RCN to Acquire NEON Communications Group

RCN Corporation and NEON Communications Group, today announced they have entered into a definitive agreement for RCN to acquire NEON for up to $5.25 per share of NGI common stock, in cash, for expected total consideration of up to approximately $260 million. The trang the fourth quarter of 2007, subject tonsaction has been approved by the Board of Directors of both companies, and is expected to close duri regulatory approvals and the approval of NEON's stockholders as well as certain other closing conditions described below.

The transaction combines RCN, a leading competitive provider of video, data, and voice services to residential and business customers in the Northeast, mid-Atlantic, and Chicago metro markets, with NEON's pure play network transport services to carrier and enterprise customers in the twelve-state New England and mid-Atlantic regions. NEON offers RCN a complementary network and a customer base that fits very well into RCN Business Solutions' growth strategy. Pro forma for the quarter ended March 31, 2007 (assuming that the transaction had closed on January 1, 2007), combined RCN Business Solutions' annualized Revenue and EBITDA would have been approximately $160 million and $40 million, respectively, nearly twice the actual results of RCN Business Solutions. These figures exclude an estimated $10 million of expected revenue and expense synergies to be achieved during the integration period following the closing of the transaction. In addition, this acquisition expands RCN's overall network footprint, including over 1,000 combined on-net commercial locations, and creating an opportunity to increase its addressable residential homes in markets both inside and adjacent to its existing core footprint.

• A densely built fiber optic network with approximately 4,800 route miles, over 230,000 fiber miles, 22 colocation facilities, and more than 200 points of presence from Maine to Virginia
• A facilities-based wholesale communications provider that supplies high bandwidth fiber optic capacity and comprehensive end-to-end telecom services to approximately 120 carrier and enterprise customers
• Unique fiber routes along utility rights-of-way, expanding RCN's commitment to diversity from the legacy telecom infrastructure
• Complementary network and similar sales approach, which will help facilitate integration and open up new markets for RCN products
• Complementary customer base - NEON's carrier focus and RCN's enterprise focus together offer enhanced growth and sales opportunities

Peter Aquino, President and Chief Executive Officer of RCN added, "We are thrilled to be joining forces with NEON and look forward to welcoming its customers and team members to RCN. This is a significant strategic acquisition for RCN that scales our high-value commercial segment with another premier regional service provider in our own footprint. NEON brings an extensive fiber network in New England and the mid-Atlantic with diverse intercity fiber assets. This combination of NEON, ConEd Communications and RCN's existing metro and intercity rings will now reach into both Tier 1 and Tier 2 markets for enterprise and carrier customers who are looking for robust alternatives to incumbent providers. Additionally, NEON's dense capillarity improves our ability to deliver seamless, high quality services and creates significant growth potential. We are very excited about combining RCN Business Solutions, under RBS President Felipe Alvarez's leadership, with NEON, creating one of the best Regional CLECs on the East Coast and in Chicago."

Kurt Van Wagenen, President and CEO of NEON Communications Group, said, "We are pleased with this transaction and believe that it represents a good outcome for our stockholders, customers and employees. NEON and RCN have had a positive, long standing working relationship. Through this merger, our customers gain access to an enhanced set of services, additional on-net buildings and an expanded geography including a network in Chicago and deeper capillarity in New York City and Washington DC. The combined entity will have more than 14,000 route miles and more than 1,000 on-net buildings."

RCN expects to fund the purchase price for the transaction with $250 million of debt financing, consisting of a combination of senior secured term loans as well as unsecured borrowings, with the remainder funded from its existing cash reserves. RCN has received commitment from affiliates of Deutsche Bank to provide the full $250 million of debt financing. Neither the acquisition nor the additional debt financing require the consent of RCN's existing lenders.

The transaction is expected to close during the fourth quarter of 2007, subject to FCC and state regulatory approvals, NEON's stockholder approval, and NEON achieving minimum agreed-upon revenue and EBITDA milestones during the second half of 2007. In addition, assuming the required approvals are received and minimum financial milestones are met, the purchase price could be reduced by up to $0.10 per share if NEON does not meet supplementary revenue targets specified in the agreement during the second half of 2007.

Deutsche Bank Securities, Inc. and Andrews Kurth LLP acted as financial and legal advisors to RCN, and The Bank Street Group LLC and Clifford Chance US LLP acted as financial and legal advisors to NEON.

RCN believes that non-GAAP financial measures such as EBITDA, viewed in addition to and not in lieu of the Company's reported GAAP results, provide useful information to investors because they are an integral part of the Company's internal evaluation of operating performance. In addition, they are measures that RCN uses to evaluate management's effectiveness. The EBITDA non-GAAP measure used by RCN may not be comparable to similarly titled measures presented by other companies. EBITDA is defined as operating income plus depreciation and amortization, non-cash stock based compensation and other special items including non-cash issuance of warrants, impairments and other charges and cumulative effect of accounting changes. Free cash flow represents EBITDA less capital expenditures, net interest paid and net changes in working capital.

NEON Communications Group

NEON is a facilities-based wholesale communications provider, supplying high bandwidth fiber optic capacity and comprehensive end-to-end telecom services to communications companies and enterprise customers on an intercity, regional and metro network in the 12-state Northeast and mid-Atlantic region. With 4,800 route miles and over 230,000 fiber miles from Maine to Virginia, NEON is providing unparalleled capillarity and central office connectivity in the world's most demanding telecom market.

RCN Corporation

RCN Corporation, is one of the largest facilities-based competitive providers of bundled cable, high-speed internet and phone services delivered over its own fiber-optic local network to residential customers in the most densely populated markets in the U.S. RCN Business Solutions is a growing business that also provides bulk video, high-capacity data and voice services to business customers. RCN provides service in the Boston, New York, Eastern Pennsylvania, Washington, D.C., and Chicago metropolitan markets.