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DALLAS, TEXAS, January 3, 2000 -- Allegiance Telecom, Inc. (Nasdaq:ALGX), a leading competitive provider of
telecommunications services to small and medium-sized business, today pre-announced certain results from its
fourth quarter and, at the same time, detailed a major expansion of its business plan. With the planned
addition of 12 new markets to its original 24-market business plan, the Company plans to be operational in
36 of the largest metropolitan areas in the United States by the end of 2001.
Based on preliminary information, the Company estimates that for the fourth quarter and for the year ended
December 31, 1999, it had consolidated revenues in the range of $38.5 million to $40.0 million and $98.3
million to $99.8 million, respectively; earnings before interest, income taxes, depreciation and amortization,
management ownership allocation charge and noncash deferred compensation in the range of negative $26 million
to negative $27 million and negative $103.4 million to negative $104.4 million, respectively; capital expenditures
in the range of $55.0 million to $57.0 million and $270.9 million and $272.9 million, respectively. Based on
preliminary information, the Company estimates that it sold between 73,000 and 75,000 lines and installed
between 59,500 and 61,000 lines during the fourth quarter ended December 31, 1999, and that it has sold between
335,100 to 337,100 lines and has installed between 240,900 to 242,400 lines to date.
In connection with the expanded business plan, Allegiance has obtained a commitment from Goldman Sachs Credit
Partners L.P., Toronto Dominion (Texas), Inc., BankBoston, N.A., Morgan Stanley Senior Funding, Inc. and various
other lenders to fully underwrite $500 million of senior secured credit facilities. The credit facilities
consist of a $350 million revolving credit facility and a $150 million delayed draw term loan facility. The
credit facilities are subject to customary conditions for a transaction of this type, including completion of
definitive documentation and finalization of all terms and conditions. The Company expects to close these
facilities in February 2000.
"We have launched operations in the 19 largest metropolitan markets in the U.S. and have raised the capital
that we think is necessary to fully fund the deployment of our first 24 markets," said Royce J. Holland, chairman
and CEO of Allegiance Telecom. "In light of this progress we have decided to expand our original 24-market
business plan by 50 percent."
According to Holland, there are three key components of the business plan expansion:
Allegiance will increase the number of target markets by 12, to a total of 36 of the largest metropolitan
markets in the U.S. It plans to provide service in 27 markets by the end of 2000 and intends to deploy service
in an additional nine markets by the end of 2001.
Allegiance plans to increase its collocation footprint by approximately 100 central offices in its initial
24 target markets.
Allegiance is moving to the next stage of its smart build strategy in most of its existing markets by
acquiring long-term rights to use dark fiber rings that will connect many of the central offices where the
Company is located. These dark fiber rings will replace the network elements that Allegiance is leasing on
a short-term basis from various ILECs and are expected to provide the Company with higher operating margins
and more reliable network services. Allegiance currently has dark fiber rings in operation in New York City,
Dallas and Houston and has entered into contracts for dark fiber rings in an additional 16 metropolitan markets,
all of which are expected to be in operation before the end of 2000. Allegiance has also contracted for similar l
ong-term arrangements for long-haul fiber routes connecting its Boston, New York City and Washington, D.C.
networks. Further details are provided in separate press releases issued today.
"This expanded business plan calls for total projected central office collocations of 990, up from 650, and a
projected 33% increase in the number of nonresidential access lines that we can address with our collocation
footprint," added Holland.
About Allegiance Telecom, Inc.
Based in Dallas, Texas, Allegiance Telecom is a facilities-based competitive local exchange carrier 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 36 major metropolitan
areas in the U.S. with its "one-stop shopping" approach. Allegiance is currently operational in the following
19 markets: Atlanta, Baltimore, Boston, Chicago, Dallas, Detroit, Fort Worth, Houston, Long Island, Los Angeles,
New York, Northern New Jersey, Oakland, Orange County, Philadelphia, San Diego, San Francisco, San Jose and
Washington D.C. The Company's web address is: www.allegiancetele.com. Allegiance's common stock is traded
on the Nasdaq National Market under the symbol ALGX.
Certain statements in this press release, including in particular all of those relating to the Company's fourth
quarter preliminary financial and operating performance, constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, and the Company intends that such forward-looking
statements be subject to the safe harbors created thereby. The words "believes," "expects," "estimates,"
"anticipates," "will be" and "plans" and similar words or expressions identify forward-looking statements
made by or on behalf of the Company. These forward-looking statements are subject to many uncertainties and
factors which may cause the actual results of the Company to be materially different from any future results
expressed or implied by such forward-looking statements. Examples of such uncertainties and factors include,
but are not limited to, adjustments that may be made to the Company's preliminary financial and operating performance
data upon the completion of the Company's annual audit for 1999, the extent to which the Company can achieve
"electronic bonding" with ILECs, the Company's ability to timely and effectively provision new customers, the
Company's continued access to necessary capital and the potential adverse impact of state and federal regulatory
developments. Additional factors are set forth in the Company's Annual Report on Form 10-K. The Company does
not undertake any obligation to update or revise any forward-looking statement made by it or on its behalf,
whether as a result of new information, future events or otherwise.
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