The Virginia-based CLEC on Monday reported a net loss of $16.6 million, $12.1 million higher than the $4.5 million net loss a year earlier. Revenue fell $8.3 million to $369.5 million, mostly because XO increased wholesale long-distance prices on some routes to improve its margins.
Still, there was some good news. XO’s broadband products created $209.8 million in revenue, a $20.4 million rise, as IP VPN, IP Flex, Ethernet and Dedicated Internet Access all saw more demand. And XO continued to operate with zero debt. Meanwhile, wholesale carrier VoIP termination sales dropped off by $3.5 million as XO hiked up those charges. And, as expected, revenue from legacy voice services fell again, by $10.8 million, as XO moves its customers off of TDM platforms.
And finally, in the first quarter, XO finished upgrading its network for 40gbps services in all of its major metro markets in the United States. The CLEC also expanded its international reach. For example, it added its fourth gateway to Latin America so it can provide direct network access to telecom companies in the United States and Mexico. And it partnered with an international carrier to offer high-capacity circuits between the United States and Europe, and beefed up its IP operations and peering in four European cities. That bolstered XO’s trans-Atlantic capacity by about 30 percent.
XO further noted in its filings with the Securities and Exchange Commission that it remains embroiled in several years-old lawsuits – some with municipalities and utilities, others with some shareholders. And the company said the Universal Service Administrative Co. is auditing for Universal Service Fund contribution compliance for 2007. XO doesn’t know when the audit will be complete or what the outcome may be. If XO is determined to have shorted its USF payments for 2007, the finding “could result in significant retroactive assessment of universal service fund contribution liability and associated interest, penalties, fines or forfeitures,” XO noted in its quarterly filing.
Shares of XO remained unchanged in Tuesday early afternoon trading, at 73 cents.