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KPN to Merge International Wholesale Business Into iBasis
Den Haag, 21-6-06
KPN to Become Majority Shareholder; iBasis Shareholders to Receive Post-Closing Dividend of $113 Million
iBasis (NASDAQ:IBAS), the global VoIP company, and Royal KPN N.V., the national carrier of The Netherlands, today announced that they have signed a definitive agreement to merge KPN’s international voice wholesale business into iBasis. This combination will establish iBasis as one of the five largest international wholesale voice carriers in the world, with pro forma 2005 revenues exceeding USD 1.1 billion and more than 15 billion minutes in 2005. iBasis will acquire KPN subsidiary KPN Global Carrier Services and receive USD 55 million in cash from KPN in return for the issuance of approximately 40 million shares of iBasis common stock, which represent a 51 percent ownership interest in iBasis on a diluted basis.
iBasis shareholders of record immediately prior to closing will receive a dividend of USD 113 million immediately following closing. In connection to payment of the dividend, outstanding options will be adjusted to preserve their equity value. The transaction, which is subject to customary closing conditions, including regulatory approvals and the approval of iBasis shareholders, is expected to be completed before the end of 2006.
Ad Scheepbouwer, Chairman and CEO of KPN commented: “We are very pleased to merge our international wholesale voice business into iBasis, given its leadership in VoIP and its strong growth profile. This transaction is an important step for KPN that will clearly contribute to the realization of our existing All IP strategy and our transformation into an All IP operator. Consolidation of iBasis revenues will contribute to the growth of our fixed activities and increase the contribution of IP-based services in our portfolio.”
“This transaction will establish the expanded iBasis as a Tier One player in the international wholesale voice market and one of the top five carriers of international traffic worldwide,” said Ofer Gneezy, President and CEO of iBasis. “In addition to its strengths in Europe, KPN Global Carrier Services provides long term sustainable revenues and bilateral relationships with major carriers around the world, as well as significant mobile traffic and relationships with European mobile operators. The combined depth, breadth and high quality of both networks are a tremendous benefit to our customers and to the internal sources of traffic, including KPN’s international traffic and iBasis’ retail prepaid traffic.”
Rationale
The transaction combines the companies’ 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 European and Asian footprint with iBasis’ strong presence in the Americas and Asia. KPN Global Carrier Services 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 400 carriers worldwide. iBasis is a leading international provider to emerging consumer VoIP companies, including major brands like Yahoo! and Skype.
As a result, KPN Global Carrier Services’ customers gain access to broader and more cost-efficient termination capacity in other regions, while iBasis customers gain access to a portfolio of premium services for mobile traffic and greater capacity in Europe. The international traffic stream from KPN’s retail services coupled with iBasis’ own retail traffic provides a strong and sustainable basis for continuing growth.
Pre-tax cost synergies of more than USD 10 million per year are expected in the medium term, resulting primarily from improved termination rates due to the increase in scale and economies of scale in the back office.
Financial details
Following completion of the transaction and after the post-closing dividend of USD 113 million has been paid to the existing shareholders, iBasis will continue to have a strong financial profile with virtually no debt.
Combined 2005 revenues of USD 1.1 billion is based on iBasis 2005 revenue of USD 0.4 billion and KPN Global Carrier Services 2005 revenue on a GAAP basis of USD 0.8 billion assuming current Euro/Dollar exchange rates, adjusted by USD 0.1 billion to reflect market rates on intra-company revenue transactions with KPN. This adjusted revenue is a non-GAAP measure used to present information about the combined company’s operations (see Use of Non-GAAP Financial Measure, below).
Anticipated financial results, as if the two entities were combined for the full year 2006, assuming the current Euro/Dollar exchange rate, and excluding synergies and integration-related expenses are:
Revenues of USD 1.2 – 1.25 billion
EBITDA of USD 45 – 50 million
Governance
Following completion of the transaction Ofer Gneezy will continue to serve as President and CEO, and Gordon VanderBrug will continue to serve as Executive Vice President of iBasis. The seven-member board of directors will consist of current directors Ofer Gneezy, as chairman, Robert Brumley, Charles Corfield, Frank King, and Gordon VanderBrug. KPN will appoint two non-executive directors: Eelco Blok, Member of the Board of Management of KPN and responsible for the Fixed Division and Joost Farwerck, Director of Segment Wholesale and Operations at KPN. In addition, KPN will nominate two independent Board members as the terms of the existing independent directors come up for renewal.
iBasis’ headquartes will remain in Burlington, Massachusetts, USA.
Listing on NASDAQ
As previously announced, iBasis stock will begin trading on NASDAQ today, june 21, under the symbol IBAS. iBasis stock previously traded on OTCBB under the symbol IBSE.
Investor/analyst call
A joint investor/analyst conference call is scheduled for June 21, 16.00 hours CET /10:00 a.m. EDT. Dial-in numbers for the conference call are: US 1-8774527894: UK 0800-0288238; rest of Europe
+ 31 20 531 58 71. Replay conferencecall, dial in replay: +31 70 315 43 00, code replay: 124 424# Access to the live webcast will be available on the KPN website at http://www.kpn.com/kpn/show/id=1430486/
About iBasis
Founded in 1996, iBasis (NASDAQ:IBAS)) is a leading wholesale carrier of international long distance telephone calls and a provider of retail prepaid calling services, including the Pingo® web-based offering (www.pingo.com) and disposable calling cards, which are sold through major distributors and available at retail stores throughout the U.S. iBasis customers include many of the largest telecommunications carriers in the world, including AT&T, Cable & Wireless, China Mobile, China Unicom, Verizon, Sprint, Skype, Yahoo, and Telefonica. iBasis carried approximately 8 billion minutes of international voice over IP (VoIP) traffic in 2005, and is one of the largest carriers of international voice traffic in the world. For four consecutive years service providers named iBasis the best international wholesale carrier in ATLANTIC-ACM’s annual International Wholesale Carrier Report Card[1]. The Company can be reached at its worldwide headquarters in Burlington, Massachusetts, USA at 781-505-7500 or on the Internet at www.ibasis.com.
iBasis and Pingo are registered marks, and the global VoIP company is a trademark of iBasis, Inc. All other trademarks are the property of their respective owners.
