IDT Seeks Sole Control of Net2Phone

International carrier IDT Corp. (NYSE: IDT) is set to take control of Net2Phone Inc. (Nasdaq: NTOP), the VOIP service provider it spun out in 1999, in a stock deal worth $56 million.

IDT is in talks to acquire all the Net2Phone shares currently held by Liberty Media Corp. (NYSE: LMC), and take its stake in the VOIP carrier from 16.1 percent to 41.2 percent, giving it the lion's share of the voting power.

Liberty will get 3.75 million IDT common shares, worth $56.4 million at Tuesday's closing price of $15.03. That would leave Liberty with a 17 percent stake in IDT.

In a statement delivered as part of its first-quarter results (see IDT Cuts Loss in Q1), IDT noted that "if such a transaction is consummated, we will extend our control over Net2Phone." This will place a question mark over the current makeup of the board, which was shuffled only weeks ago in an attempt to loosen IDT's grip (see Net2Phone Shuffles CEO, Board).

The news comes as Net2Phone announced a wider loss in its first quarter of 2005 (see Net2Phone Reports Q1 Loss). However, the VOIP player has been picking up wholesale customers in its MSO target market, and only this week announced a five-year deal with cable operator Millennium Digital Media, which will sell Net2Phone's voice service to its 250,000+ customers in markets such as Baltimore, Detroit, and Seattle.

Net2Phone says it signed five deals with MSOs during its first quarter, when it recorded revenues of $20.3 million, down on the previous quarter's $21.1 million and short of analyst estimates of $22 million. Net loss was $8.2 million, or 11 cents per share, in line with analyst estimates.

Net2Phone's share price stood at $3.75 before trading began Wednesday.

— Ray Le Maistre, International News Editor, Light Reading

fgoldstein 12/5/2012 | 1:00:24 AM
re: IDT Seeks Sole Control of Net2Phone I enjoy watching Howard Jonas operate. Back in the boom years, IDT owned much of Net2Phone, and the market cap of the latter's stock was in the billions. Most of IDT's market cap was in its Net2Phone stock, even though the rest of IDT's business was profitable and Net2Phone was a cash hole. So IIRC Howard sold a whole heap of shares to AT&T, paid for in lots of BoomBux. (Are those the shares that Liberty now has?) Now Howard's buying back control in a deal that sets the total valuation in the $200M range, a lot less than he got for it five years ago. That's why he's a survivor.

Timing is everything.
materialgirl 12/5/2012 | 1:00:20 AM
re: IDT Seeks Sole Control of Net2Phone Is Howard smart, or is he catching a falling knife with NTOP? Why are revenues weak when SIP-based players seem to be growing like weeds. Is something wrong with their imlementation?
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