Teleglobe Acquires ITXC

PRINCETON, N.J. -- Teleglobe International Holdings Ltd and ITXC Corp. (NASDAQ:ITXC - News) today announced that they have signed a definitive merger agreement for the acquisition of ITXC by Teleglobe. The acquisition would bring together ITXC, the largest provider of Voice over Internet Protocol (VoIP) wholesale services, with Teleglobe, one of the world's leading wholesale providers of voice, data, IP and mobile roaming services. The newly formed parent company of the Teleglobe group of companies (Teleglobe), which will continue to operate under the Teleglobe name, is expected to receive a NASDAQ listing. The combined company's main operations will continue to be located in Montreal (Quebec). Its voice business will be managed from ITXC's current headquarters in Princeton, New Jersey and will also have operations in Reston, Virginia and Montreal.

Following completion of the merger, Liam Strong will continue to lead Teleglobe as President and Chief Executive Officer (CEO). Tom Evslin, ITXC's current Chairman and CEO, will become non-executive Chairman of the Board of Directors. Cerberus Capital Management, L.P., Teleglobe's current controlling shareholder, will continue to own a majority of Teleglobe.

After the merger, Teleglobe will be one of the top three international voice carriers. The merger will combine Teleglobe's established position and customer relationships in world market segments with ITXC's strength in higher growth developing market segments. The merger also provides the opportunity to realize a significant reduction in the overall cost base of the combined company. In part, reductions are expected to be achieved by the application of ITXC's automated technology to Teleglobe's older back-office processes.

"This agreement strengthens Teleglobe's leading position in wholesale global communications," stated Liam Strong. "It brings together ITXC's leading-edge VoIP network with Teleglobe's access to 275 established bilateral relationships with telecommunications companies on all continents. The opportunity to lower our cost base in the price-sensitive wholesale market segment is significant. Access to ITXC's technological capability will also accelerate our plans for next-generation services in voice, data, IP and mobile roaming."

According to Evslin: "Voice traffic is migrating from the legacy fixed-line public switched telephone network to wireless and IP networks. These networks support both wireless and IP applications, which we believe Teleglobe will be well positioned to offer. ITXC's industry-leading patented VoIP and routing capability, combined with Teleglobe's advanced international voice, data, IP and mobile roaming services, provide a strong foundation to build the next generation of combined voice, data, IP and mobile roaming services for our customers."

Once the transaction is closed, holders of ITXC's common stock will receive common shares of a newly formed parent company of the Teleglobe group of companies, representing approximately 28 percent of the new Teleglobe parent company. All outstanding options and warrants of ITXC will be converted into options and warrants of the new Teleglobe parent company. The proposed transaction is intended to be qualified as tax free to the shareholders of ITXC and Teleglobe. Morgan Stanley & Co. Inc. acted as financial advisor for ITXC on this transaction.

The Boards of Directors of ITXC and Teleglobe have unanimously approved the merger agreement. The transaction is subject to the approval of ITXC's shareholders, the meeting of certain financial tests by ITXC and Teleglobe, registration with the SEC of the Teleglobe common shares to be issued in the merger, the approval for listing of Teleglobe common shares on NASDAQ or another U.S. national securities exchange, receipt of any required governmental or other regulatory approvals, including the expiration of any applicable Hart-Scott-Rodino waiting period and other customary closing conditions. In light of the above approval process, the merger is expected to be completed by approximately the end of March 2004. Prior to the meeting to vote on the merger, ITXC shareholders will receive a proxy statement containing detailed information on Teleglobe before and after the merger, the background of the merger and the material terms of the merger agreement.

ITXC and Teleglobe had revenues on a combined basis for the quarter ended September 30, 2003 of approximately USD$286.8 million. Before taking into account any cost savings, the combined company had positive net cash provided by operating activities for the same period and had over USD$88.8 million in cash and cash equivalents as at September 30, 2003. Since its emergence from bankruptcy, Teleglobe has had positive net cash flows. The combined company expects to have positive net cash flows by the end of 2004.

In addition to a leading position in wholesale voice, the combined company will have substantial revenues from higher-margin data, value-added voice and mobile roaming services. The addition of ITXC's innovative technology and alternative routing capabilities will give Teleglobe an even greater range of choices for routing customers' traffic.

Teleglobe has been a major player in international telecommunications for well over 50 years. It ranks among the top five providers of international wholesale voice, data, IP and mobile roaming services. Teleglobe's network reaches more than 240 countries and territories and is physically interconnected to approximately 275 fixed-line telecommunications operators and 360 mobile operators. Teleglobe carries approximately 7.4 billion minutes of voice traffic a year, has ownership in 100 worldwide cable networks, and satellite networks and has Internet peering relationships with many of the other major leading international Internet providers.

Founded in 1997, ITXC operates the world's largest VoIP network and is the world's largest VoIP wholesaler, based on international calling minutes, carrying over four billion voice minutes of international traffic annually. It has direct relationships with carriers in more than 175 countries.

Teleglobe anticipates conducting a private placement of debt securities during 2004. The proceeds of this offering are expected to be used to fund the repurchase of the $95 million (plus accrued dividends) Series A Preferred Shares of Teleglobe primarily held in investment funds and accounts managed by affiliates of Cerberus.

Strong concludes "We believe this merger will mean enhanced quality, lower costs and a complete range of product offerings for our customers. Shareholders in the combined company will own a business with a diversified product portfolio and a strong financial profile."

Teleglobe

ITXC Corp.