KPN to Merge International Wholesale Business into iBasis
KPN to Become Majority Shareholder; iBasis Shareholders to Receive Post-Closing Dividend of USD113 Million
BURLINGTON, MA, USA, and THE HAGUE, THE NETHERLANDS — June 21, 2006 — iBasis (NASDAQ:IBAS), the global VoIP company™, and Royal KPN N.V., the national carrier of The Netherlands, today announced that they have signed a definitive agreement to merge KPN's international wholesale voice business into iBasis. This combination will establish iBasis as one of the five largest international wholesale voice carriers in the world, with combined 2005 revenues exceeding USD 1.1 billion and more than 15 billion combined minutes in 2005. iBasis will acquire KPN subsidiary KPN Global Carrier Services and receive USD 55 million in cash from KPN in return for the issuance of approximately 40 million shares of iBasis common stock, which represent a 51 percent ownership interest in iBasis on a diluted basis.
iBasis shareholders of record immediately prior to closing will receive a cash dividend of USD 113 million immediately following closing. In connection with payment of the dividend, outstanding common stock options will be adjusted to preserve their value. The transaction, which is subject to customary closing conditions, including regulatory approvals and the approval of iBasis shareholders, is expected to be completed before the end of 2006.
Ad Scheepbouwer, Chairman and CEO of KPN commented: "We are very pleased to merge our international wholesale voice business into iBasis, given its leadership in VoIP and its strong growth profile. This transaction is an important step for KPN that will clearly contribute to the realization of our existing All IP strategy and our transformation into an All IP company. Consolidation of iBasis revenues will contribute to the growth of our fixed activities and increase the contribution of IP-based services in our portfolio."
"This transaction will establish the expanded iBasis as a Tier One player in the international wholesale voice market and one of the top five carriers of international traffic worldwide," said Ofer Gneezy, President and CEO of iBasis. "In addition to its strengths in Europe, KPN Global Carrier Services provides long term sustainable revenues and bilateral relationships with major carriers around the world, as well as significant mobile traffic and relationships with European mobile operators. The combined depth, breadth and high quality of both networks are a tremendous benefit to our customers and to the internal sources of traffic, including KPN's international traffic and iBasis' retail prepaid traffic."
Rationale
The transaction combines the companies' strengths in two of the fastest growing segments of global telecommunications: mobile services and consumer VoIP. Furthermore the combination results in complementary geographic coverage by bringing together KPN Global Carrier Services' extensive European and Asian footprint with iBasis' strong presence in the Americas and Asia. KPN Global Carrier Services brings an established business in mobile services, including a reliable and high quality product portfolio and relationships with more than 100 mobile operators, as well as international traffic from KPN's Dutch, German and Belgian operations. iBasis brings a global VoIP network comprising over 1,000 points of presence in more than 100 countries and interconnections with more than 400 carriers worldwide. iBasis is a leading international provider to emerging consumer VoIP companies, including major brands like Yahoo! and Skype.
As a result, KPN Global Carrier Services' customers gain access to broader and more cost-efficient termination capacity in other regions, while iBasis customers gain access to a portfolio of premium services for mobile traffic and greater capacity in Europe. The international traffic stream from KPN's retail services coupled with iBasis' own retail traffic provides a strong and sustainable basis for continuing growth.
Pre-tax cost synergies of more than USD 10 million per year are expected in the medium term, resulting primarily from improved termination rates due to the increase in scale and economies of scale in the back office.
Financial details
Following completion of the transaction and after the post-closing cash dividend of USD 113 million has been paid to the existing shareholders, iBasis will continue to have a strong financial position with virtually no debt.
Combined 2005 revenues of USD 1.1 billion is based on iBasis 2005 revenue of USD 0.4 billion and KPN Global Carrier Services 2005 revenue on a GAAP basis of USD 0.8 billion assuming current Euro/Dollar exchange rates, adjusted by USD 0.1 billion to reflect market rates on intra-company revenue transactions with Royal KPN N.V. This adjusted revenue is a non-GAAP measure used to present information about the combined company's operations (see Use of Non-GAAP Financial Measure, below).
Forecasted financial results, as if the two entities were combined for the full year 2006, assuming the current Euro/Dollar exchange rate, and excluding synergies and integration-related expenses are:
Revenues of USD 1.2 - 1.25 billion
EBITDA of USD 45 - 50 million
Governance
Following completion of the transaction Ofer Gneezy will continue to serve as President and CEO, and Gordon VanderBrug will continue to serve as Executive Vice President of iBasis. The seven-member board of directors will consist of current directors Ofer Gneezy, as chairman, Robert Brumley, Charles Corfield, Frank King, and Gordon VanderBrug. KPN will appoint two non-executive directors: Eelco Blok, Member of the Board of Management of KPN and responsible for the Fixed Division and Joost Farwerck, Director of Wholesale Services and Operations at KPN. In addition, KPN will nominate two independent Board members as the terms of the existing independent directors come up for renewal. iBasis' headquarters will remain in Burlington, Massachusetts, USA.
Listing on NASDAQ
As previously announced, iBasis stock will begin trading on NASDAQ today, June 21, under the symbol IBAS. iBasis stock previously traded on OTCBB under the symbol IBSE.
Investor/analyst call
A joint investor/analyst conference call is scheduled for June 21, 16.00 hours CET /10:00 a.m. EDT. Dial-in numbers for the conference call are: 1-877-452-7894 (United States), 0800-0288238 (UK), +31 205315871 (international). Access to the live webcast will be available on the iBasis Investor Relations website at investor.ibasis.com.
About KPN
KPN offers telecommunication services to both consumers and businesses. The core activities are telephony, Internet and television services in the Netherlands, mobile telecom services in Germany, the Netherlands and Belgium and data services in Western Europe. KPN is the market leader in the major segments of the Dutch telecom market and is actively growing market share in the new IP and DSL markets. Through E-Plus and BASE, KPN occupies a strong position in the mobile markets in Germany and Belgium respectively.
As of March 31, 2006, KPN's 28,647 employees served 6.7 million fixed-line subscribers and 2.2 million Internet customers in the Netherlands as well as 21.6 million mobile customers in Germany, the Netherlands and Belgium. KPN was privatized in 1989. KPN's shares are listed on the stock exchanges in Amsterdam, New York, London and Frankfurt.
About iBasis
Founded in 1996, iBasis (OTCBB: IBAS) is a leading wholesale carrier of international long distance telephone calls and a provider of retail prepaid calling services, including the Pingo® web-based offering (www.pingo.com) and disposable calling cards, which are sold through major distributors and available at retail stores throughout the U.S. iBasis customers include many of the largest telecommunications carriers, including AT&T, Cable & Wireless, China Mobile, China Unicom, MCI, Sprint, Skype, and Telefonica. iBasis carried 7.8 billion minutes of international voice over IP (VoIP) traffic in 2005, and is one of the ten largest carriers of international voice traffic in the world1. For four consecutive years service providers named iBasis the best international wholesale carrier in ATLANTIC-ACM's annual International Wholesale Carrier Report Card2. iBasis was also ranked among the fastest-growing technology companies in New England in the 2002, 2003, and 2004 Technology Fast 50 programs 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. |
