Allegiance Telecom Creates Web Hosting Division

Acquires Web Hosting Assets of HarvardNet, Acquires Adgrafix



Apr 16, 2001, 01:00 ET from Allegiance Telecom, Inc.

    DALLAS, April 16 /PRNewswire/ -- Allegiance Telecom, Inc. (Nasdaq: ALGX),
 a leading integrated communications provider (ICP), announced the creation of
 a centralized Web hosting division.  This new division is the result of the
 critical mass created by the growth in Allegiance's Internet and hosting
 business and acquisitions of several regional Internet service companies.  It
 will focus on developing, marketing, and selling national Web hosting and
 Internet connectivity services.
     The new centralized Allegiance Web hosting division will market and sell
 its services, including a full-suite of shared, dedicated, managed, and
 colocated hosting services and Internet connectivity services, under a
 separate brand.
     The total U.S. Web hosting services market was estimated at $3.9 billion
 in 2000, according to IDC, a subsidiary of International Data Group, and is
 expected to grow to $24.8 billion by 2004.
     Allegiance also announced it acquired Web hosting assets, including the
 customers and world-class Internet data center, of Medford, Mass.-based
 HarvardNet.  In addition, Allegiance announced it acquired Adgrafix, a Web
 hosting services company headquartered in Sudbury, Mass.  These new
 acquisitions solidify the East Coast footprint of Allegiance's new Web hosting
 division.
     This vibrant Web hosting and data presence, combined with Allegiance
 Telecom's robust voice business, provide Allegiance's target customer audience
 of small and medium-sized enterprises (SMEs) with a wide array of
 communication and Internet solutions to compete in today's fast-paced business
 world.
     "The formation of a division focused exclusively on the Web hosting
 business and Internet connectivity is the most effective way for Allegiance
 Telecom to pursue the tremendous business opportunity of the Web.  At the same
 time, we'll continue to execute successfully on our communications services
 strategy," said Royce Holland, chairman and CEO of Allegiance Telecom, Inc.
 "These additional new Web hosting capabilities, combined with experienced
 management teams, mark a tremendous step forward for us, further enhancing our
 company's ability to provide a full range of Internet services to our target
 market of small and medium-sized businesses."
     "The creation of this division, bolstered by these acquisitions, is value
 accretive to Allegiance Telecom with minimal impact on the company's short
 term EBITDA [earnings before interest, taxes, depreciation and amortization]
 losses.  We believe that we remain fully funded to implement our 36 market
 plan," Holland added.  He stressed that all of these acquisitions provide
 significant cross-marketing and cross-selling opportunities for Allegiance's
 integrated package of voice and data communications services.  Allegiance
 Telecom is currently operational in 29 U.S. markets and expects to open seven
 more markets in 2001.
 
     HarvardNet Web Hosting Assets Form Foundation for New Hosting Division
 
      HarvardNet, a leading provider of dedicated, managed, and colocated Web
 hosting and Internet connectivity services to SMEs, was a pioneer in the
 competitive New England marketplace.  The HarvardNet employees who joined
 Allegiance Telecom are contributing to build Allegiance's burgeoning Web
 hosting division.  Mark Washburn, former HarvardNet president and CEO, joined
 Allegiance as senior vice president of Web hosting, responsible for operations
 of the newly created division.  He reports to Dan Yost, Allegiance president
 and chief operating officer.
     "Becoming part of Allegiance Telecom provides an opportunity to further
 the company's position as a major player in the Web hosting market," said
 Washburn.  "The new hosting division takes great advantage of proven Web
 hosting talent and products at the acquired companies and creates synergies
 with Allegiance Telecom's ever-growing installed base of more than 100,000
 small and medium-sized business customers."
 
     Adgrafix Becomes Part Of Allegiance Telecom
     Initiating its Web business in 1995, Adgrafix provides shared and
 dedicated Web hosting services to small and medium-sized businesses and
 organizations around the world.  Adgrafix's virtual and dedicated Web hosting
 services feature enhanced software for creating secure electronic commerce
 sites.  Adgrafix has several thousand customers located in more than 90
 countries.  Adgrafix's employees will also join the Allegiance Web hosting
 team.  Adgrafix founder and president Robert Bennett will report to Mark
 Washburn in the newly formed Allegiance Telecom Web hosting division.
     "Becoming part of Allegiance Telecom means the Adgrafix success story can
 continue to grow and prosper," said Bennett.  "Adgrafix products meet the
 needs of many Allegiance Telecom communications customers."
 
