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iBasis
To Acquire Leading Enhanced Services Provider PriceInteractive;
Adds Company's Fortune 500 Customers to Growing Revenue
Stream
iBasis
Accelerates Time to Profitability
BURLINGTON,
MA - December 13, 2000 - iBasis, Inc., (Nasdaq:
IBAS), the leader in advanced voice-based Internet
communications, today announced that it has signed
a definitive agreement to acquire privately held PriceInteractive
for a combination of approximately 10.1 million shares
of iBasis common stock and approximately $50 million
in cash. Headquartered in Reston, Virginia, PriceInteractive
is a Speech Application Service Provider (ASP) whose
products and services give enterprises and service
providers the ability to speech-enable business-critical,
customer-facing solutions, such as e-commerce, call-center,
employee self-service, product and sales information,
customer care and other interactive applications.
Connecting these services to the iBasis Network, with
its extensive global reach and significantly reduced
network costs, will greatly increase the value and
scope of the solutions PriceInteractive provides to
its large enterprise and carrier customers.
By
leveraging the iBasis Network and its global footprint
with these hosted speech-enabled services, iBasis
will also accelerate its revenue generation from enhanced
services. This expanding portfolio of comprehensive,
outsourced solutions will enable the combined companies'
enterprise and service provider customers to affordably
extend global access to customer service solutions
- from mobile and fixed phones anywhere in the world.
The acquisition of PriceInteractive is an important
step in iBasis' strategy to enhance the capabilities
of its global VoIP infrastructure with new, speech-enabled
services that combine the power of the Internet with
the convenience, simplicity and ubiquity of the phone.
The
companies' customers include many of the largest enterprises
and carriers in the world. PriceInteractive has delivered
innovative, interactive voice response and speech-enabled
solutions to many Fortune 500 companies and leading
global service providers. PriceInteractive's customers
include AT&T, ExxonMobil, Gannett, H&R Block,
Home Shopping Network, Morgan Stanley, Sabre Group,
WorldCom, Sprint, Verizon, and Western Union. iBasis
customers include 11 of the top 12 US-based international
carriers and 10 of the top 20 global carriers, such
as WorldCom, Cable & Wireless, NTT, Telstra and
Concert, as well as four of the five largest carriers
in China.
"PriceInteractive
brings significant expertise in developing business-critical,
speech-enabled applications for major customers. The
combination of our two companies will allow us to
more quickly realize our vision of delivering enhanced
services for enterprises and service providers over
our global VoIP network," said Ofer Gneezy, president
and chief executive officer of iBasis. "We expect
that our acquisition of PriceInteractive will enable
us to offer a more complete portfolio of high-margin
enhanced services that build upon our continuing success
in Internet telephony and significantly accelerate
our progress toward achieving profitability."
"Our
solutions are used every day to connect businesses
to millions of customers, prospects, suppliers, employees
and others over the phone," said Dan Price, president
and CEO of PriceInteractive. "iBasis has the
vision, the leadership and the means to significantly
expand the global reach and greatly enhance the overall
value of PriceInteractive's solutions. Leveraging
the iBasis Network with its global footprint and proven
quality of service will enable us to deliver new,
international access and calling services to our enterprise
and service provider customers."
PriceInteractive:
Speech ASP Solutions
PriceInteractive provides the software, development,
implementation, hosting and ongoing support for its
three primary service offerings:
- SpeechPort™:
A hosted service that provides a speech-enabled
interface to Web-based content and e-commerce applications;
- IPort™:
A portfolio of Interactive Voice Response (IVR)
solutions for the Fortune 500 enterprise, carrier
and call center markets; and
-
PriceInteractive Professional Services: A full range
of speech and mobile commerce consulting, development
and implementation services for telephony and wireless
applications.
The
PriceInteractive acquisition builds on iBasis' previously
announced initiative to leverage its global infrastructure
for the delivery of speech-enabled solutions that
use technologies from leading speech recognition providers
such as SpeechWorks International (see iBasis and
SpeechWorks International Announce Plans To Provide
Global Phone Access For Speech-Driven Web Services
and Content - - December 4, 2000.)
