IDT chief: Armstrong's personal touch won Net2Phone deal
IDT Corp. chief Howard Jonas couldn't speak on the company's latest earnings conference call citing laryngitis. After AT&T bought a big chunk of IDT's Net2Phone, you couldn't keep Jonas quiet.
Jonas, who turned away Microsoft Corp. (Nasdaq: MSFT) and America Online (NYSE: AOL), sounded like he won an Oscar the way he was thanking his fellow executives at Net2Phone, IDT (Nasdaq: IDTC) and AT&T Corp. (NYSE: T).
An AT&T-led consortium, which includes Liberty Media and British Telecom (NYSE: BTY), will purchase 4 million newly issued Class A shares from Net2Phone at a price of $75 a share.
The consortium will also purchase 14.9 million Class A Net2Phone shares from IDT Corp. (Nasdaq: IDTC), currently Net2Phone's controlling shareholder, for $75 per share. IDT also inked agreements with AT&T and the Concert international venture.
On a conference call with analysts, Jonas said AT&T chief C. Michael Armstrong won the Net2Phone deal because of his personal touch. Jonas said Armstrong approached him personally to negotiate the Net2Phone deal. "Everyone else came through intermediaries," said Jonas.
It also didn't hurt that Armstrong offered $75 a share when AOL reportedly topped out with an offer of $60 per share.
However, Jonas indicated that AT&T had something that AOL couldn't deliver -- revenue growth for IDT. Under the Net2Phone deal, AT&T and IDT will become preferred suppliers to each other for a period of three years. AT&T will supply two-thirds of IDT's domestic voice and data communications services, and the two companies will co-locate equipment at each other's facilities.
IDT also reached agreements for international services with Concert, the global joint venture of AT&T and BT. With IDT and Net2Phone on AT&T's side, Ma Bell will be better positioned to battle MCI WorldCom (Nasdaq: WCOM).
"AT&T is the Dallas Cowboys of telecommunications," said Jonas. "They deserved to win."
• AT&T buys controlling stake in Net2Phone, trumps AOL
• AOL will make additional investment in Net2Phone
• IDT misses estimates >