     Internet Data Centers
     Allegiance's newly acquired state-of-the-art Internet data center, located
 in Boston, provides customers with an integrated suite of shared and dedicated
 server capacity, managed hosting services, colocated hosting and leased line
 Internet access.  The high-performance, 20,000 square foot facility is
 designed for scalability and connectivity, and is served by multiple fiber
 providers and a dual power grid.
     The hosting capacity of this newly acquired data center, coupled with the
 Internet data centers in Austin, Chicago, Dallas, Los Angeles and San Diego,
 create a formidable national presence for Allegiance Telecom Web hosting and
 Internet connectivity services.
 
     About Allegiance Telecom
     Since its founding in 1997, Allegiance Telecom has rapidly become one of
 the leading facilities-based integrated communications providers in the U.S.
 Allegiance provides its business customers with a complete package of
 telecommunications services, including local, long distance, international
 calling, high-speed data transmission and Internet services and e-commerce
 offerings.   Allegiance currently has 29 markets operational, including
 Atlanta, Baltimore, Boston, Chicago, Cleveland, Dallas, Denver, Detroit, Fort
 Lauderdale, Fort Worth, Houston, Long Island, Los Angeles, Miami,
 Minneapolis/St. Paul, New York, Northern New Jersey, Oakland, Orange County,
 Philadelphia, Phoenix, St. Louis, San Antonio, San Diego, San Francisco, San
 Jose, Seattle, Tampa and Washington, D.C.  Seven more markets are expected to
 become operational in 2001, bringing Allegiance's total to 36 markets.  The
 Company's Web address is: www.allegiancetele.com. Allegiance's common stock is
 traded on the Nasdaq National Market under the symbol ALGX.
     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 which 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 Company's ability to timely and
 effectively provision new customers; technological, regulatory or other
 developments in the industry; and the ability to develop and maintain
 efficient billing, customer service and information systems.  Additional
 factors are set forth in the Company's SEC reports, including but not limited
 to the Annual Report on Form 10-K for the year ended December 31, 2000.  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.
    DALLAS, April 16 /PRNewswire/ -- Allegiance Telecom, Inc. (Nasdaq: ALGX),
 a leading integrated communications provider (ICP), announced the creation of
 a centralized Web hosting division.  This new division is the result of the
 critical mass created by the growth in Allegiance's Internet and hosting
 business and acquisitions of several regional Internet service companies.  It
 will focus on developing, marketing, and selling national Web hosting and
 Internet connectivity services.
     The new centralized Allegiance Web hosting division will market and sell
 its services, including a full-suite of shared, dedicated, managed, and
 colocated hosting services and Internet connectivity services, under a
 separate brand.
     The total U.S. Web hosting services market was estimated at $3.9 billion
 in 2000, according to IDC, a subsidiary of International Data Group, and is
 expected to grow to $24.8 billion by 2004.
     Allegiance also announced it acquired Web hosting assets, including the
 customers and world-class Internet data center, of Medford, Mass.-based
 HarvardNet.  In addition, Allegiance announced it acquired Adgrafix, a Web
 hosting services company headquartered in Sudbury, Mass.  These new
 acquisitions solidify the East Coast footprint of Allegiance's new Web hosting
 division.
     This vibrant Web hosting and data presence, combined with Allegiance
 Telecom's robust voice business, provide Allegiance's target customer audience
 of small and medium-sized enterprises (SMEs) with a wide array of
 communication and Internet solutions to compete in today's fast-paced business
 world.
     "The formation of a division focused exclusively on the Web hosting
 business and Internet connectivity is the most effective way for Allegiance
 Telecom to pursue the tremendous business opportunity of the Web.  At the same
 time, we'll continue to execute successfully on our communications services
 strategy," said Royce Holland, chairman and CEO of Allegiance Telecom, Inc.
 "These additional new Web hosting capabilities, combined with experienced
 management teams, mark a tremendous step forward for us, further enhancing our
 company's ability to provide a full range of Internet services to our target
 market of small and medium-sized businesses."
     "The creation of this division, bolstered by these acquisitions, is value
 accretive to Allegiance Telecom with minimal impact on the company's short
 term EBITDA [earnings before interest, taxes, depreciation and amortization]
 losses.  We believe that we remain fully funded to implement our 36 market
 plan," Holland added.  He stressed that all of these acquisitions provide
 significant cross-marketing and cross-selling opportunities for Allegiance's
 integrated package of voice and data communications services.  Allegiance
 Telecom is currently operational in 29 U.S. markets and expects to open seven
 more markets in 2001.
 
