LEVEL 3 COMMUNICATIONS SELECTS KIEWIT TO BUILD ADVANCED NATIONAL FIBER OPTIC NETWORK
15,000 Mile Network To Connect Cities Across The U.S.
OMAHA, NEB., June 18, 1998 – Level 3 Communications, Inc. (Nasdaq:LVLT) today announced that it has selected Peter Kiewit Sons', Inc., to build a 15,000 mile national communications network, which will serve as the intercity or long distance portion of the Level 3 Network.
This network will be interconnected with Level 3's local networks in cities across the United States. Overall cost of the project is estimated at approximately $2 billion. The contract calls for construction to commence immediately. Construction will take place in phases, with network completion expected in the first quarter of 2001.
"Kiewit's national presence and experience in managing projects of this scope and magnitude were clearly factors that were considered as we went through the process of selecting a construction program manager from among several firms," said James Q. Crowe, president and CEO of Level 3. "Another key factor was Kiewit's willingness to tie its compensation directly to performance." "We have great respect for the Kiewit organization and its ability to complete projects on time and within budget," said Crowe. "Kiewit is recognized as one of the leaders in building communications networks, having built networks for a number of providers including MFS Communications."
Innovative Contract Ties Compensation to Performance
The significant size and complexity of the project made it important to align the interests of the selected program manager and Level 3. The negotiation produced a contract that provides for Kiewit to be reimbursed for its auditable cost relating to all direct and indirect project level costs such as payroll, materials, subcontracts, equipment, rent and supplies. Above that, Kiewit will have the opportunity to earn an award fee that will be tied to performance results as measured and determined by Level 3.
Award Fee Contract
To determine the fee to be awarded, Level 3 will evaluate Kiewit's performance in five areas, with cost and speed of construction receiving the greatest weight. Kiewit will also be evaluated on its performance in the areas of quality, safety and program management. The award fee received by Kiewit will be determined by Level 3's assessment of Kiewit's performance in each of these areas.
Level 3 Network To Be Continuously Upgradeable
Level 3's network is designed to be continuously upgradeable, so that the network can evolve to accommodate changes in both technology and customer demand. Unlike the networks of most other competitors, which were constructed with no spare conduits, Level 3 will install six to eight conduits along its network. Initially, fiber cable will be installed in only one of the conduits. The remaining conduits will be available for use as fiber technology and customer demands change.
Network To Be Optimized For IP Technology
Level 3's network will utilize Internet Protocol (IP) technology, rather than older circuit switching technology predominantly used by major telephone companies. In addition to the intercity network, Level 3 is also building IP-based local networks in cities across the U.S. Development of these networks is currently underway in 15 cities and construction contracts are being negotiated independently from the intercity portion to be built by Kiewit. A majority of the intercity network will be constructed along railroad rights of way. Level 3 recently announced an agreement with the Union Pacific Railroad Company granting Level 3 rights of way along nearly 7,800 miles of Union Pacific rail routes, primarily west of the Mississippi River. Negotiations for the balance of required rights of way are ongoing.
About Kiewit
Founded in 1884, Peter Kiewit Sons', Inc. is one of North America's largest and most respected construction organizations. In 1997, revenues were $2.8 billion. The company is the largest firm in the construction industry owned entirely by its active employees. Headquartered in Omaha, Kiewit serves clients through a network of Kiewit and affiliate locations across the United States, Canada and several international locations. The firm's World Wide Web address is www.kiewit.com.
About Level 3 Communications
Level 3 Communications, Inc. (NASDAQ: LVLT), an international communications company, operates one of the largest Internet backbones in the world, connecting 180 markets in 18 countries. The company serves a broad range of wholesale, enterprise and content customers with a comprehensive suite of services including: Internet Protocol (IP) services, broadband transport and infrastructure services, colocation services, voice and voice over IP services, content delivery and media distribution services. These services provide the building blocks to enable Level 3’s customers to meet their growing demands for advanced communications solutions. The company’s Web address is www.Level3.com.
"Level 3 Communications,” "Level 3," the red 3D brackets and the Level 3 Communications logo are registered service marks of Level 3 Communications, LLC in the United States and/or other countries. Level 3 services are provided by wholly owned subsidiaries of Level 3 Communications, Inc. Any other service, product or company names recited herein may be trademarks or service marks of their respective owners.
Forward-Looking Statement
Some of the statements that we make in this press release are forward looking in nature. These statements are based on management’s current expectations or beliefs. These forward looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside our control, which could cause actual events to differ materially from those expressed or implied by the statements. The most important factors that could prevent us from achieving our stated goals include, but are not limited to our ability to: successfully integrate acquisitions; increase the volume of traffic on our network; defend our intellectual property and proprietary rights; develop new products and services that meet customer demands and generate acceptable margins; successfully complete commercial testing of new technology and information systems to support new products and services; attract and retain qualified management and other personnel; and meet all of the terms and conditions of our debt obligations. Additional information concerning these and other important factors can be found within Level 3’s filings with the Securities and Exchange Commission. Statements in this press release should be evaluated in light of these important factors. Level 3 is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
