Eschelon Telecom, Inc. to Acquire Mountain Telecommunications, Inc.

Eschelon Telecom Service Map (Graphic: Eschelon Telecom)

MINNEAPOLIS--()--June 29, 2006--(NASDAQ:ESCH) Eschelon Telecom, Inc., a leading provider of integrated communications services to small and medium sized businesses in the western United States, today announced that it has signed a definitive agreement to acquire Mountain Telecommunications, Inc. (MTI), a competitive services provider based in Tempe, Arizona.

MTI provides services in Phoenix, Tucson and markets throughout the state of Arizona. The company has $19.0 million in annualized Q1 2006 revenue. Eschelon will pay approximately $40.0 million in cash to acquire MTI. Eschelon expects to increase annualized EBITDA from $5.0 million (pre-synergies) to $8.0 million (post-synergies) in 12-18 months after the transaction closes. The transaction is expected to close in the fourth quarter of 2006.

"This transaction combines the financial stability of Eschelon with the strong presence of MTI throughout Arizona to enable the company to continue providing the highest level of service to their customers while maintaining competitive prices," stated Richard A. Smith, President and Chief Executive Officer of Eschelon Telecom, Inc. "MTI fits our acquisition filters well as it has focused on the medium and small business segment, is in one of our existing states and is EBITDA and cash flow positive. Those factors, combined with its significant presence in Arizona, are what attracted us to MTI. Before our acquisition of Oregon Telecom, we established an objective of acquiring $100M of competitive local exchange carrier revenue over a two to three-year period. With the acquisitions of Oregon Telecom and now MTI, we have acquired over $42 million in revenue - we continue to make progress toward our goal," said Smith.

Jack Pleiter, President and CEO of Mountain Telecommunications, Inc. stated, "We share many similarities with Eschelon, including a mission to deliver superior products and service to our customers. That focus will not change once we are part of Eschelon - our customers will remain at the center of our business. The MTI team of Associates is proud of what we have built and this transaction will be good for all of our constituents."

With the completion of this transaction, Eschelon will enhance its market leadership in the fast growing Phoenix market and will expand its network footprint to Tucson and other high growth markets throughout the state of Arizona.

Investor Conference Call

Eschelon will host a conference call for investors Friday, June 30, 2006 at 10 a.m. (CT).

Conference call number: (800) 218-4007

Replay number: (800) 405-2236 (The replay will be available between June 30, 2006 at 12:00 p.m. CT and Friday, July 7, 2006 at 11:59 p.m. CT.)

Replay passcode: 11065320#

About Eschelon Telecom, Inc.

Eschelon Telecom, Inc. is a facilities-based competitive communications services provider of voice and data services and business telephone systems in 23 markets in the western United States. Headquartered in Minneapolis, Minnesota, the company offers small and medium-sized businesses a comprehensive line of telecommunications and Internet products. Eschelon currently employs approximately 1,200 telecommunications/Internet professionals, serves over 55,000 business customers and has approximately 480,000 access lines in service throughout its markets in Minnesota, Arizona, Utah, Washington, Oregon, Colorado, Nevada and California.

About Mountain Telecommunications, Inc.

Mountain Telecommunications, Inc, headquartered in Tempe, Arizona, is a locally owned, facilities-based Competitive Local Exchange Carrier serving business, government, and educational organizations throughout the State of Arizona. Mountain Telecommunications, Inc. is dedicated to providing superior telecommunications products and services, optimum network reliability and the highest quality customer service in the telecommunications industry.

Forward Looking Statements

This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements are based on Eschelon Telecom's current intent, belief and expectations. These statements are not guarantees of future performance and are subject to certain risks and uncertainties that are difficult to predict. Actual results may differ materially from these forward-looking statements because of the company's history of losses, ability to maintain relationships with RBOCs, substantial indebtedness, intense competition, dependence on key management, difficulties inherent in making and integrating acquisitions, changes in government regulations, and other risks that may be described in the company's filings with the Securities and Exchange Commission. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today's date. Eschelon Telecom undertakes no obligation to update or revise the information contained in this announcement, whether as a result of new information, future events or circumstances or otherwise.

