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Robust Fiber Network expansion with the Cavalier Telephone Acquisition; 2010 revenue growth of 2.8% driven by Managed Services Acquisitions

PAETEC Holding Corp. (NASDAQ GS: PAET) today announced fourth quarter 2010 and full year 2010 financial and operating results. "We are pleased to announce that we have met our revenue and adjusted EBITDA guidance for full year 2010," said Arunas A. Chesonis, chairman and CEO. "We continue to vigorously integrate our December acquisition of Cavalier and look forward to adding XETA's growing business to PAETEC in 2011." Financial results for full year 2010 included the following:

• Full year 2010 revenue of $1,623.8 million, growth of 2.8%;
• Full year 2010 adjusted EBITDA* of $264.9 million, growth of 3.1%;
• Full year 2010 net loss of $57.7 million, compared to a net loss of $28.7 million for 2009;
• 32nd consecutive quarter of positive free cash flow*, which increased to $139.9 million for full year 2010;
• Full year 2010 net cash provided by operating activities of $125.8 million; and
• A cash balance of $95.5 million at December 31, 2010.

Full Year 2010 Results

Revenue

• Total revenue of $1,623.8 million for 2010 increased 2.8% or $43.6 million over 2009, primarily due to the 2010 acquisitions of U.S. Energy Partners, Quagga Corporation, and Cavalier Telephone Corporation.
• Core network services revenue for 2010 was $1,140.5 million, a marginal decrease of $1.3 million from 2009 primarily due to a decline in usage-based revenue and price compression.
• Core carrier services revenue for 2010 was $184.9 million, a decrease of 1.3% or $2.5 million from 2009 due to a decline in usage-based revenues.
• Integrated solutions group revenue for 2010 was $115.9 million, an increase of 87.9% or $54.2 million over 2009, primarily due to the inclusion of U.S. Energy and Quagga, and the growth in sales of our IP Simple product.

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About PAETEC
PAETEC (NASDAQ: PAET) is personalizing business communications for medium and large businesses, enterprise organizations and institutions across the United States. We offer a comprehensive suite of IP, voice, data, and Internet services, as well as enterprise communications management software, network security solutions, CPE, and managed services. For more information, visit www.paetec.com.