News

Net2Phone Dials Up Liberty Deal

6/15/2001 6:52 AM Eastern

Liberty Media Group inked a five-year deal to license Net2Phone Inc.'s
voice-over-Internet-protocol technology.

The binding memorandum of understanding is worth about $20 million, Net2Phone
CEO Howie Balter said during a conference call Thursday.

With the addition of service-provider, monitoring and installation services
provided by Net2Phone, 'there is a substantial upside potential to that $20
million revenue stream,' he added.

Under terms of the deal, Liberty will make Net2Phone's core VoIP technology
-- including its 'VoiceLine' broadband-phone service -- available to its base of
international cable affiliates, which serve a combined 25 million
households.

Among cable MSOs, Liberty has equity positions in U.K.-based Telewest
Communications plc, Japan's Jupiter Telecommunications Co. Ltd. and
UnitedGlobalCom Inc., which operates European MSO United Pan-Europe
Communications N.V.

Liberty said the technology will allow it to offer its affiliates services
such as voice-activated dialing, voice-portal services and a variety of
messaging features.

AT&T Corp. and America Online Inc. are also among Net2Phone's strategic
partners.

On the financial front, Net2Phone reported third-quarter fiscal-year-2001
revenues of $18.9 million, up 17 percent from the previous quarter, and a net
loss (excluding restructuring and other charges) of $23.9 million, or 41 cents
per share.

The company is also consolidating some business lines and closing a few
undisclosed corporate subsidiaries that could result in fourth-quarter severance
costs of $3 million to $4 million.

Net2Phone -- which had 1.8 million 'active' users as of April, not including
those that tap its service via Microsoft Corp.'s or Yahoo! Inc.'s messenger
services -- said it's 'on track' to reach profitability by July
2002.

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