DALLAS, February 19, 2004 - Allegiance Telecom, Inc. (OTCBB: ALGXQ.OB) today announced that Judge Robert Drain of U.S. Bankruptcy Court for the Southern District of New York has issued an order approving the proposed purchase by XO Communications, Inc. (OTCBB: XOCM.OB) of substantially all of Allegiance's assets for $311 million in cash and approximately 45.38 million shares of XO common stock. The transaction remains subject, among other things, to receipt of certain governmental regulatory approvals. XO expects to close on the sale by the end of the second quarter, 2004.

On February 13, 2004, Allegiance selected XO as the winning bidder for substantially all of the assets of Allegiance Telecom, which had filed for financial restructuring under Chapter 11 of the U.S. Bankruptcy Code on May 14, 2003. Under the terms of the purchase agreement, XO will 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, its dedicated managed modem business, and certain other Allegiance assets and operations.

With the addition of Allegiance's network assets and customer base, XO will become the premier national facilities-based competitor to the regional Bell operating companies. The acquired assets are expected to add more than 100,000 customers to XO and XO has projected that its total revenues will be more than $1.6 billion. The combined company's network will have more nationwide connections to regional Bell operating companies' networks than any other CLEC, and double the points of presence (POPs) within the 36 markets where both XO and Allegiance operate. XO believes that this extensive network will help XO improve delivery of service to customers, reduce network costs, improve operating results and better compete head to head with other companies in the nationwide local telecommunications services market.

"We are pleased that we have completed yet another milestone on our way to reorganizing Allegiance," said Royce Holland, chairman and chief executive officer of Allegiance Telecom. "We are confident that we will be able to complete the remaining milestones quickly so that the vision of the Telecommunications Act of 1996 - head-to-head competition between the Regional Bell Operating Companies and well funded competitive carriers - will be a reality."

Allegiance Telecom is a facilities-based national local exchange carrier headquartered in Dallas, Texas. As the leader in competitive local service for medium and small businesses, Allegiance offers "One source for business telecomTM" - 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.

XO Communications is a leading broadband telecommunications services provider offering a complete set of telecommunications services, including: local and long distance voice, Internet access, Virtual Private Networking (VPN), Ethernet, Wavelength, Web Hosting and Integrated voice and data services. XO has assembled an unrivaled set of facilities-based broadband networks and Tier One Internet peering relationships in the United States. XO currently offers facilities-based broadband telecommunications services within and between more than 70 markets throughout the United States.

Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and the Company intends that such forward- looking statements be subject to the safe harbors created thereby. The words "believes," "expects," "estimates," "anticipates," "plans," "will be" and "forecasts" and similar words or expressions identify forward-looking statements made by or on behalf of the Company. These forward-looking statements were derived using numerous assumptions and are subject to many uncertainties and factors that may cause the actual results of the Company to be materially different from those stated in such forward-looking statements. Examples of such uncertainties and factors include, but are not limited to, the impact of the bankruptcy filing and transactions entered into in connection therewith (including the potential sale of some or all of the company's assets and operations) on the Company's business, the Company's ability to timely and effectively provision new customers; the Company's ability to retain existing customers, including its largest customer, Level 3 Communications, the Company's ability to develop and maintain efficient billing, customer service and information systems; and technological, regulatory or other developments in the industry and general economy that might adversely affect the Company. Additional factors are set forth in the Company's SEC reports, including but not limited to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2003. The Company does not undertake any obligation to update or revise any forward-looking statement made by it or on its behalf, whether as a result of new information, future events or otherwise.