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Level 3 Says on the Prowl for Acquisitions

09/30/2003

NEW YORK (Reuters) - Level 3 Communications Inc. said on Tuesday it aims to acquire financially distressed telecommunications companies as it looks for new ways to boost its revenues.

With about $1 billion in cash on its books, Level 3 has "lots of opportunities to make acquisitions like the ones we have already made," Level 3 Chief Executive James Crowe told investors at a Goldman Sachs communications conference.

Crowe said he believes the company could get additional sources of funding if it found a "tremendous opportunity" that exceeded the size of its wallet.

Level 3, the high-speed communications network operator backed by investor Warren Buffett, in February acquired most of the assets of bankrupt rival Genuity Inc. for $242 million.

"We want companies that offer largely the same services and are in largely the same geographic area so we can take advantage of some synergies," Crowe said.

Earlier this month, Level 3 cut its third-quarter revenue forecast due to lower-than-expected traffic on its network.

Crowe said he expects Level 3's fourth-quarter revenues to grow about 13 percent from the third-quarter level, and the company aims to boost that growth-rate in the future.

"We want to improve that through organic and acquired revenues," Crowe said.

Broomfield, Colorado-based Level 3 and other communications companies have struggled amid a glut of fiber-optic network capacity, scant customer demand and debt amassed during network construction.

The company would use some of its cash to pay down debt if it failed to find any attractive acquisition targets.

The company had about $5.6 billion in debt as of June 30. Earlier this month it said it would sell $500 million of senior notes in a private offering to repay existing debt.

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