The
iBasis Network: Infrastructure for the Voice Web
The iBasis Network™ is a robust, global platform
for the delivery of IP-based communications services,
including wholesale, phone-to-phone VoIP and enhanced
Voice Web services. iBasis enhanced services include
voice-enabled email and Unified Communications. The
company also plans to further leverage its global
network and VoIP expertise to develop and deliver
speech-driven, Web-based content, e-commerce and customer
service applications. The iBasis Network delivers
IP-based voice services using large carrier-class
switching and application hosting facilities called
Internet Central Offices™, strategically located
in Amsterdam, Cambridge (Mass.), Frankfurt, Hong Kong,
London, Los Angeles, Miami, New York, Paris, Singapore,
Stockholm, Sydney, Tokyo, and Toronto. The network
also comprises numerous smaller points of presence
called Internet Branch Offices™, which play an
important role in connecting providers to iBasis services.
With this global infrastructure in more than 45 countries
and through its peering relationships with other communications
providers, iBasis can provide IP-based voice services
virtually anywhere in the world.
New
Guidance, Accelerated Profitability
iBasis is providing new financial guidance based on
business factors that are independent of the PriceInteractive
transaction, as well as guidance based upon the anticipated
successful completion of the transaction.
Consistent
with previous guidance, as a stand-alone entity (without
giving effect to the PriceInteractive transaction),
iBasis expects to achieve full-year 2001 revenue in
the range of $130-140 million. Under new guidance,
on a stand-alone basis, the company now anticipates
accelerated improvement in gross margin, and expects
to begin approaching its steady-state gross margin
target of 20-25% in the fourth quarter of 2001. Further,
iBasis anticipates that it will achieve a net loss
in the range of $2.10 - $2.25 per share in 2001 (based
on an assumed 35 million shares outstanding). In addition,
the company now expects to achieve positive EBITDA
(earnings before interest, taxes, depreciation, and
amortization) in Q1 2002, and net income profitability
in Q2 2002, two quarters earlier than previous guidance.
The company is maintaining its previous guidance on
aggregate capital expenditure, which is expected to
be in the range of $30-40 million in 2001.
The
company's accelerated guidance (detailed above) is
primarily due to the following business factors: 1)
strong continuing momentum in the company's core wholesale
VoIP (Voice-over-Internet-Protocol) business - including
success in generating a higher percentage of revenue
from Tier-1 carrier traffic and an increase in overseas
traffic origination; 2) the adoption of a new "success-based"
deployment process for incremental capacity at existing
Internet Branch Office (IBO) and Internet Central
Office (ICO) facilities in 2001; 3) limiting new ICO
deployments in 2001 until higher network utilizations
are achieved; 4) anticipated traction in its higher-margin,
enhanced services businesses; and 5) incremental improvements
in cost management.
PriceInteractive
Transaction-Related Guidance
PriceInteractive generated 1999 revenue of approximately
$11.8 million, gross margin of approximately $6.2
million, positive EBITDA of approximately $1.9 million,
and positive net income of approximately $707,000.
PriceInteractive expects to generate 2000 revenue
of approximately $17-18.5 million, with gross margins
of approximately $8-9 million, positive EBITDA of
approximately $1.5-1.8 million and expects to be net
income positive for the full-year 2000. On a stand-alone
basis, PriceInteractive is expected to generate 2001
revenue in the range of $27-30 million with gross
margins of approximately 40-50%. PriceInteractive
is currently EBITDA positive and expects to generate
positive EBITDA of approximately $3-4 million in 2001.
On
a pro forma basis that assumes the successful completion
of the PriceInteractive transaction in the first quarter
of 2001, iBasis expects PriceInteractive to be accretive
to EBITDA in the first year of combined operations.
iBasis also anticipates that the combined company
will achieve positive EBITDA in the fourth quarter
of 2001. Independent of any special charges related
to the transaction, including the financial impact
of future goodwill and amortization charges, iBasis
anticipates the combined company will become net income
positive in the first quarter of 2002 - one quarter
earlier than indicated in iBasis' updated stand-alone
guidance.
With
more than $340 million in cash and equivalents at
September 30, 2000, iBasis believes that it continues
to be fully-funded for growth through to profitability
even after giving effect to the anticipated closing
of the PriceInteractive transaction. The company does
not anticipate the need to access the capital markets
for additional financing under its current business
model.
