EarthLink to Acquire One Communications Corp


Expands EarthLink Business Fiber Network and Customer Base in Northeast, Midwest and Mid-Atlantic Regions

ATLANTA, Dec. 20, 2010 --

o Builds on Deltacom Acquisition, Further Establishes EarthLink as a Leading IP Infrastructure and Services Company

o EarthLink Intends to Set New Quarterly Dividend Rate to Retain Financial Flexibility for Additional Strategic Initiatives

EarthLink, Inc. (Nasdaq: ELNK) today announced a definitive merger agreement under which EarthLink will acquire One Communications Corp. (One Comm) for $370 million, which includes payment of approximately $285 million of One Comm net debt. One Comm stockholders have the right to elect to receive the net merger consideration in the form of cash or EarthLink common stock. The transaction purchase price represents a multiple of approximately 3.7x Adjusted EBITDA (a non-GAAP measure, see definition in "Non-GAAP Information for One Communications Corp." below) for the twelve months ended September 30, 2010, including $20 million in expected cost synergies and excluding one-time transaction costs. One Comm's shareholders will retain liability for all costs relating to One Comm's pending litigation with Verizon New York Inc. The merger has been approved by the Boards of Directors of both companies and the stockholders of One Comm.

The acquisition will provide EarthLink with:

o a strong IP network footprint in the Northeast, Midwest, and Mid Atlantic regions;
o overlapping connection cities with EarthLink Business (formerly Deltacom) long-haul routes in major markets including Washington, D.C., Baltimore, Philadelphia and New York City;
o geographical expansion and scale for managed IP services product strategy supported by a talented One Comm employee base; and
o a solid foundation for potential future acquisitions of revenue bases in the region.

One Comm, with corporate headquarters in Burlington, Massachusetts, and operational headquarters in Rochester, New York, is one of the largest privately held, multi-regional integrated telecommunications solutions providers in the United States. With approximately 1,500 employees, One Comm serves approximately 113,000 small and mid-sized business customers in 17 states across the Northeast, Mid-Atlantic and Upper Midwest, including the major metropolitan markets of Boston, New York, Philadelphia, Baltimore and the District of Columbia. One Comm's products include a wide range of data, voice (both traditional and VoIP) and integrated voice/data solutions that scale with bandwidths ranging from T1s to fiber-based speeds. One Comm's network consists of 629 collocations, connected by more than 11,700 route miles of fiber.

EarthLink plans to integrate One Comm into its newly established EarthLink Business division, which currently consists of products and capabilities of its former New Edge Network, Deltacom and EarthLink Business Solutions divisions. After the closing of this transaction, EarthLink Business will operate a nationwide IP network with underlying fiber assets in 30 of the top 50 MSAs in the country. The combined fiber network will span approximately 28,000 route miles across 27 states, with 923 collocations, 55 IP and circuit-based switches and 68 metro fiber rings. With the addition of One Comm, EarthLink will have nearly 3,500 employees nationwide.

"The acquisition of One Communications is a significant development in further transforming EarthLink into one of the largest IP services companies in the U.S. We will now have a fiber-based IP network that covers a substantial portion of the key business markets across the eastern half of the United States, as well as substantial revenue and EBITDA scale in our strategic line of business," said EarthLink Chairman and Chief Executive Officer Rolla P. Huff. "We fully recognize the declining trend line of One Comm's revenue and EBITDA as the company has struggled to deal with the uncertainty of their debt covenants and pending litigation. We have taken the opportunity to acquire their network assets and customer base at an attractive valuation multiple. We are confident that EarthLink's nationwide IP service offering, substantial free cash flow, strong balance sheet, and strong track record of customer service and operating excellence will add meaningful stability to the financial and operating performance of the company."

"As part of our evolution, our management team and Board of Directors have carefully evaluated our capital structure alternatives for our transformed business. Given the substantial opportunities we believe exist for continued value creation by investing in our strategic line of business, the Board of Directors has decided to adjust the EarthLink quarterly dividend rate to $0.05 per share. We are pleased that EarthLink will be uniquely positioned in this industry to offer its shareholders a dividend yield," added Huff.

EarthLink ended the third quarter of 2010 with $572 million in cash and marketable securities pro forma the recent closing of its $527 million acquisition of ITC^DeltaCom. EarthLink's share repurchase program has approximately $146 million available under the current authorization.

Pro Forma Financials

On a pro forma basis, for the 12-month period ended September 30, 2010, EarthLink and Deltacom together with One Comm would have generated approximately $1.64 billion in revenue, $1.15 billion of which is from its combined business services segments. During this period, One Comm generated $79 million in Adjusted EBITDA (a non-GAAP measure, see definition in "Non-GAAP Information for One Communications Corp." below). EarthLink expects to achieve annual cost synergies of approximately $20 million to be fully realized on a run rate basis by the end of the third year after closing.

All of One Comm's outstanding indebtedness will be paid by the shareholders of One Comm from the cash proceeds of the merger.

Transaction Terms and Structure

The agreement provides for EarthLink's acquisition of One Comm by means of a merger of a newly formed indirect subsidiary with and into One Comm, with One Comm surviving as an indirect wholly owned subsidiary of EarthLink. The agreement contains customary representations, warranties, covenants, closing conditions and escrow and indemnification protection.

The closing of the merger is subject to the satisfaction of several conditions, including receipt of required regulatory approvals from the Federal Communications Commission and certain state public utilities commissions and expiration or termination of the waiting period under the Hart-Scott-Rodino Act. Subject to the fulfillment of these conditions, the transaction is expected to close in the first half of 2011.

Greenhill & Co. LLC acted as financial advisor to EarthLink and rendered a fairness opinion to the EarthLink Board of Directors in connection with the transaction. Houlihan Lokey Capital, Inc. also rendered a fairness opinion to the EarthLink Board. King & Spalding LLP was EarthLink's M&A legal counsel. Blackstone Advisory Services L.P. acted as financial advisor to One Comm, and Kelley, Drye & Warren LLP was its legal counsel.

Conference Call

EarthLink will host a conference call to discuss the transaction today at 8:45 a.m. Eastern Time Those wishing to participate in the call should dial 800-706-0730 (U.S. and Canada) or 706-634-5173 (international) approximately 10 minutes prior to the start of the call and reference the "EarthLink Conference Call."

A listen-only webcast will be available at ir.earthlink.net/index.cfm. A replay of the call will be available two hours after the call by dialing 800-642-1687 Passcode 33481648.

About EarthLink

EarthLink, Inc. (Nasdaq: ELNK) is a leading provider of Internet Protocol (IP) infrastructure and services to medium-sized and large businesses, enterprise organizations and over 1.5 million consumers across the United States. The company has been providing Internet access and communications services for decades and has earned an award-winning reputation for both outstanding customer service and product innovation. For consumers, EarthLink is a leading Internet Service Provider connecting people to the power and possibilities of the Internet. EarthLink Business(TM) provides voice, data, mobile and equipment services over a Southeast fiber network and MPLS-based services nationwide. For more information, visit EarthLink's website www.earthlink.net.

SOURCE EarthLink, Inc.

CONTACT:
Investors,
Louis Alterman,
+1-404-748-7650,
+1-678-472-3252 (mobile),
altermanlo@corp.earthlink.net,

Media,
Michele Sadwick,
+1-404-748-7255,
+1-404-769-8421 (mobile),
sadwick@corp.earthlink.net

Web Site: www.earthlink.net

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