XO Holdings Reports First Quarter 2009 Financial Results

HERNDON, VA, May 11 (MARKET WIRE) --
XO Holdings, Inc. (OTCBB: XOHO) today announced its first quarter 2009
financial and operational results, reporting increased revenue and
increased adjusted EBITDA compared to the same period last year. The
company's strong financial results were driven by continued growth in
broadband offerings, comprised of its robust Data and IP products.

Total revenue for the first quarter of 2009 was $377.8 million, an
increase of $16.7 million, or 4.6%, compared to the same period last
year. Net loss in the first quarter of 2009 was $4.5 million, an
improvement of $39.9 million, or 89.9%, compared to the $44.4 million net
loss reported for the same period last year. Adjusted EBITDA (a non-GAAP
financial measure) was $28.1 million in the first quarter of 2009, an
increase of $22.6 million compared to the same period last year. This
significant year-over-year improvement in adjusted EBITDA is primarily
driven by XO's continued investments in customers and infrastructure.

"These positive results are a tangible reflection of XO's solid position
as a leading broadband provider," said Carl J. Grivner, chief executive
officer of XO Holdings. "We're capturing a greater share of the
high-potential enterprise, SMB and carrier markets and realizing strong
growth as a result of our expanding customer base and demand for
innovative, cost-effective and flexible broadband solutions."

First Quarter 2009 Financial Results

%
Change - Q1
2009 - Q1
($ in millions) Q1 2009 Q4 2008 Q1 2008 2008
---------- ---------- ---------- ----------
Revenue $ 377.8 $ 375.2 $ 361.1 4.6%
---------- ---------- ---------- ----------
Adjusted EBITDA (1) $ 28.1 $ 34.4 $ 5.5 412.0%
---------- ---------- ---------- ----------
Adjusted EBITDA % (2) 7.4% 9.2% 1.5% 389.4%
---------- ---------- ---------- ----------
Net Income (Loss) ($ 4.5) $ 21.5 ($ 44.4) -89.9%
---------- ---------- ---------- ----------
Capital Expenditures $ 40.3 $ 42.0 $ 65.3 -38.3%
---------- ---------- ---------- ----------

(1) Adjusted EBITDA is a Non-GAAP financial measure. See the footnote
discussion accompanying the financial statements.

(2) Adjusted EBITDA % is adjusted EBITDA divided by revenue. See the
footnote discussion accompanying the financial statements.

Core Services

During the quarter XO Holdings continued to derive strong revenue growth
from the company's core broadband offerings, including high-speed Internet
access, Ethernet, IP, private line and wavelength services -- among other
highly-scalable and cutting-edge products targeted toward the company's
business services and carrier customers.

In the first quarter of 2009, broadband offerings generated $189.5 million
in revenue, an increase of $36.0 million, or 23.4% from the same period
last year. This revenue growth is partially offset by the continued and
expected decline in XO Holdings' traditional Legacy/TDM services, which
decreased $7.1 million, or 5.8% compared to the same period last year. The
decrease in Legacy/TDM Services was anticipated as the company continues
its transformation into a broadband-focused business.

First Quarter 2009 Service Revenue

% Change
Q1 2009 -
($ in millions) Q1 2009 Q4 2008 Q1 2008 Q1 2008
----------- ----------- ----------- ----------
Core Broadband (1) $ 189.5 $ 180.0 $ 153.5 23.4%
----------- ----------- ----------- ----------
Core Integrated Voice $ 73.7 $ 71.6 $ 85.9 -14.2%
----------- ----------- ----------- ----------
Core Total $ 263.2 $ 251.6 $ 239.4 9.9%
----------- ----------- ----------- ----------
Legacy TDM Services $ 114.6 $ 123.6 $ 121.7 -5.8%
----------- ----------- ----------- ----------
Total Revenue $ 377.8 $ 375.2 $ 361.1 4.6%
----------- ----------- ----------- ----------

(1) Formerly reported as "Core Data and IP Services"

First Quarter Network and Operations Highlights

XO Holdings continued to invest in the company's network, expand its
offerings and execute its strategic corporate initiative to transition to
broadband. In doing so, the company implemented numerous initiatives
across its business services and carrier business units to accelerate
revenue growth and fortify the company's competitive position, all while
providing its customers with best-in-class products and customer care.

"Given today's challenging economic environment, it's more important than
ever that businesses and carriers partner with a communications provider
that understands their needs and enhances their competitive position with
cost-effective broadband solutions," added Grivner. "We're confident that
XO is that provider, and we remain committed to serving our customers with
innovative broadband solutions that enable them to run their businesses
more efficiently."

To strengthen the company's expertise and leadership, XO Holdings
appointed Daniel Wagner as president of the Business Services business
unit, effective January 15, 2009. A telecommunications industry veteran,
Wagner formerly held several senior leadership positions at Global
Crossing and brings a depth of experience and industry knowledge to the
company. In this role, Wagner is dedicated to developing and implementing
strategic initiatives that enhance revenue and drive operational
efficiencies within Business Services.

