IDT Corporation Announces Strategic Plan for its Winstar Communications Subsidiary |
Winstar to Grow its On-Net Building Network, Reduce Costs and Advance Profitability Target Date
NEWARK, N.J. – March 8, 2002 – IDT Corporation (NYSE: IDT, IDT.B), a leading multinational carrier and telephone company, today announced that its Winstar Communications, LLC subsidiary has begun implementing a strategic plan which will result in the growth of its facilities based communications business and significantly advance its move towards profitability by the end of this year. This program results from the analysis of the Winstar business which IDT has conducted since acquiring significantly all of the operating assets of Winstar nearly three months ago.
Under this plan, Winstar will exit its wireline resale business entirely, exit its fixed wireless business in certain of its smaller markets and consolidate certain facilities and functions with IDT. At the same time, the plan calls for Winstar to increase the overall size of its fixed wireless network by adding approximately 600 new buildings in the 22 cities in which it is maintaining these operations and to significantly expand its sales force. With the addition of these buildings, Winstar will have approximately 4,000 buildings on its network.
“When IDT bought Winstar in December, we expected to bring the company to profitability before the end of this year,” said Brian Finkelstein, the Chief Executive Officer of Winstar. “By rationalizing our network and growing our footprint, we will have access to thousands of additional businesses in the new buildings which we will be bringing onto our network and should reach our goal of profitability even earlier than our initial expectations.”
Through its wireline resale business, Winstar provides telephone and Internet service to customers using wires which are leased from another carrier (usually the local monopoly phone company) to provide so-called “last mile” connectivity. “You don’t have to be very smart to know that you can’t stay in business by paying exorbitant fees to your competitors,” said Howard Jonas, IDT’s Chairman. “Rather than losing money on a business where we have to pay the monopoly local carrier – our competitor – for access to our customer, we’re going to play to our strengths by focussing our efforts on the customers who we can service on our own network. With these changes, we can compete head-to-head with the monopoly carriers utilizing our own proprietary network and bring true competition to the local service business.”
Winstar provides local, long distance and Internet services to business customers with superior customer service at highly competitive prices. Through its unique fixed wireless network, Winstar presently reaches customers in approximately 3,500 buildings in the 22 continuing markets. Additionally, because Winstar’s proprietary network does not utilize the last-mile wiring or network of the incumbent monopoly carriers, it provides redundancy for businesses seeking back-up service. This redundancy enabled Winstar to provide uninterrupted telephone service in lower Manhattan to customers and to the federal government’s disaster relief operations following the September 11th attack on the World Trade Center towers.
“IDT and Winstar are committed to providing the best service to the Winstar customers,” said Jim Courter, IDT’s CEO and Vice Chairman. “We will be working with all customers affected by this restructuring in order to ensure that they are properly transitioned over to an alternate service provider and do not experience service interruptions.”
In connection with the implementation of this strategic plan, responsibility for many overlapping functions will be assumed by IDT personnel, principally at IDT’s headquarters in Newark, New Jersey and its engineering center in Piscataway, New Jersey. This will result in the elimination of approximately 65% of Winstar’s existing non-sales workforce and the transfer of Winstar’s customer service operations to an alternate facility. It is anticipated that these changes will enable Winstar to offer even more competitive pricing and improved service to its customers.
Winstar will retain and continue to grow its wide area network data business (which provides frame relay and asynchronous transfer mode (ATM) services to customers) and its long distance resale business (which provides 1+ long distance service to business customers) across the entire continental United States. Additionally, it will continue to provide local, long distance and Internet services on its fixed wireless network in the following 22 markets: Atlanta, Baltimore, Boston, Chicago, Cincinnati, Dallas/Ft. Worth, Denver, Detroit, Houston, Los Angeles, Miami, Minneapolis/St. Paul, New York City, Newark (New Jersey), Orange County (California), Philadelphia, Phoenix, San Francisco, Seattle, Stamford (Connecticut), Tampa and Washington DC.
IDT CORPORATION
IDT, through its IDT Telecom subsidiary, is a leading facilities-based, multinational carrier that provides a broad range of telecommunications services to its retail and wholesale customers worldwide. Through its own national telecommunications backbone and fiber optic network infrastructure, IDT Telecom provides its customers with integrated and competitively priced international and domestic long distance telephony and prepaid calling cards. IDT Ventures is the IDT subsidiary principally responsible for the Company’s initiatives in media and new technologies. Through its various subsidiaries, IDT has interests in several telecom, Internet-related and media companies. Recent IDT acquisitions include Winstar Communications, Net2Phone, and Talk America Radio Network.
Except for historical information, all of the expectations and assumptions contained in the foregoing are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and the Securities Exchange Act of 1934, involving risks and uncertainties. These statements refer to our plans to implement our growth strategy, improve our financial performance, expand our infrastructure, develop new products and services, expand our customer base and enter international markets. The forward looking statements also include our expectations concerning factors affecting the markets for our products, including the demand for long distance telecommunications, and Internet access services. These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results that we anticipate. These risks and uncertainties include, but are not limited to, those risks discussed in this release. In addition to the factors specifically noted in the forward looking statements, other important factors that could result in those differences include (a) general economic conditions in the telecommunications and Internet markets, including inflation, recession, interest rates, and other economic factors; (b) casualty to or other disruption of our facilities and operations; (c) those discussed in our Annual Report on Form 10K for the period ended July 31, 2001 and (d) other factors that generally affect the business of telecommunications, Internet and other communications companies. We assume no obligation to update these forward looking statements or to update the reasons actual results could differ materially from the results anticipated in the forward looking statements.
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Mar 08, 2002 |
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