Competitive Provider for Businesses Now Serves 32 Markets

PORTLAND, OR, June 14, 2001 - With telecommunications services as a major recurring expense for smaller companies, the arrival of Allegiance Telecom, Inc. in Portland provides business owners with an economical alternative. Allegiance is targeting small and medium-sized businesses in the Portland area, providing local, long distance, international calling, high-speed data transmission, Internet and Web hosting packages.

Portland is Dallas-based Allegiance Telecom's 32nd market nationwide. Adding four additional U.S. markets in 2001 will complete Allegiance's fully funded 36-market business plan, addressing 57 percent of the total U.S. business communications market. To date, the company has installed more than 750,000 lines for business customers nationwide.

"Business owners in Portland rely on services like basic local dial tone, high-speed Internet access and e-commerce applications to grow a successful business," said Joseph D'Amico, Allegiance Telecom national vice president of sales. "Allegiance Telecom is an excellent alternative to incumbent telecom providers because we offer a single source for business telecom services with considerable 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 large business organizations."

Allegiance Telecom's local sales office is located at 10575 S.W. Cascade Blvd. in the Portland suburb of Tigard and can be reached via telephone, 503/620-6616. Joe Chaplik serves as the Allegiance city vice president in Portland.

Allegiance Telecom is a facilities-based integrated communications provider (ICP), offering businesses a complete package of telecommunications services consolidated on a single bill. The company is targeting 36 major metropolitan areas in the U.S. with its single source approach for businesses. Allegiance Telecom is currently operational in 32 U.S. markets including: Atlanta, Austin, Baltimore, Boston, Chicago, Cleveland, Dallas, Denver, Detroit, Fort Lauderdale, Fort Worth, Houston, Long Island, Los Angeles, Miami, Minneapolis/St. Paul, New York, Northern New Jersey, Oakland, Orange County, Philadelphia, Phoenix, Portland, Sacramento, St. Louis, San Antonio, San Diego, San Francisco, San Jose, Seattle, Tampa and Washington D.C.

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's common stock is traded on the Nasdaq National Market under the symbol ALGX.