Net2Phone Announces New Investor, Ownership Structure; IDT Leads Consortium With Liberty Media and AT&T To Take Majority Interest in the Company

Business Wire, Oct 23, 2001

Business Editors

NEWARK, N.J.--(BUSINESS WIRE)--Oct. 23, 2001

"It's All About IP-Driven Convergence"

Net2Phone, Inc. (NASDAQ: NTOP), a leading provider of voice and enhanced services to IP networks, announced today that current shareholder, IDT Corporation (NYSE: IDT and IDTB), would lead a consortium that would concentrate ownership of approximately 49% (60% of the voting power) of Net2Phone.

The consortium consists of IDT, Liberty Media Corporation (NYSE:LMC.A and LMC.B) and AT&T (NYSE: T), resulting in significant economic stakes in Net2Phone for all three parties.

IDT and AT&T contributed their shares of Net2Phone (approximately 10 million and 18.9 million respectively) to a newly formed Limited Liability Company (LLC). Liberty then acquired a substantial portion of the LLC's units from AT&T, while IDT increased its stake and AT&T retained a significant interest. IDT will be the managing member of the LLC. The transaction was designed to maximize the value of Net2Phone.

Net2Phone President Stephen Greenberg commented: "The transaction will provide Net2Phone with an opportunity to work much more closely with two of the industry's leaders. IDT and Liberty Media have been tremendous drivers of innovation in the industry. From Jonas' long-distance phoning advances to the birth of Net2Phone to Malone's focus and advances in the cable industry both here and abroad, we are excited by the potential new and expanded opportunities their involvement will bring the company. This combination of interests and the support it will provide gives us a greater opportunity to execute our business plan and improve shareholder value."

Howard Jonas, Chairman of IDT, commented, "We are very excited about this transaction. We all share a vision of convergence - convergence driven by the flexibility and scalability of IP technology. We see exciting opportunities across technologies and media and entertainment platforms. From VoIP over broadband and positioning Net2Phone as a leading provider of phone services in the home to virtually any other service that we envision VoIP enabling, we look forward to leveraging our respective assets and relationships to continue to position Net2Phone at the nexus of this fast-approaching convergence. We believe that the consolidation of interests of IDT, Liberty Media and AT&T positions us to maximize the value of all of our Net2Phone investments."

Founded in 1995, Net2Phone is a leading provider of voice and enhanced services over IP networks to consumers, businesses and carriers worldwide. With millions of users around the world, Net2Phone enables toll-quality calls between computers, telephones, and broadband devices utilizing IP networks. Recognized as the first company to bridge the Internet with the public switched telephone network, Net2Phone has routed more than 1.5 billion minutes of traffic over its award-winning network. Net2Phone also offers enhanced hosted service solutions, including voice recognition, for businesses around the world. For more information about Net2Phone's products and services, please visit www.net2phone.com

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward- looking statements involve risks and uncertainties and actual results could differ materially from those discussed in the forward-looking statements. For this purpose, any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Factors which may affect the Company's results include, but are not limited to, the Company's ability to expand its customer base, the Company's ability to develop additional and leverage its existing distribution channels for its products and solutions, dependence on strategic and channel partners including their ability to distribute the Company's products and meet or renew their financial commitments, the Company's ability to address international markets, the effectiveness of the Company's sales and marketing activities, the acceptance of the Company's products in the marketplace, the timing and scope of deployments of the Company's products by customers, fluctuations in customer sales cycles, customers' ability to obtain additional funding, technical difficulties with respect to the Company's products or products in development, the need for ongoing product development in an environment of rapid technological change, the emergence of new competitors in the marketplace, the Company's ability to compete successfully against established competitors with greater resources, the uncertainty of future governmental regulation, the Company's ability to manage growth, obtain patent protection, and obtain additional funds, general economic conditions and other risks discussed in this Report and in the Company's other filings with the Securities and Exchange Commission. All forward-looking statements and risk factors included in this document are made as of the date hereof, based on information available to the Company as of the date thereof, and the Company assumes no obligation to update any forward-looking statement or risk factors.