BURLINGTON, Mass. and THE HAGUE, The Netherlands -- 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 voice wholesale business into iBasis. This combination will establish iBasis as one of the five largest international wholesale voice carriers in the world, with pro forma 2005 revenues exceeding USD 1.1 billion and more than 15 billion 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 dividend of USD 113 million immediately following closing. In connection to payment of the dividend, outstanding options will be adjusted to preserve their equity 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 operator. 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.”

KPN Telecom NV (NYSE: KPN)

iBasis Inc. (Nasdaq: IBAS)