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Qwest buys Allegiance assets

The Baby Bell will spend $300 million for nearly all the assets of carrier Allegiance Telecom, pushing its reach into 31 more markets.

Local phone service provider Qwest Communications International agreed to purchase nearly all the assets of carrier Allegiance Telecom for $300 million.

Qwest expects to close the nearly all-cash deal sometime next year, pending a bankruptcy court judge's approval, the carrier said Thursday. Dallas-based Allegiance filed for Chapter 11 bankruptcy protection in May.

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The deal is expected to further intensify competition among the nation's major phone companies, which are also facing increasing challenges from cable providers that are using a new form of telephone dialing called .

The agreement covers Allegiance's business-class telephone customers in 36 metropolitan areas, 31 of which are outside Qwest's present reach. Allegiance's voice and data traffic is valued at $500 million.

Qwest Chairman Richard Notebaert said the deal gives his company more "points of presence"--a way of measuring a telephone company's network reach--than most of its competitors. He added that the agreement will allow Qwest to expand its recent push into selling VoIP dialing.

Allegiance Chairman Royce Holland characterized the pairing of long-distance and local phone companies as the first-ever "large-scale, out-of-region competitor for local service between the regional Bell companies."