IDT Acquires Nationwide Fiber Network |
The New Network Capacity Will More than Double the Size of IDT’s Domestic Backbone and Significantly Reduce Costs
NEWARK, N.J-- September 20, 2002 – IDT Corporation (NYSE: IDT.B; NYSE: IDT), a leading multinational carrier and telephone company announced today that it’s IDT Telecom subsidiary has acquired certain Indefeasible Rights of Use (IRUs) and equipment from the estate of Star Telecommunications, Inc. IDT completed the acquisition after the United States Bankruptcy Court in Wilmington, Delaware selected IDT as the winning bidder and entered an Order authorizing the purchase. The assets acquired represent long-term capacity on US nationwide fiber networks operated by Qwest and Broadwing. The original IRU’s were purchased by Star Telecommunications in 1998 for approximately $68 million.
“We got this fiber network at a great price and just in the nick of time. At the rate we’re growing, we need to get our hands on as much bandwidth as we can,” said Howard Jonas, IDT’s Chairman. “With all of the well publicized woes being experienced by so many other telecom companies, new customers have been flocking to IDT’s Winstar and Telecom businesses. Additionally, the new capacity will allow IDT to expand its enterprise and pre-paid phone card businesses into many new US markets.”
Under the terms of the deal, IDT paid cash for the right of use of the capacity on the network for the remainder of the term (most are in excess of 16 years), operations and maintenance and certain equipment. IDT expects to recoup the cost of this acquisition in under a year solely on the basis of costs avoided, representing the money saved by moving traffic onto its own network in lieu of leasing network capacity from other carriers.
“This acquisition is just another example of IDT’s ability to obtain valuable telecom assets for a fraction of their original cost and put them into immediate, profitable use,” said James Courter, IDT’s CEO. “IDT will be better positioned to deliver high quality, low cost telecommunications services to our rapidly growing customer base.”
The fully operational 20-leg network of OC3 and OC12 bandwidth allows IDT to carry increased voice and data traffic into 13 major metropolitan cities in the United States, including Boston, New York City, Washington, DC, Atlanta, Miami, Houston, Dallas, El Paso, Phoenix, San Diego, Los Angeles, San Francisco, and Las Vegas.
“While the purchase price was less than a penny on the dollar of the original cost of the network,” said Motti Lichtenstein, CEO of IDT Telecom, “the true value lies in our ability to procure bandwidth at a significant discount to even today’s depressed market rates for leasing a similar amount of capacity.”
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 and Liberty Media own 95% and 5 % of IDT Telecom, respectively. IDT Media is the IDT subsidiary principally responsible for the Company's initiatives in media, new video technologies and print media.
Through its various subsidiaries, IDT has interests I in December 2001. IDT Corporation common shares trade on the New York Stock Exchange under the ticker symbols IDT.B and IDT. As of June 10, 2002, there were about 53.4 million shares of Class B common stock (IDT.B) outstanding, and about 24.9 million shares of common stock (IDT). Of these, approximately 4.0 million shares of Class B common stock and approximately 5.4 million shares of common stock were held by units of IDT Corporation.
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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Sep 19, 2002 |
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