     HarvardNet Web Hosting Assets Form Foundation for New Hosting Division
 
      HarvardNet, a leading provider of dedicated, managed, and colocated Web
 hosting and Internet connectivity services to SMEs, was a pioneer in the
 competitive New England marketplace.  The HarvardNet employees who joined
 Allegiance Telecom are contributing to build Allegiance's burgeoning Web
 hosting division.  Mark Washburn, former HarvardNet president and CEO, joined
 Allegiance as senior vice president of Web hosting, responsible for operations
 of the newly created division.  He reports to Dan Yost, Allegiance president
 and chief operating officer.
     "Becoming part of Allegiance Telecom provides an opportunity to further
 the company's position as a major player in the Web hosting market," said
 Washburn.  "The new hosting division takes great advantage of proven Web
 hosting talent and products at the acquired companies and creates synergies
 with Allegiance Telecom's ever-growing installed base of more than 100,000
 small and medium-sized business customers."
 
     Adgrafix Becomes Part Of Allegiance Telecom
     Initiating its Web business in 1995, Adgrafix provides shared and
 dedicated Web hosting services to small and medium-sized businesses and
 organizations around the world.  Adgrafix's virtual and dedicated Web hosting
 services feature enhanced software for creating secure electronic commerce
 sites.  Adgrafix has several thousand customers located in more than 90
 countries.  Adgrafix's employees will also join the Allegiance Web hosting
 team.  Adgrafix founder and president Robert Bennett will report to Mark
 Washburn in the newly formed Allegiance Telecom Web hosting division.
     "Becoming part of Allegiance Telecom means the Adgrafix success story can
 continue to grow and prosper," said Bennett.  "Adgrafix products meet the
 needs of many Allegiance Telecom communications customers."
 
     Internet Data Centers
     Allegiance's newly acquired state-of-the-art Internet data center, located
 in Boston, provides customers with an integrated suite of shared and dedicated
 server capacity, managed hosting services, colocated hosting and leased line
 Internet access.  The high-performance, 20,000 square foot facility is
 designed for scalability and connectivity, and is served by multiple fiber
 providers and a dual power grid.
     The hosting capacity of this newly acquired data center, coupled with the
 Internet data centers in Austin, Chicago, Dallas, Los Angeles and San Diego,
 create a formidable national presence for Allegiance Telecom Web hosting and
 Internet connectivity services.
 
     About Allegiance Telecom
     Since its founding in 1997, Allegiance Telecom has rapidly become one of
 the leading facilities-based integrated communications providers in the U.S.
 Allegiance provides its business customers with a complete package of
 telecommunications services, including local, long distance, international
 calling, high-speed data transmission and Internet services and e-commerce
 offerings.   Allegiance currently has 29 markets operational, including
 Atlanta, Baltimore, Boston, Chicago, Cleveland, Dallas, Denver, Detroit, Fort
 Lauderdale, Fort Worth, Houston, Long Island, Los Angeles, Miami,
 Minneapolis/St. Paul, New York, Northern New Jersey, Oakland, Orange County,
 Philadelphia, Phoenix, St. Louis, San Antonio, San Diego, San Francisco, San
 Jose, Seattle, Tampa and Washington, D.C.  Seven more markets are expected to
 become operational in 2001, bringing Allegiance's total to 36 markets.  The
 Company's Web address is: www.allegiancetele.com. Allegiance's common stock is
 traded on the Nasdaq National Market under the symbol ALGX.
     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 which 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 Company's ability to timely and
 effectively provision new customers; technological, regulatory or other
 developments in the industry; and the ability to develop and maintain
 efficient billing, customer service and information systems.  Additional
 factors are set forth in the Company's SEC reports, including but not limited
 to the Annual Report on Form 10-K for the year ended December 31, 2000.  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.