Terms
of the Transaction
Under terms of the agreement, existing PriceInteractive
stockholders and holders of vested options to purchase
PriceInteractive capital stock will receive approximately
10.1 million shares of iBasis common stock and approximately
$50 million in cash. iBasis will assume any unvested
PriceInteractive options. The cash and stock transaction
will be accounted for using the purchase method of
accounting. The transaction is expected to close in
the first quarter of 2001 and is contingent upon iBasis
shareholder approval, applicable regulatory approvals,
and other customary closing conditions. Stockholders
of iBasis, including several members of the Board
of Directors of iBasis, holding in the aggregate approximately
30% of iBasis' outstanding common stock, have agreed
to vote in favor of the transaction.
PriceInteractive
will become an iBasis line of business and PriceInteractive
president and CEO Dan Price will join the iBasis board
of directors and become senior vice president and
general manager of the new line of business reporting
directly to iBasis president and CEO Ofer Gneezy.
PriceInteractive's approximately 140 employees will
continue to be based in Reston, Virginia. iBasis currently
has 333 full-time employees.
About
PriceInteractive
PriceInteractive is a leading Speech Application Service
Provider (ASP) that delivers a comprehensive, speech-enabling
solution for accessing Web content and applications
via any phone or wireless device. Founded in 1997
and located in Reston, Virginia, PriceInteractive
develops and hosts speech applications for Fortune
500 and e-business market leaders such as AT&T,
ExxonMobil, H&R Block, Home Shopping Network,
WorldCom, Sprint, Verizon and Western Union. SpeechPort
technology partners include SpeechWorks, BEA, Oracle,
Sun Microsystems, Cisco Systems, and Intel/Dialogic.
For more information about the company visit www.PriceInteractive.com.
About
iBasis
Founded in 1996, iBasis (Nasdaq: IBAS) is the leader
in advanced Internet-based communications. iBasis
delivers toll quality voice and fax, as well as other
advanced hosted communications solutions to service
providers and enterprises. More than 100 international
service providers, including 11 of the top 12 US-based
international carriers and four of the five largest
carriers in China, route traffic over the iBasis Network.
iBasis customers include Worldcom, Cable & Wireless,
NTT, Concert, China Unicom, China Mobile and Telstra.
iBasis offers hosted, enhanced service solutions,
including VoCore
Unified Communications and the IP CallCard™ pre-
and post-paid calling card platform. In addition,
the company is further leveraging its global network
and VoIP expertise to develop and deliver speech-driven
web-based content, e-commerce and customer service
applications. The iBasis Network is the world's largest
international Cisco Powered Network for Internet Telephony
and the first to receive the Unified Communications-Cisco
Powered Network (UC-CPN) designation. iBasis is listed
in both the Russell 2000® and Russell 3000®
Indexes. The company can be reached at its worldwide
headquarters in Burlington, Mass., USA at 781-505-7500
or on the Internet at www.ibasis.net.
Except
for historical information, all of the expectations,
projections and assumptions contained in the foregoing
press release, including those set forth under the
headings "New Guidance, Accelerated Profitability",
"PriceInteractive Transaction-Related Guidance",
"Terms of the Transaction" and relating
to the company's current expectations regarding revenue
growth, sources of revenue, margin improvement and
future capital expenditures constitute forward-looking
statements under the Private Securities Litigation
Reform Act of 1995 and involve risks and uncertainties.
Important factors that could cause actual results
to differ materially from such forward-looking statements
include, but are not limited to, (i) the extent of
adoption of the company's new voice-based Internet
services and the timing and amount of revenue generated
by these services; (ii) fluctuations in the market
for and pricing of VoIP services; and (iii) the other
considerations described as "Risk Factors"
in iBasis' prospectuses dated March 9, 2000, and the
company's other SEC filings.
###
Assured Quality Routing and AQR are
registered trademarks, VoCore is a service mark and
iBasis, The iBasis Network, Internet Central Office
and Internet Branch Office and IP CallCard are trademarks
of iBasis, Inc. PriceInteractive, SpeechPort and IPort
are registered trademarks of PriceInteractive, Inc.
Cisco and Cisco Powered Network are registered trademarks
of Cisco Systems, Inc. SpeechWorks is a trademark
of SpeechWorks International, Inc. in the United States
and other countries. All other trademarks are the
property of their respective owners.
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