Net2Phone shares jump on AOL deals

Shares of the Internet telephony service provider gain following news of several deals with AOL to push telephone calling over the Net.

2 min read
America Online, the giant Internet service provider, and Net2Phone, a provider of Internet telephony services, have inked several deals to ring in telephone calling to the Net.

Shares of Net2Phone jumped on news of the deal, closing up 3.81 or 6 percent to 66.75. Earlier, shares were up more than 13 percent.

According to a Net2Phone filing yesterday with the Securities and Exchange Commission, the company entered into an agreement with AOL, allowing AOL's instant messaging users to make PC-to-phone and phone-to-PC calls and access PC-to-fax, fax-to-PC and conference calling services.

Net telephony, or phone calls over the public Internet, is still an emerging market that is unknown to many mainstream Net users. Yet the market is expected to skyrocket as consumers here and abroad realize that Web phone calls are often less expensive than regular toll calls, analysts say.

Earlier this year, Net2Phone entered into an agreement with ICQ, a subsidiary of AOL, to provide Internet telephony services to users of ICQ's instant messaging service.

The companies are also co-branding a prepaid phone-to-phone calling card with AOL's instant messaging service. Net2Phone said it will be the exclusive provider of these services for more than two years.

Today, CompuServe, a subsidiary of AOL, said it signed a two-year agreement with Net2Phone for the telephony company to provide CompuServe's U.S. members with Net2Phone Internet telephony calling card communications services.

Under the terms of the agreement, CompuServe will promote prepaid and post-paid phone-to-phone Internet telephony cards for CompuServe customers, allowing users to place calls at reduced rates.

Earlier this month, Net2Phone said it would sell 6.3 million shares of stock in a secondary offering. The company also earlier signed deals with AT&T and Priceline.com for its Internet phone service.

General Electric, Softbank, AOL and CNET's Snap.com are among those who own equity stakes in Net2Phone. CNET is the publisher of News.com.