IBasis To Unveil Call Agreement With China Mobile
By William M. Bulkeley
Staff Reporter of The Wall Street Journal
In a sign of the growth potential of routing voice calls over the Internet,
iBasis Inc. is expected to announce today that it has won a contract to
handle international calls for China Mobile Telecommunications Corp., which
claims the world's biggest base of cell-phone users.
Ibasis, based in Burlington, Mass., operates a global Internet-protocol
communications network and has contracts with many U.S. and international
phone carriers to provide Internet-based services, including voice.
Under the arrangement with China Mobile, which has 46 million cellular
customers, users making international calls will be able to hit the star
button on their phones and the call will be switched to iBasis's network,
cutting the cost of such calls by 80%, said Ofer Gneezy, chief executive and
founder of iBasis.
On Friday, iBasis stock rose $1.875, or 8%, to $25.375 in 4 p.m. Nasdaq
Stock Market trading. The company has a market valuation of about $860
million. The share price remains well below the $94.25 high it hit in
February.
Mr. Gneezy said he expected that within 12 months the contract will bring
iBasis added revenue of $2 million a month or more.
Last year, iBasis reported a net loss of $21 million, or $2.29 a share, on
revenue of $19.4 million. Rick Juarez, an analyst at FleetBoston Robertson
Stephens in San Francisco, said he expected that revenue this year will top
$55 million and will reach $125.5 million in 2001.
However, "because they're building out" the network, losses are going to
continue in the next two years, said Mr. Juarez, whose firm was lead
underwriter for a recent iBasis debenture offer.
Ibasis's biggest chunks of revenue come from providing low-priced voice
services to and from China and Mexico where traditional voice charges are
steep. Some prepaid phone calls for international calls route the callers
over iBasis.
(END) DOW JONES NEWS 06-12-00
12:01 AM
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