XO Communications reported Thursday that it has reduced its net loss for the first quarter by more than 50% over the previous year’s first quarter, although its revenues fell slightly as the competitive carrier continues to shift its product mix to data and IP services and away from legacy voice offerings.

Total service revenues were $348.5 million, down .3% from the first quarter of 2006, and down from $355.333 million in the fourth quarter of 2006. Data/IP revenues were up 21% to $119.1 million and that included a 184% rise in VoIP revenues from the year-previous quarter as the XOptions Flex service continues to grow. The company’s gross margin improved by 9% to $212.2 million. XO’s net loss was $20.6 million, down 53% from $43.7 million. Adjusted EBITDA was $39.7 million, up 76% from the year-previous quarter.

“Our strategy of concentrating on businesses and enterprises, carriers and broadband wireless markets is delivering strong results across the board,” said Carl Grivner, CEO of XO Holdings, Inc., in a prepared statement. “In the first quarter, we continued to grow revenue and profits in our core data and IP services compared to the same period last year. We’re very pleased with our progress in delivering high-margin services to businesses and large enterprises, the success of our inter-city network services with wholesale customers, and the rapid expansion of Nextlink broadband wireless solutions.”

Integrated voice services declined 13% to $79.6 million, as XO focused its growth on its data and IP product portfolio. Revenue from the XO’s carrier VoIP services, which includes VoIP Origination and VoIP Termination, grew 83% to $7.6 million in the first quarter of 2007 compared to $4.1 million in the first quarter of 2006

Over the past year, XO has launched a major national marketing campaign to target wholesale intercity services as it lit up a national backbone. The company said sales orders for inter-city network transport services were up 514% compared to same period last year. XO also unveiled IP VPN services on its MPLS network and expanded its Ethernet offering using Ethernet over copper.