Feb. 8, 2002, DALLAS -- Allegiance Telecom, Inc. (Nasdaq: ALGX), a leading integrated communications provider, announced that Morgan Stanley & Co. Inc. filed a Form 144 (Notice of Proposed Sale of Securities) with the Securities and Exchange Commission, indicating that due to a foreclosure sale on collateral held by the broker dealer, it intended to sell 2,800,000 shares of Allegiance Telecom common stock. Allegiance has confirmed that a majority of these shares have been sold.

According to the filing, certain clients of Morgan Stanley & Co. Inc. pledged registered Allegiance common stock as collateral for a loan by Morgan Stanley & Co. Inc. upon which they are in default. Morgan Stanley Capital Partners, one of Allegiance Telecom's founding stockholders, continues to hold its shares of Allegiance common stock and was not involved in this foreclosure sale.

Based in Dallas, Allegiance Telecom is a facilities-based integrated communications provider (ICP) offering businesses a complete package of telecommunications services, including local, long distance, international calling, high-speed data transmission and Internet services. Allegiance is currently operational in 36 U.S. markets.