BROOMFIELD, Colo., Oct. 23 /PRNewswire-FirstCall/ -- Level 3 Communications, Inc. (Nasdaq: LVLT - News) reported consolidated revenue of $1.061 billion for the third quarter 2007, compared to consolidated revenue of $1.052 billion for the second quarter 2007.

The net loss for the third quarter 2007 was $174 million, or $0.11 per share, compared to a net loss of $202 million, or $0.13 per share, for the second quarter 2007.

Consolidated Adjusted EBITDA(1) increased to $215 million in the third quarter 2007, compared to $193 million for the second quarter 2007.

"While we continued to grow Core Communications Services revenues and we did meet our guidance measures in the third quarter, the company had difficulties with provisioning orders for its services," said James Q. Crowe, CEO of Level 3. "The breadth of the problem was greater than we had earlier diagnosed, and we did not increase provisioning capacity as we had expected. This increase in provisioning capacity was necessary to meet the revenue increases we had previously projected. As a result, we are lowering our Consolidated Adjusted EBITDA guidance for the full year 2007 and the full year 2008. We are disappointed by our performance, particularly given the strength of the current market. We believe we have identified the underlying causes of our provisioning constraints, and we have begun to implement additional changes. We are focused on correcting this issue as quickly as possible."

Third Quarter 2007 Financial Results Metric Consolidated Third Quarter ($ in millions) Third Projections(1) Revenue Quarter Results Core Communications Services $909 $905-$925 Other Communications Services $63 $60-$65 SBC Contract Services $71 $40-$60 Total Communications Revenue $1,043 $1,005-$1,050 Other Revenue $18 Total Consolidated Revenue $1,061 Consolidated Adjusted EBITDA (2)(3) $215 $210-$230 Capital Expenditures $155 Unlevered Cash Flow (3) $76 Free Cash Flow (3) $(54) Communications Gross Margin (3) 58% Communications Adjusted EBITDA Margin (3) 21% (1) Projections issued July 26, 2007. (2) Consolidated Adjusted EBITDA excludes $24 million in non-cash compensation expense and includes $1 million of cash restructuring charges for the third quarter 2007. (3) See schedule of non-GAAP metrics for definition and reconciliation to GAAP measures. Communications Business Revenue

Total Communications Revenue increased to $1.043 billion during the third quarter, versus $1.035 billion for the previous quarter. Contributing to this increase was a $21 million increase in Core Communications Services revenue, offset by a slightly less than expected $13 million decline in Other Communications Services and SBC Contract Services revenue. During the third quarter 2007, the company recognized $4 million in termination revenue in its Core Communications Services revenue, compared to $2 million during the second quarter 2007.

Communications Revenue Quarter Quarter Percent ($ in millions) ended ended June Change September 30, 2007 30, 2007 Transport and Infrastructure(2) $438 $420 4 % IP and Data(1) (2) $144 $143 1 % Voice $291 $292 <(1)% Vyvx $36 $33 9 % Total Core Communications Services $909 $888 2 % Other Communications Services $63 $71 (11)% SBC Contract Services $71 $76 (7)% Total Communications Revenue $1,043 $1,035 1 % (1) Communications revenue for the third quarter includes approximately $1 million from Servecast. (2) A billing methodology change that took effect July 1, 2007 resulted in a $3 million revenue impact, with higher revenue recognized for certain customers in Transport and Infrastructure and lower revenue recognized in IP and Data compared to the second quarter.

In the third quarter, Level 3''s top 10 customers, in alphabetical order, were Alltel, AT&T Inc., British Telecom, Comcast Corporation, Commonwealth of Pennsylvania, EarthLink, Inc., Qwest Communications International Inc., Time Warner, Inc., Verizon Communications and Vonage Holdings Corporation. Including the SBC contract, these top 10 customers represent 32 percent of Total Communications revenue, and excluding the SBC contract, 27 percent of Total Communications revenue.

Core Communications Services

Core Communications Services revenue increased quarter over quarter by 2 percent. The increase was due primarily to the growth in transport services and Vyvx broadcast services, although growth was moderated across all services due to service activation issues.

Transport and Infrastructure revenues grew during the quarter resulting primarily from growth in colocation, wavelengths services and metro transport. IP and Data services revenue grew slightly during the quarter, primarily due to growth in High Speed IP revenue and the addition of Servecast revenue during the quarter, offset by declines in Dedicated Internet Access revenue resulting from seasonality and delayed installations.

Voice revenues declined slightly during the quarter, with continued growth in the cable and wireless segments offset by a decline in voice revenues in the voice service provider segment. Vyvx revenues increased sharply during the quarter, driven primarily by an increase in advertising distribution revenue and continued growth in high definition programming.

In the third quarter 2007, the breakdown of Core Communications Services revenue by each market group was as follows:

-- Wholesale Markets Group - 56 percent -- Business Markets Group - 26 percent -- Content Markets Group - 11 percent -- European Markets Group - 7 percent

Other Communications Services

Other Communications Services revenue declined by 11 percent to $63 million during the quarter, as a result of expected declines in managed modem services.

SBC Contract Services