IDT Corp. (Nasdaq: IDTC) jumped in to the telecom pricing war Wednesday with its announcement of a new rate of 5 cents per minute for domestic long distance telephone service with a $3.95 monthly fee.
The new plan offers a flat rate that applies to all calls, 24 hours a day, 7 days a week. In addition, IDT plans to offer rates as low as 3.5 cents per minute for customers who also subscribe to IDT's dial-up Internet service. This makes IDT the lowest cost domestic long distance provider in the country, according to the company's release.
Shares in IDT jumped 1 1/8 to 30 5/8 in initial trading Wednesday.
The move is a direct jab at recent discounts announced by AT&T Corp. (NYSE: T), Sprint (NYSE: FON), and MCI WorlsCom Inc. (Nasdaq: WCOM). AT&T intensified competition Monday by slashing its home long-distance rate to 7 cents a minute. In recent weeks, MCI and Sprint have trimmed the price for long-distance calls to as low as 5 cents a minute for weekends, nights and evenings.
"Seven cents a minute is yesterday's news. Limiting 5 cents to evenings and weekends is also yesterday's news. It is not our intention to escalate a pricing war. But it is our intention to make it clear to consumers that they can do better with us," said Howard Jonas, Chairman and CEO of IDT in a press release.
IDT is a multinational carrier that provides domestic long distance and Internet access.