With new leadership at the helm, Business Services continued to deploy its
innovative services to leading companies throughout the U.S., enhanced its
broadband product suite and expanded its national footprint. This included
expanding the network to encompass the Raleigh, N.C. market and launching
new product offerings such as XO Application Performance Management. In
addition to securing new customers such as St. Louis University, Gold's
Gym and others, XO Business Services also received the prestigious
Schedule 70 IT contract from the U.S. General Services Administration
(GSA), thereby enabling the company to service federal and state
governments, municipalities and other public sector institutions.

XO Communications' Carrier Services business unit also strengthened its
network and expanded its product set during the quarter. One such
enhancement included the launch of a carrier-grade MPLS IP-VPN offering, a
wide area networking service engineered to meet the unique requirements of
the company's wholesale customers. Further reinforcing XO's understanding
of, and responsiveness to, its customers' needs, Carrier Services executed
several rapid network service deployments for notable carriers and
Internet Service Providers (ISPs) during the quarter. The business unit
also surfaced strategic opportunities for international expansion by
forming partnerships with companies such as Pacific Crossing, a
trans-Pacific, privately owned carrier-class service provider.

Subsequent to the close of the first quarter, XO Communications realigned
its offerings by integrating the Nextlink wireless broadband products into
the company's existing business units. This strategic decision to expand
Business Services and Carrier Services will enable XO to manage, market
and sell its offerings in a more efficient manner.

"XO continues to make strategic decisions that will position the company
strongly in this competitive marketplace," concluded Grivner. "We remain
focused on optimizing our operations today for success in the future."

Financial Highlights

In the first quarter of 2009, ACF Industries Holding Corp. agreed to
extend the date on which XO Holdings would be required to redeem its
shares of the company's Class A Convertible Preferred Stock from January
15, 2010 to no later than April 15, 2010. ACF Industries Holding Corp. is
an affiliate of Mr. Carl Icahn, the Chairman of the company's board of
directors, and holds approximately 77.4 percent of the outstanding shares
of the Class A Convertible Preferred Stock.

About XO Holdings

XO Holdings, Inc. (OTCBB: XOHO) is the holding company of XO
Communications, LLC (XOC) and Nextlink Wireless, Inc. (Nextlink).

XOC is a leading provider of 21st century communications services for
businesses and communications services providers, including 50 percent of
the Fortune 500 and leading cable companies, carriers, content providers
and mobile operators. Utilizing its unique and powerful nationwide IP
network and extensive local metro networks and broadband wireless
facilities, XOC offers customers a broad range of managed voice, data and
IP services in 75 metropolitan markets across the United States. For more
information, visit www.xo.com.

Nextlink, whose services going forward have been integrated into XOC's
Carrier Services business unit, has historically provided alternative
access, backhaul and diverse network solutions and services for the
carrier, business and government markets. As one of the nation's largest
holders of fixed wireless spectrum, Nextlink delivers high-quality,
carrier-grade broadband wireless solutions that scale to meet the demands
of today's converged world of communications -- supporting next-generation
mobile and wireline voice, data and video applications. For more
information, visit www.nextlink.com.

XO, XOptions, XOptions Flex and all related marks are either registered
trademarks or trademarks of XO Communications in the United States and/or
other countries. Nextlink is a registered trademark of Nextlink Wireless,
Inc. in the United States and/or other countries.

Cautionary Language Concerning Forward-Looking Statements

The statements contained in this release that are not historical facts are
"forward-looking statements" (as such term is defined in the Private
Securities Litigation Reform Act of 1995) that involve risks and
uncertainties. These statements include those describing our ability to
remain an industry leader, enhance our communications solutions, broaden
our customer reach, grow our revenues, expand our market share, continue
to deliver a broad range of high-capacity network services and mid-band
Ethernet services, pursue growth opportunities, meet the growing demand
for high-speed Internet access services, scale to multi-terabit capable
router nodes and obtain future long-term financing. Management cautions
the reader that these forward-looking statements are only predictions and
are subject to a number of both known and unknown risks and
uncertainties, and actual results, performance, and/or achievements of
Nextlink and XOC may differ materially from the future results,
performance, and/or achievements expressed or implied by these
forward-looking statements as a result of a number of factors. These
factors include, without limitation, our ability to generate sufficient
capital or to obtain additional financing on terms favorable to the
company or at all. Other factors to consider also include the risk
factors described from time to time in the reports filed by XO Holdings,
Inc. with the Securities and Exchange Commission, including its Annual
Report on Form 10-K for the year ended December 31, 2008 and its
quarterly reports on Form 10-Q. XO Holdings, Inc. undertakes no obligation
to update any forward-looking statements, except as otherwise required by
law.

This press release contains certain non-GAAP financial measures.
Reconciliations between the non-GAAP financial measures and the GAAP
financial measures are available below in the accompanying financial
statements.

