DALLAS, TEXAS, November 2, 1999 - Allegiance Telecom, Inc.'s (Nasdaq: ALGX) $205 million 12.875 percent senior notes (due May 15, 2008) and the Company's $250.5 million 11.75 percent senior discount notes (due Feb. 15, 2008) with $445 million maturity value, have been assigned single 'B' and B3 ratings by Standard & Poor's and Moody's Investors Service respectively.

A single 'B-plus' rating was assigned by Standard & Poor's to Allegiance Finance Company's $225 million senior secured credit facility (maturing in 2005); Moody's assigned a B2 rating to this credit facility. Allegiance Finance is a wholly owned subsidiary of Allegiance Telecom. Additionally, Standard & Poor's assigned a single 'B' corporate credit rating to Allegiance Telecom with a "positive" outlook. Moody's has the senior implied rating B2; the outlook is "stable."

"The ratings clearly reflect the flawless execution of our fully funded business plan," said Royce Holland, chairman and chief executive officer of Allegiance Telecom, Inc. "Allegiance has posted six consecutive quarters of steadily improving results and we recently announced an acceleration of plans to be in 24 total markets by the middle of the year 2000. The ratings are a vote of confidence from the investment community that we are firmly on target."

Allegiance Telecom, Inc. was founded in April 1997 by a management team led by Royce J. Holland, the former president and COO of MFS Communications Company, Inc., and Thomas M. Lord, former managing director of Bear, Stearns & Co. Inc., where he specialized in the telecommunications, information services and technology industries.

Allegiance offers businesses a complete package of telecommunications services, including local, long distance, international calling, high-speed data transmission and Internet services. Allegiance is targeting 24 major metropolitan areas in the U.S. with its "one-stop shopping" approach. The Company's web address is: www.allegiancetele.com.