XO Wins Allegiance AuctionXO Wins Allegiance Auction

XO Communications purchases Allegiance's assets and subsidiaries for $311M in cash and 45.38M shares

February 13, 2004

2 Min Read

DALLAS -- Allegiance Telecom (OTC Bulletin Board: ALGXQ - News) has 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 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 Inc.

Allegiance Telecom Inc.

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