XO Communications Inc. is selling its wireline assets for $700 million and turning itself into a fixed broadband wireless services provider for businesses and carriers.

The company is selling to its largest creditor, billionaire investor Carl Icahn, whose company, Elk Associates LLC, will take over the XO name. XOs board of directors several months ago appointed a special committee to seek bids for its wireline business; Elk Associates won the bid. If the deal falls through, XO would pay Elk Associates a break-up fee of 1 percent.

XO will use the $700 million to repay its debt and says it expects its wireless business which has yet to be named to be debt-free and have more than $300 million to fund its operations.

The transaction should close late this year or in early 2006, according to XO. XO says it expects its still-unnamed wireless business and the new XO Communications will resell each others services.

XO owns fixed broadband wireless spectrum in the 28 GHz-31 GHz range, covering more than 70 U.S. metropolitan markets.