: AT&T Seeks To Buy Net2Phone Stake
NEW YORK, Mar 30, 2000 (AP Online via COMTEX) -- AT&T Corp. is negotiating to
buy a stake in Net2Phone Inc., a provider of cheap long-distance calls over the
Internet, people familiar with the discussions said Thursday.
News of the talks, first revealed in a Business Week report valuing the
potential deal at about $1 billion, came just days after AT&T's Liberty Media
affiliate announced an agreement to buy a 10 percent stake in Net2Phone's
parent, IDT Corp.
Both AT&T and Net2Phone declined to comment on the matter, though sources
confirmed that the talks have reached an advanced stage.
Business Week also reported in its April 10 edition that America Online, already
a minority owner in Net2Phone, is looking to increase its stake. However, the
magazine said, IDT was leery of giving AOL a leading role that would dissuade
rivals such as Yahoo! and Microsoft from licensing Net2Phone's technology.
The moves suggest that Internet phone calling is emerging from the fringes of
technology into a more viable business.
Phone calls over the Internet have always been cheap, but poor quality has
discouraged their widespread use, especially with prices plunging for calls made
over the near-perfect connections of traditional telephone systems.
Growing interest in Net2Phone shows how the frenzied race to upgrade the
Internet for floods of Web traffic is also helping minimize the crackles and
voice delays of Web phone calls.
Earlier this week, network equipment maker Cisco Systems introduced a new office
phone system that uses a company's computer networks to make calls.
Net2Phone, based in Hackensack, N.J., is the early leader in the fast-growing
market for routing phone calls over the Internet and enabling people to use
their computers and Internet connections to avoid costly charges from local and
long-distance carriers. The service, with 600,000 active users, is particularly
popular among overseas callers.
Other players include deltathree.com and PhoneFree, as well as a new upstart
named dialpad.com, which is offering free calls in hopes of building a large
enough customer base to make money from advertisements on its Web site.
Internet calls are transmitted using the Web language known as Internet
Protocol, or IP for short. By using IP, a phone conversation can be broken down
into the same type of digital packets used to send information across the
Internet.
Business Week: AT&T To Take Major Stake In Net2Phone
New York, Mar 30, 2000 (BUSINESS WIRE) -- BUSINESS WEEK has learned that AT&T
is close to a deal in which it, and possibly others, will pay about $1 billion
for a major stake in Internet phone pioneer Net2Phone Inc. AT&T will buy part of
the equity from IDT Corp., which now holds a 58% voting stake in Net2Phone.
America Online Inc. and British Telecommunications PLC are also expected to
invest in Net2Phone. AT&T and its partners are expected to buy 60% of IDT's
stake in the company. As of Mar. 29, a Net2Phone board committee had yet to
approve the deal, Business Week reports. |