Accompanying financial statements located
at
http://www.xo.com/about/Pages/investor.aspx

XO HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(Dollars in thousands, except for share and per share data)

------------------------
Three Months Ended
------------------------
March 31, March 31,
2009 2008
----------- -----------
(Unaudited) (Unaudited)

Revenue: $ 377,825 $ 361,149

Cost of service (Excludes depreciation and
amortization expense) (1) 220,004 228,344
Selling, general and administrative (2) 129,964 127,799
Depreciation and amortization 43,396 45,529
Loss on disposition of assets 1,515 46
----------- -----------
Total costs and expenses 394,879 401,718
Loss from operations (17,054) (40,569)

Investment gain, net 9,757 4,121
Interest income 3,907 878
Other non-operating income - 250
Interest expense (786) (8,750)
----------- -----------

Net loss before income taxes (4,176) (44,070)

Income tax expense (292) (342)
----------- -----------

Net loss (4,468) (44,412)

Preferred stock accretion (19,508) (3,701)
----------- -----------

Net loss allocable to common shareholders $ (23,976) $ (48,113)
=========== ===========

Net loss allocable to common shareholders per
common share, basic and diluted $ (0.13) $ (0.26)
----------- -----------

Weighted average shares, basic and diluted 182,075,035 182,075,035
=========== ===========
Total adjusted EBITDA (3) $ 28,111 $ 5,491
=========== ===========

XO HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands)

As of As of
March 31, December 31,
2009 2008
------------- -------------
(Unaudited)

Cash and cash equivalents $ 283,638 $ 256,747
Marketable and other securities 107,683 117,148
Accounts receivable, net 145,729 152,622
Other current assets 35,862 41,200
Property and equipment, net 725,772 724,404
Intangibles, net 53,515 53,515
Other assets, net 42,602 30,348
------------- -------------
Total assets $ 1,394,801 $ 1,375,984
============= =============

Accounts payable and other current
liabilities $ 307,676 $ 314,903
Other long-term liabilities 100,806 84,930
Class A convertible preferred stock 263,875 259,948
Class B convertible preferred stock 583,808 573,795
Class C perpetual preferred stock 206,446 200,877
Total stockholders' deficit (67,810) (58,469)
------------- -------------
Total liabilities, preferred stock and
stockholders' deficit $ 1,394,801 $ 1,375,984
============= =============

XO HOLDINGS, INC.
Reconciliation of Net Loss to Adjusted EBITDA
(Dollars in thousands)

-------------------------------------------
Three Months Ended
-------------------------------------------
March 31, December 31, March 31,
2009 2008 2008
------------- ------------- -------------
(Unaudited) (Unaudited) (Unaudited)

Net income (loss) before
income taxes $ (4,176) $ 16,467 $ (44,070)

Depreciation and amortization 43,396 48,713 45,529

Loss on disposition of assets 1,515 4,171 46

Investment gain, net (9,757) (30,489) (4,121)

Interest (income) expense, net (3,121) (4,680) 7,872

Other non-operating income - (2) (250)

------------- ------------- -------------
EBITDA $ 27,857 $ 34,180 $ 5,006
============= ============= =============

Stock-based compensation 253 259 483

------------- ------------- -------------
Adjusted EBITDA (3) $ 28,110 $ 34,439 $ 5,489
============= ============= =============

(1) For the three months ended March 31, 2008, we adjusted the tax
expenditure due to certain taxes being overpaid and certain taxes being
recorded as a reduction in the liability. The Company concluded the errors
were not material and had an effect of increasing the loss by $4.1
million, or $0.02 per basic and diluted share.

(2) In the fourth quarter of 2008, the Company determined that during each
period between 2004 and the third quarter of 2008, it had incorrectly
calculated the net present value for its underutilized operating leases.
As a result, the Company's underutilized operating lease liability was
understated by $10.0 million as of March 31, 2008 and the net loss was
understated by $1.1 million for the three months ended March 31, 2008. In
addition, the Company recorded an immaterial prior period adjustment in
December 2008.

(3) Adjusted EBITDA is defined as net income or loss before depreciation,
amortization, (gain)/loss impairment/disposal of assets, interest expense,
interest income, investment gains or losses, income tax expense or
benefit, cumulative effect of change in accounting principle, and
stock-based compensation. Adjusted EBITDA is not intended to replace
operating income (loss), net income (loss), cash flow, and other measures
of financial performance reported in accordance with generally accepted
accounting principles in the United States. Rather, Adjusted EBITDA is an
important measure used by management to assess operating performance of
the Company. Adjusted EBITDA as defined here may not be comparable to
similarly titled measures reported by other companies due to differences
in accounting policies. Additionally, adjusted EBITDA as defined here
does not have the same meaning as EBITDA as defined in our SEC filings.

Contact:
Courtney Harper/Cassidy Neveux/Charlotte Walker
Reputation Partners (for XO Communications)
T: 312-819-5722

Copyright 2009, Market Wire, All rights reserved.

-0-