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Saturday, 04/03/2004 11:54:46 PM

Saturday, April 03, 2004 11:54:46 PM

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Allegiance Telecom Files Plan of Reorganization
Thursday March 18, 4:53 pm ET

DALLAS, March 18 /PRNewswire-FirstCall/ -- Allegiance Telecom, Inc. (OTC Bulletin Board: ALGXQ - News), a national local exchange carrier providing competitive telecom services to business, filed its proposed plan of reorganization with Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York.

Later today, the company will file a disclosure statement that explains the details of the proposed plan. The proposed plan and the disclosure statement will be available via the court's website, at . Please note that a PACER password is required to access documents on the Bankruptcy Court's website. The Company's bankruptcy case number is 03-3057(RDD). Additional information regarding the Company's reorganization is available at .

The company will request that a hearing on the adequacy of the disclosure statement and related procedures to solicit votes in favor of the plan be scheduled by the Bankruptcy Court for April 16, 2004.

On February 13, 2004, Allegiance selected XO Communications Inc. (OTC Bulletin Board: XOCM - News) as the winning bidder to purchase substantially all of the assets of Allegiance Telecom and its subsidiaries, including the stock of Allegiance's regulated operating subsidiaries. XO will not purchase Allegiance's customer premises equipment sales and maintenance business operated under the name of Shared Technologies, its dedicated dial-up access services business with Level 3, 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 bid was approved by the court on Feb. 19, 2004, and is currently undergoing certain federal and state government approvals. The Company anticipates that, subsequent to receipt of the federal approvals which are expected by mid-April, 2004, XO Communications will run the Allegiance business under the terms of an operating agreement until final closing.

Allegiance also recently announced that it reached a settlement with Level 3 Communications, which subject to approval of the Allegiance bankruptcy court and other conditions, would terminate a multi-year contract Level 3 has to purchase wholesale dial access services, including the use of operating equipment, from Allegiance. Under this settlement, Level 3 has agreed to pay Allegiance $54 million in cash in exchange for Allegiance's contract with Level 3 and certain associated assets dedicated to this contract.

With the sale to XO and the settlement agreement with Level 3, Allegiance's remaining operations consist of its Shared Technology customer premise equipment installation and maintenance business and the Allegiance shared hosting business. The Company plans to operate the Shared Technology business as a free-standing enterprise, the stock of which will be held for the benefit of, or distributed to, the Allegiance creditors. Allegiance is in the process of selling its shared hosting business.

Allegiance Telecom is a facilities-based national local exchange carrier headquartered in Dallas, Texas. It announced financial restructuring plans under Chapter 11 of the U.S. Bankruptcy Code 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.

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, 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, Inc.

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