                          TRANSACTION SUMMARY
                       (all data as of 03/31/06)


Parties                     Eschelon Telecom, Inc.
----------------------------------------------------------------------
Public/Private              Public
----------------------------------------------------------------------
Company Description         Eschelon Telecom, Inc., headquartered in
                            Minneapolis, was founded in 1996 and is a
                            rapidly growing provider of integrated
                            voice, data and Internet services. The
                            Company offers small and medium sized
                            businesses a comprehensive line of
                            telecommunications and Internet products
                            including local lines, long distance,
                            business telephone systems, DSL,
                            Dedicated T-1 access, network solutions
                            and Web hosting.
----------------------------------------------------------------------
Switches                    12 Voice, 13 Data
----------------------------------------------------------------------
Collocations                125
----------------------------------------------------------------------
Primary Markets Served      Oregon
                            Portland/Eugene/Salem
                            Bend/Medford
                            Klamath Falls/Newport
                            Albany/Roseburg

                            Washington
                            Seattle/Tacoma/Everett
                            Bellingham/Olympia/ Yakima

                            Phoenix, AZ
                            Minneapolis/St. Paul, MN
                            Denver/Boulder, CO
                            Salt Lake City, UT
                            Reno, NV
                            Santa Rosa, CA
----------------------------------------------------------------------
Primary States Served       Oregon
                            Washington
                            Arizona
                            Minnesota
                            Colorado
                            Utah
                            Nevada
                            California
----------------------------------------------------------------------
RBOC Territory              Qwest
                            Verizon
                            SBC
----------------------------------------------------------------------
2005 Revenue                $228 Million
----------------------------------------------------------------------


Mountain Telecommunications, Inc.          TOTAL
----------------------------------------------------------------------
Private                                    Public
----------------------------------------------------------------------
Mountain Telecommunications, Inc,          The combined company will
headquartered in Tempe, Arizona, is a      be a leading facilities-
facilities-based Competitive Local         based regional CLEC
Exchange Carrier (CLEC) serving            focused on small and
businesses, government, and educational    medium sized business
organizations throughout the State of      customers in key western
Arizona.                                   states.
----------------------------------------------------------------------
2 Voice, 3 Data                            14 Voice, 16 Data
----------------------------------------------------------------------
7                                          132
----------------------------------------------------------------------
Arizona                                    Oregon
Phoenix                                    Portland/Eugene/Salem
Tucson                                     Bend/Medford
Casa Grande                                Klamath Falls/Newport
Cottonwood                                 Albany/Roseburg
Flagstaff                                  Washington
Florence                                   Seattle/Tacoma/Everett
Globe                                      Bellingham/Olympia/ Yakima
Nogales                                    Arizona
Payson                                     Phoenix
Prescott                                   Tucson
San Manuel                                 (see list of additional
Sedona                                      markets at left)
Sierra Vista
Wickenburg                                 Minneapolis/St. Paul, MN
Yuma                                       Denver/Boulder, CO
                                           Salt Lake City, UT
                                           Reno, NV
                                           Santa Rosa, CA
----------------------------------------------------------------------
Arizona                                    Oregon
                                           Washington
                                           Arizona
                                           Minnesota
                                           Colorado
                                           Utah
                                           Nevada
                                           California
----------------------------------------------------------------------
Qwest                                      Qwest
                                           Verizon
                                           SBC
----------------------------------------------------------------------
$18 Million                                $246 Million
----------------------------------------------------------------------

                    TRANSACTION HIGHLIGHTS


                     ESCHELON TELECOM, INC.
----------------------------------------------------------------------
Transaction Summary  --  Eschelon will pay approximately $40.0
                         million cash for Mountain Telecommunications
                         Inc. with closing expected in Q4 2006.
                     --  Eschelon will increase its footprint within
                         the Qwest territory.
                     --  This transaction provides an opportunity to
                         exercise Eschelon's expertise in efficiently
                         integrating operations and customer service.
                     --  The companies will continue to operate
                         independently until the transaction closes.
                     --  Closing is subject to customary regulatory
                         approvals.
----------------------------------------------------------------------
Contact Information  Investor Relations:
                     Geoffrey M. Boyd
                     Chief Financial Officer
                     Eschelon Telecom, Inc.
                     612-436-6486

                     Media Inquiries:
                     Jenna M. Soule
                     Sr. Manager, Communications
                     Eschelon Telecom, Inc.
                     612-436-6426
----------------------------------------------------------------------

Contacts

Eschelon Telecom, Inc.
Investor Relations:
Geoffrey M. Boyd, 612-436-6486
or
Media Inquiries:
Jenna M. Soule, 612-436-6426

Contacts

Eschelon Telecom, Inc.
Investor Relations:
Geoffrey M. Boyd, 612-436-6486
or
Media Inquiries:
Jenna M. Soule, 612-436-6426