ALJ/JLG/eap Mailed 8/23/2002

Decision 02-08-058 August 22, 2002

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application Pursuant to Public Utilities Code Section 854 for Approval of the Indirect Transfer of Control of XO California, Inc. (U 5553 C) and XO Long Distance Services, Inc. (U 6272 C)

Application 02-05-018 (Filed May 3, 2002)

OPINION GRANTING APPLICATION TO
INDIRECTLY TRANSFER OWNERSHIP AND CONTROL

I. Summary

We authorize Applicants XO California, Inc. (XO California) and XO Long Distance Services, Inc. (XO Long Distance) to indirectly transfer ownership and control through their parent company, XO Communications, Inc. (XO), from Craig O. McCaw and the existing shareholders of XO to Forstmann Little & Co Equity Partnership-VII, L.P., Forstmann Little & Co. Subordinated Debt and Equity Management Buyout Partnership-VIII, L. P. (Forstmann Little), and to an indirect, wholly owned subsidiary of Telefonos de Mexico, S.A. de C.V. (Telmex) and 20% common stock divided between XO management (2%) and other holders (18%).