Competitive Provider for Businesses Serves 28 U.S. Markets

SAN ANTONIO, March 6, 2001 - Telecommunications services are a major recurring expense for smaller companies, but with the arrival of Allegiance Telecom, Inc., business owners in San Antonio now have an economical alternative for all telecom-related services. Allegiance is targeting small and medium-sized businesses in Bexar County in the San Antonio metropolitan area, providing local, long distance, international calling, high-speed data transmission, Internet and electronic commerce packages.

Allegiance Telecom secures its fourth market in Texas and 28th market nationwide with service initiation in San Antonio; the company has provided service to businesses in Dallas and Fort Worth since 1998 and in Houston since 1999. Allegiance plans to provide service to Austin-based businesses by May 2001.

Eight additional U.S. markets in 2001 (including Austin) will complete Allegiance's fully funded 36-market business plan, addressing 57 percent of the total U.S. business communications market of approximately seven million businesses. To date, the company has installed over 600,000 lines for business customers nationwide.

"Business owners in San Antonio 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 One International Center, 100 N.E. Loop 410, Suite 250 in San Antonio and can be reached via telephone: 210.308.3500. Coy Highsmith serves as the San Antonio area vice president.

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 28 U.S. 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, Phoenix, 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 Telecom is a facilities-based ICP with headquarters 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.