Move to Accelerate Allegiance's Data, DSL and Internet Service Offerings

DALLAS, TEXAS, June 14, 1999-Allegiance Telecom, Inc. (Nasdaq: ALGX) today announced that it has entered into an agreement to acquire KIVEX.com, an Internet Service Provider (ISP) based in Bethesda, Maryland for $34.5 million in cash.

Founded in 1994, KIVEX.com was one of the first ISPs to deliver high-speed Internet products and services exclusively to the business community. KIVEX.com provides businesses in 22 markets with high-speed connections to the Internet, World Wide Web hosting, DSL connectivity and e-mail. KIVEX.com services are offered in over 200 multi-tenant office buildings. It uses the shared tenant services delivery model and therefore has relationships with many of the largest building owners and national property management companies. Agreements negotiated with national building management companies enable KIVEX.com to readily access an additional 700 buildings.

KIVEX.com currently provides data and Internet services to approximately 1,400 small and medium-sized business customers. Over ninety percent of KIVEX.com's customers are located in markets where Allegiance has networks in operation or development.

Allegiance is a facilities-based competitive local exchange carrier (CLEC) that offers businesses a complete package of telecommunications services, including local, long distance, international calling, high-speed data transmission and Internet services. The Company is targeting 24 major metropolitan areas in the U.S. with its "one-stop shopping" approach. Allegiance is operational in 14 markets, including Atlanta, Boston, Chicago, Dallas, Fort Worth, Houston, Los Angeles, New York, Northern New Jersey, Oakland, Philadelphia, San Francisco, San Jose and Washington D.C.

"The vast potential of the Internet has already had a profound impact on our customers, an effect that will only increase as e-commerce proliferates," said Royce Holland, chairman and CEO of Allegiance Telecom, Inc. "KIVEX.com brings to Allegiance an extremely attractive customer base, since it serves small and medium-sized businesses over dedicated connections. KIVEX.com is also using DSL to deliver Internet services which complements our recent development of DSL. Combining KIVEX.com's service offerings, experience and strategy with ours will only further position us to achieve our plan of offering a Ôone-stop shop' to small and medium-sized businesses."

Allegiance rolled out its first in a series of Internet and high-speed data communications service offerings in December 1998. The first phase of products included domain name service, business e-mail service, web site hosting and dedicated high-speed Internet access.

In the second quarter of 1999, Allegiance also announced plans to offer DSL services. The Allegiance DSL offering, which will be known as AccessDirect DSL, delivers a wide range of high-speed data services for applications such as Internet access, electronic mail, e-commerce and bulk data transfer. Consistent with its strategy of serving as a Ôone stop shop' for its customers, the Allegiance DSL offering is symmetric, allowing it to accommodate both the customer's traditional telephone service and high-speed data services.

"It's clear to us that the addition of KIVEX.com's expertise in the data, DSL and Internet arenas will accelerate our combined package of telecommunications services," added Dan Yost, president and chief operating officer of Allegiance. "And the geographic fit between the KIVEX.com customer base and our networks should allow us to rapidly realize significant synergies in terms of cross selling and network efficiencies."

Allegiance expects its acquisition of KIVEX.com to close on or prior to June 30, 1999. The closing remains subject to various conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Based in Dallas, Texas, Allegiance's web address is: www.allegiancetele.com. The Company's common stock is traded on the Nasdaq National Market under the symbol ALGX.