ITC^Deltacom announced today it has cancelled its planned merger with two other competitive local exchange carriers, FDN Communications and Network Telephone.

The three companies announced their plans for an all-stock transaction Sept. 8, 2004, predicting the deal would close late this year or early in 2005. Combined, the three CLECs would have had 120,000 business customers across 45 Southeastern markets, more than 635,000 retail access lines, annual revenues of about $800 million and no significant debt, ITC^Deltacom said in September.

An ITC^Deltacom spokesperson declined to comment on the reasons for the cancellation, promising more information in the company's forthcoming 8-K filing with the Securities and Exchange Commission, expected to be released Tuesday. But a source close to ITC said integration issues were a primary factor in the merger cancellation.

FDN Communications was not immediately available for comment. A Network Telephone spokesperson referred inquiries to ITC^Deltacom.

A press release issued today by ITC^Deltacom said the merger between it and FDN Communications was mutually terminated and that ITC’s merger with FDN was a prerequisite of ITC’s merger with Network Telephone.

No termination fees apply to any of the companies, the statement said, and each company will bear its own merger-related expenses. “While we are disappointed that we are unable to move forward with the transaction, we believe this mutual termination is in the best interest of our shareholders, customers and employees,” Larry Williams, ITC^DeltaCom chairman and chief executive officer said in the statement issued today. “We will continue to focus on the successful execution of our operating plan.” .