iBasis goes Dutch,
BURLINGTON, MASS. AND THE HAGUE, NETHERLANDS
iBasis, Inc. (NASDAQ: IBAS), the global VoIP company™, and Royal KPN N.V., the national carrier of the Netherlands, today announced that iBasis has received shareholder approval of its transaction with Royal KPN N.V., which results in the effective merger of KPN's international wholesale voice business into iBasis. The combination changes the landscape of global telecommunications as iBasis becomes one of the three largest carriers of international phone calls worldwide. The transaction officially goes into effect on October 1.
As a result of the transaction, iBasis receives the KPN Global Carrier Services business unit and $55 million in cash from KPN in exchange for approximately 40 million shares of its common stock, after which KPN will be a 51 percent shareholder on a fully diluted basis. iBasis will pay a dividend in the aggregate amount of $113 million to its stockholders of record as of the close of business on September 28, 2007.
The combination creates a "new iBasis" with strengths in two of the fastest growing segments of global telecommunications: mobile services and consumer VoIP. Furthermore, the combination results in complementary geographic coverage by bringing together KPN Global Carrier Services' extensive footprint in Europe, the Middle East and Africa with iBasis' strong presence in the Americas and Asia. KPN Global Carrier Services also brings an established business in mobile services, including a reliable and high quality product portfolio and relationships with more than 100 mobile operators, as well as international traffic from KPN's Dutch, German and Belgian operations. iBasis brings a global VoIP network comprising over 1,000 points of presence in more than 100 countries and interconnections with more than 600 carriers worldwide.
With combined pro forma 2006 revenues of $1.3 billion and more than 20 billion minutes of international voice traffic, iBasis is the first IP-based carrier to break into the international telecom top three, regarded by analysts as a major event in an industry-wide migration to the Internet as a preferred communications platform. The transaction also dramatically enhances the iBasis product portfolio by adding feature-rich voice and data offerings for mobile operators and combining other products to meet the needs of customers from every market segment. The new iBasis will now serve approximately 1,000 customers including national operators, wholesale carriers, calling card operators, mobile operators, fixed retail business, cable Multi-Service Operators and Voice over Broadband service providers.
"Our extensive global VoIP network and sophisticated back office systems enable us to deliver a very high volume of traffic at a low cost," said Ofer Gneezy, president and CEO of iBasis. "With a comprehensive portfolio of products and services, customers in all existing industry segments, and technology to pursue rapidly emerging areas, iBasis is the new 'face' of telecom.
"The international voice market will continue to consolidate, with more carriers looking to enhance their efficiency by outsourcing international service," continued Gneezy. "We feel uniquely qualified to drive the current migration to IP communications and to be a platform for continued industry consolidation."
Eelco Blok, member of the Board of Management of KPN said, "We are very pleased with the shareholder approval to merge KPN Global Carrier Services into iBasis. iBasis is a strong partner that will substantially increase scale in our international wholesale activities and therefore lower costs. With the integration of iBasis' IP-based network, we see this transaction as a further step in transforming our company to an all-IP operator, both nationally and internationally."
iBasis remains a stand-alone, publicly traded company, headquartered in Burlington, Mass. It gains a significant operation in The Hague and additional sales offices throughout the world. iBasis will continue to be led by existing senior management under the direction of President and CEO, Ofer Gneezy. Edwin van Ierland, former general manager of KPN Global Carrier Services, joins the executive staff of iBasis with the completion of the transaction. KPN has appointed two of its executives, Eelco Blok and Joost Farwerck, to join the seven member iBasis Board of Directors. They replace departing directors David Lee and Charles Skibo whose contributions to iBasis' success are greatly appreciated. KPN also has the right to nominate two independent directors to the iBasis' board in the future.
Comments from Industry Analysts
"The IP transformation of the industry is well underway," said Joe McGarvey, senior analyst with Heavy Reading, an independent telecom market research firm. "Traditional telecom technologies simply cannot compete with an IP-based infrastructure, which is less expensive to maintain, operate and expand. This transaction brings iBasis significant gains in traffic volume, customers and capabilities. Plus, its advanced IP resources -- enhanced with the addition of mobile voice and messaging services from KPN Global Carrier Services -- puts iBasis in a strong position for capitalizing on fast-growing industry segments."
"iBasis has been one of the great success stories of the wholesale market, and has been both an innovator and a survivor," said TeleGeography's Director of Research, Stephan Beckert. "KPN has effectively outsourced its international voice business to iBasis and made a significant investment in the company. This represents a strong vote of confidence in iBasis, and its VoIP strategy, by a major incumbent carrier. While many other carriers foundered during the downturn in the telecom market, iBasis stayed focused and continued to grow, to the point where in just over ten years it carries as much international traffic as AT&T."
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