Now Providing Business Communications Alternative in 25 Cities

MINNEAPOLIS, September 28, 2000 - Telecommunication services are a major recurring expense for small and medium-sized companies, but with the arrival of Allegiance Telecom, business owners in the Twin Cities now have an economical alternative for local calling and related telecom services. Allegiance is targeting small and medium-sized businesses in Minneapolis/St. Paul, (including Bloomington, Eden Prairie, Golden Valley and other suburbs) providing economical local, long distance, international calling, high-speed data transmission, Internet and electronic commerce packages.

Allegiance is a facilities-based competitive local exchange carrier (CLEC), offering businesses a complete package of telecommunications services, consolidated on a single bill. The company is targeting 36 major metropolitan areas in the United States with its "one-stop shopping" approach. Allegiance Telecom is currently operational in 24 other markets, including Atlanta, Baltimore, Boston, Chicago, Cleveland, Dallas, Denver, Detroit, Fort Worth, Houston, Long Island, Los Angeles, Miami, New York, Northern New Jersey, Oakland, Orange County, Philadelphia, St. Louis, San Diego, San Francisco, San Jose, Seattle and Washington D.C.

"Business owners in the Minneapolis/St. Paul area depend on telecommunications services, from basic local dial tone to high speed Internet access and e-commerce applications," said Joseph D'Amico, Allegiance Telecom national vice president of sales. "Allegiance is an excellent alternative to incumbent telecom providers; we offer an economical single source for business telecom services with 10 to 20 percent savings over current bills."

D'Amico noted the new Allegiance Telecom office will be headed by Brandon Hill, a veteran Allegiance salesperson who has been promoted to Minneapolis city vice president from a sales management position in the company's Dallas office. He was a member of Allegiance's initial sales force when the company started offering service in 1998. Allegiance Telecom's new local sales office is located at 7825 Washington Ave. S., Bloomington, Minn., and can be reached via telephone at 952/983-1700.

Allegiance Telecom was founded by Royce J. Holland and Thomas M. Lord in 1997. Previously, Holland was president and one of several co-founders of MFS Communications Company, Inc.; Lord was a managing director at Bear, Stearns & Co. overseeing transactions in the telecommunications, information services and technology industries. Under Holland's leadership, MFS grew from a privately held start-up operation to one of the Nasdaq 100 Index companies with annual revenue of about $1 billion and a market value of approximately $13 billion when the merger between MFS and WorldCom was completed on December 31, 1996.

Allegiance Telecom is a facilities-based competitive local exchange carrier headquartered in Dallas, Texas. The company's web address is www.allegiancetele.com. Allegiance's common stock is traded on the Nasdaq National Market under the symbol ALGX.