McLeodUSA Extends Contract with State of Iowa for Operation and Mainte

McLeodUSA Extends Contract with State of Iowa for Operation and Maintenance of the Iowa Communications Network -ICN-

    Business Editors

    CEDAR RAPIDS, Iowa--(BUSINESS WIRE)--Jan. 3, 2005--

Five additional years extends current agreement to December 31, 2009
    McLeodUSA (Nasdaq:MCLD), one of the nation's largest independent competitive telecommunications services providers, today announced that it has reached agreement with the State of Iowa to extend its current contract for maintenance of the Iowa Communications Network (ICN) for an additional five years. McLeodUSA will continue to operate the ICN Network Operations Center at Camp Dodge near Des Moines, perform field services and conduct network locate services statewide as needed. This contract extension will result in recurring revenue to McLeodUSA of approximately $5 million annually over the next five years.
    "We are proud of our successful association with the operation and maintenance of this important and innovative communications network in the State of Iowa," stated Chris A. Davis, McLeodUSA Chairman and CEO. "We thank the state for their continued confidence in McLeodUSA and we look forward to continuing our ten year heritage of excellent service to the State for the next five years."
    "I am pleased that we are extending this mutually beneficial relationship with McLeodUSA," said John Gillispie, Executive Director of the Iowa Communications Network. "The continuity of staying with this very capable service provider is an advantage to ICN users as we maintain our good service and reduce our costs."

    About The Iowa Communications Network

    The ICN equalizes learning opportunities for urban and rural students on a statewide basis by providing affordable full-motion video service and Internet access. The state-owned and operated fiber optic network connects 6,000 Iowans daily via full-motion video at 774 sites located in schools, colleges, universities, National Guard armories, libraries, hospitals, and county and state government offices. The ICN also provides telephone and data services. Visit the ICN's website at www.icn.state.ia.us

    About McLeodUSA

    McLeodUSA provides integrated communications services, including local services, in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The Company is a facilities-based telecommunications provider with, as of September 30, 2004, 38 ATM switches, 39 voice switches, 696 collocations, 435 DSLAMs and 2,474 employees. As of April 16, 2002, Forstmann Little & Co. became a 58% shareholder in the Company. Visit the Company's Web site at www.mcleodusa.com

    Some of the statements in this press release include statements about our future expectations. Statements that are not historical facts are "forward-looking statements" for the purpose of the safe harbor provided by Section 21E of the Exchange Act and Section 27A of the Securities Act. Such statements may include projections of financial and operational results and goals, including revenue, EBITDA, Adjusted EBITDA, profitability, savings and cash. In some cases, you can identify these so-called "forward-looking statements" by our use of words such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "project," "intend" or "potential" or the negative of those words and other comparable words. These forward-looking statements are subject to known as well as unknown risks and uncertainties that may cause actual results to differ materially from our expectations. Our expectations are based on various factors and assumptions and reflect only our predictions. Factors that could cause actual results to differ materially from the forward-looking statement include technological, regulatory, public policy or other developments in our industry, availability and adequacy of capital resources, current and future economic conditions, the existence of strategic alliances, our ability to generate cash, our ability to implement process and network improvements, our ability to attract and retain customers, our ability to migrate traffic to appropriate platforms and changes in the competitive climate in which we operate. These and other risks are described in more detail in our most recent Annual Report on Form 10-K filed with the SEC. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise.

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CONTACT: McLeodUSA Incorporated, Cedar Rapids Investor Contact: Bryce E. Nemitz, 319-790-7800 or Press Contact: Bruce A. Tiemann, 319-790-7800 mcleodusa_ir@mcleodusa.com or Iowa Communications Network Tamara Fujinaka, 515-725-4658 tami.fujinaka@iowa.gov

KEYWORD: IOWA INDUSTRY KEYWORD: TELECOMMUNICATIONS SOFTWARE NETWORKING INTERNET E-COMMERCE MARKETING AGREEMENTS SOURCE: McLeodUSA Incorporated

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