Competitive Provider for Businesses Serves 26 U.S. Markets

PHOENIX, October 16, 2000 – Telecommunications services are a major recurring expense for small and medium-sized companies, but with the arrival of Allegiance Telecom, business owners in the Phoenix area have an economical alternative for local calling and related telecom services. Allegiance is targeting small and medium-sized businesses in Maricopa County including Glendale, Phoenix, Scottsdale and Tempe, providing local, long distance, international calling, high-speed data transmission, Internet and electronic commerce packages. The Company will also provide services in Mesa, Ariz., in 2001.

Allegiance Telecom 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 25 other markets, including: Atlanta, Baltimore, Boston, Chicago, Cleveland, Dallas, Denver, Detroit, Fort Worth, Houston, Long Island, Los Angeles, Miami, Minneapolis/St. Paul, 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 Phoenix 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 Telecom 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. With dedicated direct sales and customer care teams supported by superior back office systems, Allegiance brings value to small and medium-sized enterprises previously only offered to larger companies."

Allegiance Telecom’s local sales office is located at 4129 East Van Buren Street, Suite 105, in Phoenix and can be reached via telephone: 602.629.3200. John Gilveli serves as the Phoenix area vice president.

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 CLEC based 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.