"We are very pleased with the resumption of revenue growth, especially considering that historically there has been seasonal weakness in the third quarter," said Ofer Gneezy, president and CEO of iBasis.

"During the third quarter, we increased gross margin on a monthly basis. The improvements in monthly margin, ARPM, and average margin per minute have continued into Q4.

"We achieved a significant increase in traffic to mobile phones, which are both higher-revenue and higher-margin minutes. This contributed significantly to the increase in ARPM. We are continuing to pursue opportunities to terminate more traffic to mobile phones and believe we can increase our share of this market.

"Also during the quarter, we established traction in our new retail prepaid business. We launched private label calling cards in five U.S. markets, and we continue to open additional major U.S. markets and establish new distributor agreements. As expected, the retail prepaid calling card business did not contribute materially to third quarter results, but we believe it is on track to contribute substantially in the future. While this business does require initial start-up costs for local and toll-free access, we expect gross margin to be in the 20 - 25% range.

"Most important, we continued to make progress towards achieving positive cash flow and net income in mid-2004. Our loss in the third quarter was the smallest, excluding benefits from debt repurchases and exchanges, since iBasis became a public company four years ago."

Key Indicators

Minutes of use in the third quarter were 866 million minutes, an increase of 29% from 670 million minutes carried in the third quarter of 2002, and 1% over the 854 million minutes in the second quarter of 2003. ARPM in the third quarter increased to 5.1 cents per minute, compared to 4.6 cents per minute in the second quarter of 2003.

Operational Highlights

Tier One carrier customers generated 63% of revenue in the third quarter 2003, up from 61% of revenue in Q2 2003. During the quarter, seven of the top ten customers were Tier One carriers. Overseas-originated calls accounted for 44% of revenue in the third quarter 2003, compared to 40% of revenue in Q2 2003.

In addition to increasing our business from existing customers during the quarter, iBasis continued to expand its customer base, adding interconnections with 27 new customers. Customers announced during the third quarter included CANTV, the national long distance carrier of Venezuela, and CAT Telecom, the national long distance carrier of Thailand. iBasis finished the quarter with 236 customers.

Also during the quarter, iBasis was again recognized by the Deloitte & Touche Technology Fast 50 program as the fastest growing technology company in New England for the second consecutive year. The ranking is based on revenue growth over the preceding five years.

Financial Highlights

Gross margin was $5.5 million or 12.6% of revenue during the third quarter 2003, compared with $5.7 million or 14.7% of revenue in the second quarter 2003, and $4.9 million or 12.8% of revenue in the third quarter of 2002.

Depreciation declined to $4.3 million in Q3 2003 compared to $6.9 million in Q3 2002 and $5.7 million in Q2 2003. Interest expense declined to $0.8 million in Q3 2003 compared to $1.8 million in Q3 2002 and $1.0 million in Q2 2003.

Cash used in operations during the quarter was $1.5 million, including $2.3 million in semi-annual interest payment on our outstanding bonds. The total decrease in cash during the quarter was $4.3 million, including cash used in operations, principal repayments on capital leases of $1.1 million, and capital expenditures of $1.6 million. The company ended the third quarter with $16.9 million in cash.

Guidance

The following statements are forward-looking and actual results may differ materially due to factors noted below, among others. The information provided in this financial outlook is as of November 5, 2003, and supersedes all previous guidance.

The company is maintaining previous guidance. The company believes it will achieve positive cash flow and net income in mid-2004.

About iBasis

Founded in 1996, iBasis (OTCBB: IBAS) is a leading provider of wholesale international telecommunications services. For the past two years the company has been named by service providers as the best international wholesale carrier in Atlantic-ACM's annual International Wholesale Carrier Report Card¹. iBasis is a preferred provider for many of the largest carriers in the world, including AT&T, Cable & Wireless, China Mobile, China Unicom, MCI, Sprint, Telefonica, Telenor, and Telstra. iBasis has carried more than six billion minutes of international voice traffic over its global Cisco Powered Network™, and is one of the ten largest carriers of international voice traffic in the world². In addition to its wholesale international telecommunications services, iBasis provides retail prepaid calling cards to major distributors, utilizing the international iBasis Network. Based on its revenue growth from 1997 through 2001, iBasis was ranked the #8 fastest-growing technology company in North America and the #1 fastest-growing technology company in New England in the Technology Fast 500 national program sponsored by Deloitte & Touche. 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.