Level 3 to Exit Genuity's Hosting Business

Citing unfavorable economics, Level 3 Communications announced plans to exit the hosting business it recently acquired as part of its purchase of Genuity. The hosting customers and operations will be served by Computer Sciences Corporation (CSC), which will assume certain lease obligations for data centers in Chantilly, Virginia, and Cambridge, Massachusetts. As part of the deal, CSC will also use Level 3’s network services to serve hosting customers and has agreed to offer employment to about 125 of the hosting unit’s employees. Level 3 said the hosting unit was not profitable and did not fully leverage the operational capabilities of its network. Hosting operations were expected to generate revenues of approximately $40 million, and EBITDA of negative $5 million, for the full year 2003. Level 3 said the hosting business served about 2% of the approximately 5,000 customer contracts acquired by Level 3 through the Genuity transaction.
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