Business News – IXC Prepares for CBI Merger

Posted: 11/1999

IXC Prepares for CBI Merger
By Ken Branson

Used-to-bad-news IXC Communications Inc., Austin, Texas, is turning around as it
prepares to be acquired by Cincinnati Bell Inc. (CBI), Cincinnati, in the fourth quarter.
In the wake of the news of CBI’s intention to acquire IXC in a $3.2 billion stock swap, a
river of money has opened for IXC, and an Internet telephony deal has floated in on it.

The river is not the Mississippi, but a very respectable stream, indeed: a $310 million
credit facility from The Bank of America N.A. intended to fund IXC’s operations through
the closure of the acquisition and due in full, immediately, should the acquisition should
fall through.

The Internet telephony deal is with e-Net Inc., Germantown, Md., which makes voice over
Internet protocol (VoIP) hardware and software and which, through a subsidiary using IXC’s
Gemini 2000 network, wants to become an Internet telephony service provider (ITSP).
e-Net’s subsidiary is ZeroPlus.com Inc.

In a year of dramatic weather, this signals a sea change for IXC, which already has
started to move away from its old course as a long distance wholesaler and toward what its
managers say is a destiny as a provider of bandwidth to small and medium-sized businesses.
CEO John Zrno, brought in to change IXC’s course, has been hiring new sales
representatives and schooling them in the new path. Rick Ellenberger, president and CEO of
Cincinnati Bell and of the new company after the acquisition closes, has made it clear
that he has his own designs on the Gemini 2000 network, mainly involving Zoomtown.com,
CBI’s Internet portal subsidiary. With Gemini 2000 at its disposal, CBI would have the
bandwidth to offer many more services through Zoomtown.com–including, perhaps, IP
telephony through ZeroPlus.com.

"This (e-Net) works exceptionally well with Zoomtown’s portal," says Dominick
DeAngelo, senior vice president, product services for IXC. "The neat thing about it
is, you have the customer interface, which people sometimes underestimate. e-Net brings
that. Then you need the access, and if you do DSL (digital subscriber line), it works
really sweet. And then you have the backbone, which we believe is IP voice-capable."