Teleglobe Reports Q4, Full Year

HAMILTON, Bermuda -- Teleglobe International Holdings Ltd (NASDAQ:TLGB), a leading provider of international telecommunications services to Internet service providers and to fixed and mobile network operators, announced today unaudited fourth quarter and full year 2004 results for the period ended December 31, 2004.

Fourth quarter 2004 revenue was $280.2 million versus $276.8 million in the third quarter of 2004 and $214.8 million in the fourth quarter of 2003. Net loss for fourth quarter 2004 was $9.2 million versus $11.0 million in the third quarter of 2004 and $2.1 million in the fourth quarter of 2003. Net loss available to common shareholders for the fourth quarter of 2004 was $9.2 million, or $(0.23) per share, versus $11.0 million, or $(0.28) per share, in the third quarter of 2004 and $4.5 million, or $(0.16) per share in the fourth quarter of 2003. Prior period financials are not comparable as ITXC Corp. (ITXC) results were included for the full period in the third and fourth quarters of 2004 and not at all in the year-ago period. The merger with ITXC and related transactions were consummated on May 31, 2004. As of December 31, 2004, the company had 39,085,663 shares outstanding.

Fourth quarter 2004 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $11.2 million including a $2.7 million gain from foreign exchange translations versus $9.6 million in the third quarter of 2004, excluding integration expenses and professional fees incurred in connection with Foreign Corrupt Practices Act ("FCPA") investigation of $3.6 million and $4.6 million from each period, respectively. EBITDA is a non-GAAP concept.

Liam Strong, president and CEO of Teleglobe, stated, "Teleglobe's fourth quarter performance was solid, and we continued to benchmark well to our integration plans. In the quarter, data revenue increased sequentially on strong volume growth, and voice revenue was stable to Q3's level. Value-added services revenue decreased slightly from the prior quarter as we took planned competitive pricing actions. Our gross margin ratio decreased slightly from Q3's high level due to voice pricing pressure in selected geographies. We are proceeding with our network unification, and are improving our overall gross margin on the initial voice routes we have unified. To date, we have realized over 50% of the $25 to $30 million in annualized synergies we have targeted from the ITXC merger, and we expect to finalize integration over the next few months."

Mr. Strong continued, "In 2005, we plan to evolve our sales mix and leverage our integration synergies to grow EBITDA and cash flow. To expand our high-margin value-added services offering to the burgeoning mobile applications market, we have already launched a new managed roaming hosted solution to mobile carriers through our Xius joint development agreement, and recently began a worldwide exclusive marketing arrangement with Wmode for data content distribution to mobile operators. Our new managed solutions should begin contributing to sales and gross margin in the second half of the year. We also plan to selectively expand our IP and VoIP network reach in more attractive geographies to participate in the high growth being enjoyed in these transit sectors. Our scale, our low-cost business model, and our expanding offering of high-margin customer-ROI-focused products represent competitive advantages. Our objective is to press these advantages to build market share, and to leverage this share over increasing cost productivity to expand EBITDA margin and drive return on invested capital."

Teleglobe International Holdings Ltd.