DENVER -- Qwest Communications International Inc. (NYSE: Q) today announced it has signed an agreement to purchase certain assets and associated revenue streams from Allegiance Company, Inc (OTC: ALGXQ). Qwest intends to purchase network assets in 36 metro markets, 31 of which are outside the Qwest local service region. This will increase Qwest's points of presence (POPs) by nearly 700 and provide additional network facilities to support the delivery of end-to-end voice and data communications to business customers across the U.S.

Under the terms of the agreement, Qwest will purchase the 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. Allegiance currently carries approximately $550 million in telecommunications traffic across these assets. Qwest plans to combine and optimize this traffic -- with its existing network traffic -- in the most cost-efficient manner in 2004.

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.

"Upon closing of this transaction, Qwest will have more POPs 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."

Qwest Communications International Inc.

Allegiance Telecom Inc.