Dallas, TX, October 8, 1997 -- Allegiance Telecom, Inc. has sued WorldCom, Inc. in United States District Court in Chicago for attempted monopolization of the one-stop shopping telecommunications market in violation of Section 2 of the Sherman Anti-Trust Act, and for unfair competition and abuse of process, among other counterclaims. One-stop shopping consists of local exchange telephone, long distance telephone, data communication, international calling and Internet services for business customers, packaged and billed on a consolidated basis.

The counterclaim takes aim at the "dangerous probability" that WorldCom will monopolize the facilities-based one-stop shopping market, and describes a series of anticompetitive practices in which WorldCom has engaged, in an effort to prevent and to delay competitors like Allegiance from entering and competing in the one-stop shopping market. Among those practices are sham litigation, including a suit against Allegiance and two of its employees and an identical federal suit against an employee of Kiewit Diversified Group, attempts to threaten former WorldCom employees with unenforceable noncompete clauses, and a refusal to fulfill obligations to pay severance and release stock options to former WorldCom employees who have joined Allegiance.

In August, WorldCom commenced litigation against Allegiance and two of its employees, claiming that Allegiance had "solicited and induced" WorldCom employees to join the Allegiance organization. WorldCom asserted in its suit that unless Allegiance is restrained, "WorldCom's lifeblood will be drained, its ability to service its existing customers and manage its existing operations will be gutted, and the continuing employment of its hundreds of other employees and managers jeopardized and their morale irreparably undermined." Yesterday's response by Allegiance denies liability and seeks damages for WorldCom's own anticompetitive behavior.

Allegiance Chairman and Chief Executive Officer, Royce J. Holland, Stated, "WorldCom has over $19 billion in assets and approximately 13,000 employees and is arguably the best positioned company to take advantage of the deregulated telecommunications environment."

"This heavy-handed attempt by WorldCom to intimidate our employees has presented a major distraction to Allegiance as it rolls out its networks and prepares to compete. Frankly, this crude effort to hobble a competitor is unseemly for an industry giant. Allegiance seeks to compete in the marketplace, not the courthouse. Hopefully, WorldCom will come to the same conclusion."