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Tech Industry

Allegiance perched on Vulcan nest egg

Allegiance Telecom, Inc. (Nasdaq: ALGX) said Wednesday that Microsoft co-founder Paul G. Allen's Vulcan Ventures, Inc. will buy 1.5 million shares of Allegiance common stock from Allegiance's investors at $50 per share.

The deal also gives Vulcan an option to buy another 5 million shares, at $56 each, and the right to appoint a director to Allegiance's board. Allegiance provides businesses with phone, high-speed data and Internet services, including digital subscriber line (DSL) services. The company has stakes in 16 markets and plans to offer its "one-stop shop'' approach in 24 major U.S. cities by mid-year 2000.

Allegiance is the latest in a line of investments from Vulcan Ventures, which has stakes in several Internet and media ventures, including ZDTV. Go2Net (Nasdaq: GNET) surged in March following a $750 million injection, and Metricom Inc. (Nasdaq: MCOM) reached new heights after Vulcan kicked into high gear in June after getting money from Vulcan. The Allegiance deal requires approval from regulators.

As with most of Allen's investments, Allegiance plans to explore strategic alliances to strengthen its Internet and e-commerce applications, and provide a distribution channel for Vulcan's portfolio companies, according to an Allegiance press release.

Shares in Allegiance Telecom, a competitive local exchange carrier (CLEC) based in Dallas, Texas, closed at 46 3/8 Tuesday. The stock's 52-week high was 59 3/4. Vulcan Ventures is based in Bellevue, Washington, and has investments in over 100 companies, most of which are big players in the Internet content and e-commerce fields.