DALLAS, Dec. 18, 2003 -- Allegiance Telecom, Inc. (OTC: ALGXQ) has entered into an agreement for Qwest Communications International Inc. (NYSE: Q) to purchase substantially all of the assets of Allegiance Telecom and its subsidiaries, except for Allegiance's customer premises equipment sales and maintenance business operated under the name of Shared Technologies and certain other Allegiance operations.

Under the terms of the agreement, Qwest will purchase Allegiance assets for approximately $300 million in cash. In addition, Qwest will issue approximately $90 million of convertible debt with a conversion price of $6.10 per share and a coupon of 1.5 percent.

"Upon closing of this transaction, Qwest will have more POPS [points of presence] than any other inter-exchange carrier in the U.S., allowing us to better serve existing customers and immediately expand our ability to serve more businesses than ever before," said Richard C. Notebaert, Qwest chairman and CEO. "With these assets, we expect to improve Qwest's profitability and expand our delivery of end-to-end communications solutions to businesses nationwide."

The agreement is subject to approval by the U.S. Bankruptcy Court and certain other government regulatory agencies. Allegiance has filed a motion with the Bankruptcy Court to begin a sale process in which Qwest will be designated as the stalking horse bidder and other interested potential bidders will have an opportunity to offer higher bids for the assets of Allegiance. If Qwest is successful in the bidding process, the company expects to close on the transaction in 2004.

"We're pleased to announce that Qwest has been selected as the stalking horse bidder " said Royce Holland, chairman and chief executive officer of Allegiance Telecom. "A Qwest-Allegiance pairing would dramatically increase competition in the telcom industry and would result in the first large-scale out-of-region competitor for local telephone service between the regional Bell companies - a huge benefit to medium and small businesses. This bold and strategic move by Qwest is exactly the competition that was envisioned when the 1996 Telecom Act was passed."

"The Allegiance management team is supportive of this agreement and believes this is the next logical step in maximizing synergies and enhancing the ability to serve customers," Holland said.

Qwest Communications International Inc. (NYSE: Q) is a leading provider of voice, video and data services to more than 25 million customers. The company's 47,000 employees are committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. More information is available at www.qwest.com.

Allegiance Telecom is a facilities-based national local exchange carrier headquartered in Dallas, Texas. Allegiance Telecom is currently pursuing financial restructuring plans under Chapter 11 of the U.S. Bankruptcy Code, as previously announced on May 14, 2003.

As a leader in competitive local service for medium and small businesses, Allegiance offers "One source for business telecom^TM" - a complete package of telecommunications services, 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 provider approach. Allegiance's common stock is traded on the Over the Counter Bulletin Board under the symbol ALGXQ.OB. The bankruptcy filings were made in the U.S. Bankruptcy Court in the Southern District of New York, case number 03-13057(RDD). For more information, visit www.algx.com or for additional information regarding the Company's reorganization, visit www.algx.com/restructuring.