DALLAS, Sept. 3, 2002 - Allegiance Telecom, Inc. (Nasdaq: ALGX) a leading integrated communications provider, today announced that it has reached agreement with its largest customer, Genuity Solutions Inc, to revise the payment schedule under Allegiance's $563 million contract with Genuity. Allegiance provides an integrated data network solution to Genuity under this contract. In accordance with the revised payment schedule, Allegiance has received full payment for its third quarter 2002 performance under the contract. All remaining payments are now due quarterly instead of on the former semi-annual schedule. No other terms of the contract were modified.

Allegiance Telecom is a facilities-based integrated communications provider headquartered in Dallas, Texas. As the leader in competitive local service for medium and small businesses, Allegiance offers "One source for business telecom(tm)"- a complete telecommunications package, including local, long distance, international calling, high-speed data transmission and Internet services and a full suite of customer premise communications equipment and service offerings. Allegiance serves 36 major metropolitan areas in the U.S. with its single source approach. Allegiance's common stock is traded on the Nasdaq National Market under the symbol ALGX.