iBasis Reports Record Revenue

BURLINGTON, Mass. -- iBasis, Inc. (OTCBB: IBAS), the leader in Internet-based voice communications, today announced results for the first quarter ended March 31, 2004. The Company also announced its intention to make a public exchange offer for its 5 3/4% Convertible Subordinated Notes due in March 2005 and that it intends to refinance its existing $25.2 million of 11 1/2% Senior Secured Notes due in January 2005 contemporaneously with the closing of the intended exchange offer for its convertible notes.

First quarter results were revenue of $57.0 million, compared to revenue of $41.8 million in the first quarter of 2003. Net loss for the first quarter 2004 was $9.3 million, or $(0.21) per share. This net loss includes a $5 million impairment charge related to a minority equity investment in a non-public entity made in 2000. The loss compares to first quarter 2003 net income of $4.0 million, or $0.09 per share. Net income for the first quarter 2003 included a gain of $12.9 million on bond exchanges.

Highlights of the first quarter include:

"During Q1, we continued to achieve top-line growth in both our core Wholesale VoIP business, and our newer Prepaid and Enhanced Services (PES) business," said Ofer Gneezy, president and CEO of iBasis. "With more than one third of all international traffic being carried by wholesale carriers, the wholesale market continues to offer significant growth opportunities for those who can manage the complexity of routing, rating, and billing. We continue to refine and strengthen the back-office systems we have developed to our benefit. Today, they provide us with flexibility and precision that constitute a significant advantage in both the wholesale VoIP business and the PES business.

"The sequential growth in the PES business is consistent with our strategy to increase the proportion of our revenue from higher margin services. The PES business successfully leverages The iBasis Network(TM) and systems to take advantage of the strongest wholesale destinations more efficiently than our competitors in the retail space. We have begun a transformation towards a balance between PES and our wholesale business in margin contribution.

"In addition to the tremendous progress in both the wholesale VoIP and PES businesses, we continue to explore opportunities to strengthen our balance sheet. Since Q4 2001, we have reduced our debt by almost $147 million through bond exchanges and repurchases. Now, we intend to embark on a program to refinance our remaining debt. We believe that the successful conclusion of this effort will significantly reinforce our ability to build on our leadership in international telecommunications."

iBasis Inc.