Newark, N.J., May 12, 2004 – IDT Corporation (NYSE: IDT, IDT.C), a multinational communications company, today announced a reorganization of its Winstar/IDT Solutions division. As part of the reorganization, the division plans to discontinue the provision of retail communications services to commercial customers in the markets it currently serves*. The discontinuance applies to retail commercial customers; it does not negatively affect services to wholesale customers, including cable telephony customers, nor does it affect federal government customers and state contract customers, whose services will be preserved.
The division’s assets will be redirected towards providing private line services, wholesale services and spectrum leasing to telecommunications companies and mobile and fixed line carriers, as well as backhaul services.
“We recognize that the future of telecommunications is quickly moving away from traditional wired service towards new technologies,” said Howard Jonas, IDT’s Chairman. “Winstar/IDT Solutions’ fixed wireless assets and technology are perfectly positioned to play a critical role in the development of these technologies, including WiFi and cellular backhaul.”
Fixed wireless technology provides a flexible and cost effective “last mile” solution for voice and data traffic. In addition, fixed wireless provides essential “backhaul” services needed by cell phone operators, and WiFi providers for their telephony products.
“This reorganization directs Winstar/IDT Solutions’ assets to the sectors of the telecom marketplace with the greatest potential for growth,” said Jim Courter, IDT’s CEO. “We are aggressively pursuing agreements with other carriers and cellular companies as well as integrating Winstar/IDT Solutions’ assets into IDT’s recently announced WiFi phone service.”
The reorganization will achieve significant cost reductions through the elimination of unprofitable business services and staff reductions, and is expected to cut the division’s losses significantly. In addition, Winstar’s assets will be integrated into IDT Telecom’s U.S. network, resulting in greater network efficiency and reduced capital expenditures.
IDT expects that the total cost of this reorganization will be approximately $50 million, of which approximately $25 million previously has been accrued for or reserved. IDT expects that by the end of the first quarter of fiscal 2005, IDT Corporation, as well as each of its three subsidiaries, IDT Telecom, IDT Entertainment and the newly formed IDT Menlo Park division will be generating positive cash flow from operations. IDT’s Menlo Park division is comprised of IDT Media, Horizon Global Trading, Approach and IDT Energy.
IDT Corporation is a multinational communications company. IDT’s primary telecommunications offerings are prepaid and rechargeable calling cards, wholesale carrier services and consumer and business local and long distance phone services. IDT’s entertainment business is comprised of complementary operations and investments that enable IDT to acquire, develop, finance, produce and distribute animated and other entertainment content. IDT also operates various media-related businesses including brochure distribution and radio operations. IDT Corporation’s Class B common stock and common stock trade on the New York Stock Exchange under the ticker symbols IDT and IDT.C, respectively.
In this press release, all statements that are not purely about historical facts, including, but not limited to, those in which the words “will,” “anticipate,” “expect,” “seek,” “intend,” “estimate, “target” and similar expressions are used, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. While these forward-looking statements represent IDT’s current judgment of what may happen in the future, actual results may differ materially from the results expressed or implied by these statements due to numerous important factors. Such factors include, but are not limited to: competition and pricing pressures in the telecommunications markets; IDT Solutions’ ability to successfully market its fixed wireless assets and technology to the WiFi and cable telephony markets; unexpected costs that may be incurred in scaling back IDT Solutions’ network, services and operations; and those factors described in IDT’s most recent report on SEC Form 10-K (under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations”), which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K and other filings IDT may make with the SEC.
*Alaska, Alabama, Arkansas, Arizona, California, Colorado, Delaware, Florida, Georgia, Iowa, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Maine, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, North Dakota, Nebraska, New Hampshire, New Mexico, New York, Nevada, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, D.C., Washington State, Wisconsin, West Virginia and Wyoming.