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PART I
ITEM 1. BUSINESS
XO Holdings, Inc., a Delaware corporation, was incorporated in December 2005 and has its principal executive
offices at 13865 Sunrise Valley Drive, Herndon, Virginia 20171. XO Holdings, Inc. is a holding company for
its direct and indirect operating subsidiaries, including XO Communications, LLC (XO Holdings, Inc., together
with its subsidiaries, “XO Holdings,” “XOH,” or the “Company”). The Company maintains an internet website
at www.xo.com. Any information included in XOH’s website is not incorporated by reference into this Annual
Report. We use the terms “we”, “our” and “us” to refer to XOH in this Annual Report. Our Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements for our
annual stockholders meeting, and amendments to those reports are available free of charge via a link on the
investor relations section of our website to the Securities and Exchange Commission. In addition, we have
posted on our website our Code of Ethics applicable to our principal executive officer, principal financial
officer, controller, treasurer and other persons performing similar functions.
Overview
We are a leading facilities-based, competitive telecommunications services provider that delivers a comprehen-
sive array of telecommunications services using both advanced IP and traditional Time Division Multiplexing
(“TDM”) technologies to the telecommunications provider, business and government markets. We serve the
broad telecommunications needs of our customers through an extensive telecommunications network that we
operate. As one of the nation’s largest competitive communications companies, we are uniquely positioned as
a leading local and national alternative to the Incumbent Local Exchange Carrier (“ILEC”) for businesses
and large enterprises. We operate in a market that continues to change rapidly as a result of technological
advancements and industry consolidation. The majority of market share is maintained by the legacy ILECs.
However, competitive service providers, like us, have succeeded in gaining market share from the ILECs by
offering comparable services at competitive prices.
We earned revenues in excess of $1.5 billion for 2009 with continued revenue growth and improvement in
operating losses over the each of the past 3 years. We expect to further grow our share within the retail and
wholesale business-to-business telecommunications market by using our network assets to offer Broadband
services primarily to business and carrier customers. We have invested over $400 million during the past two
years in order to enhance and expand our extensive network and improve efficiencies.
Strategy
We continue to execute our strategic business plan by focusing on several key elements:
Focus on Business and Carrier Customers. XOH provides a broad portfolio of reliable, scalable and
high-speed telecommunications services tailored for enterprise, business, carrier and content delivery
customers. XOH offers traditional and next-generation solutions tailored to these customers. We continue
to invest in rolling out new product offerings to meet the emerging needs of these customers.
Focus on Broadband Services. XOH has built a state-of-the-art network designed to carry data and IP
traffic. This recognizes the on-going shift from traditional telephony services to new, IP-based services.
During 2009, we realized almost half of our revenue from the sale of data and IP-related services, and
expect to see a continued shift in our revenue mix to these services in 2010. We continue to place
significant focus on developing new IP-based services. For our carrier customers, in 2008 we rolled out
several new products, including Ethernet Hub and Carrier MPLS-enabled Internet Protocol Virtual Private
Network (“MPLS IP-VPN”). For our business customers, we rolled out enhancements to several of our
service offerings including MPLS IP-VPN, ethernet, and integrated VoIP, including our award-winning
unified communications package, “XO Anywhere.” During 2009, XOH launched, “Ethernet Everywhere”,
a service availability guarantee ensuring its carrier customers can obtain ethernet service anywhere within
our coverage area. In addition, XO’s Business Services launched its XO Enterprise SIP offering. This new
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