DALLAS, Feb 13, 2004 /PRNewswire-FirstCall via COMTEX/ -- Allegiance Telecom (ALGXQ) has selected XO Communications Inc. (XOCM) as the winning bidder 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, its managed modem business and certain other Allegiance assets and operations.

Under the terms of its bid, XO will purchase substantially all of Allegiance's assets for approximately $311 million in cash and approximately 45.38 million shares of XO common stock. The parties expect to finalize the definitive agreement within the next several days and submit the agreement to Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York for approval on February 19, 2004.

"With the addition of Allegiance Telecom's network assets, XO will be positioned to be the premier national facilities based competitor to the regional Bell operating companies (RBOCs)," said Carl Grivner, chief executive officer of XO Communications. "Combining XO's already significant nationwide footprint with Allegiance's more than 800 colocations allows us to better serve existing customers, immediately expand our ability to serve more businesses than ever before, and to gain economies of scale and scope allowing us to drive down costs and develop and roll-out new services. Our goal is to expand our delivery of end-to-end communications solutions to businesses nationwide."

"The combination of Allegiance and XO, the two largest national competitive local exchange carriers (CLECs), will create the scale and synergies necessary to accelerate profitability and to further challenge the regional Bell operating companies' virtual local market monopoly," said Royce Holland, chairman and chief executive officer of Allegiance Telecom. "This well-funded super-CLEC will be able to offer the kind of competition to the RBOCs envisioned by Congress when it passed the Telecommunications Act of 1996, and will provide the foundation for offering new innovative services and pricing packages for large, medium and small businesses in the vast national footprint created by the consolidation of Allegiance's and XO's networks," he said.

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 U.S.

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. The bankruptcy filings were made in the U.S. Bankruptcy Court in the Southern District of New York, case number 03- 13057(RDD).

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.

SOURCE Allegiance Telecom

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