CEOs to Discuss an Industry in Flux

The leaders of competitive telecommunications providers today will share their views of an industry invariably facing regulatory, technology and business changes.

A panel moderated by CompTel/ASCENT CEO H. Russell Frisby Jr. will feature the chief executive officers of Grande Communications (Booth 500), Looking Glass Networks Inc. (Booth 107), XO Communications Inc. (Booth 717) and Xspedius Communications LLC (Booth 207).

William Morrow, the vice chairman and CEO of Texas-based Grande, says telcos in the competitive wireline industry must focus on a particular geography, not the entire country. He also cites the importance of owning facilities.

I really believe with the regulatory changes weve seen, the competitive industry cant afford to be focused on the entire nation, Morrow says. Those that made it through some pretty difficult times are pretty battle-hardened, pretty focused.

Morrow and his peers believe in consolidation. Over the last four years, Grande has purchased six companies for typically about 10 cents on the dollar, says Morrow, who adds other companies spent approximately $450 million on hard assets which Grande acquired for $45 million.

I think we will have another opportunity as an industry … to look at consolidation, he says.

Mark Senda, president and CEO of Missouri-based Xspedius, says consolidation in the competitive wireline industry is essential.

We get it and we understand its necessary and it needs to happen, he says.

But the reality is the big deals are developing in the wireless industry, not in the competitive wireline sector. Senior executives say investors are reluctant to assume a heap of debt or pay a premium for a companythat is in a dire financial position and numerous competitors are still struggling. Investors also may be waiting to see whether the few relatively large deals will end up being success stories.

Many eyes are fixed on the combination of Allegiance Telecom and XO. Analysts say XO has faced bigger challenges integrating Dallas-based Allegiance than it had projected, but XO CEO Carl Griver says the company is ahead of schedule to achieve $160 million in savings through the merger. And he points out XO has the same number of employees 5,000 as it did before the merger while Allegiance is adding

hundreds of millions of dollars in revenue.

I think there is a lot of buzz in the industry right now about further consolidation, he says.

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