strategic alliances, our ability to generate cash, our ability to implement process and network improvements, our ability to attract and retain customers, our ability to migrate traffic to appropriate platforms and changes in the competitive climate in which we operate. These and other risks are described in more detail in our most recent Annual Report on Form 10-K filed with the SEC. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise.

SOURCE: McLeodUSA Incorporated

McLeodUSA Incorporated, Cedar Rapids
Investor Contact:
Bryce E. Nemitz, 319-790-7800
or
Press Contact:
Bruce A. Tiemann, 319-790-7800
mcleodusa_ir@mcleodusa.com