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Global Crossing to sell local phone unit

The fiber-optic company plans to sell its local phone business to Citizens Communications for $3.65 billion in cash and reportedly is in talks to sell its Web-hosting unit to rival Exodus.

Fiber-optic company Global Crossing today said it will sell its local telephone business to Citizens Communications for $3.65 billion in cash.

The deal helps streamline Global Crossing's North American operations and allows it to focus on building and delivering telecommunications services and its broadband network, the company said in a statement.

Global Crossing's local phone services comprise 1.07 million access lines, and it is the tenth-largest incumbent local exchange carrier (ILEC) in the United States. Approximately half of those operations are in the Rochester, N.Y., area, with the remainder in 13 states, including Minnesota, Iowa, Wisconsin and Pennsylvania.

Citizens Communications, a local exchange company, will have more than 3 million access lines in more than 22 states after purchasing the Global Crossing unit.

The agreement is subject to both federal and state regulatory approvals, which are expected to take approximately nine months to obtain.

In related news, The Wall Street Journal reported that Global Crossing is also in serious discussions to sell its GlobalCenter Web-hosting business to rival Exodus Communications for about $6 billion to $7 billion in Exodus stock, according to people familiar with the matter.

Global Crossing declined to comment on the reported discussions, and Exodus was unavailable for comment.