AOL to make additional investment in Net2Phone

Larry Dignan
2 min read

AT&T Corp. (NYSE: T) may have beat America Online Inc. (NYSE: AOL) for a controlling stake in Net2Phone, but executives said Friday that AOL will remain a key player in the Internet telephony company's future.

IDT Corp. (Nasdaq: IDTC) chief Howard Jonas, whose company owned a controlling stake of Net2Phone (Nasdaq: NTOP), said Net2Phone will receive an additional investment from AOL "in the next couple days." AOL and Net2Phone will also co-invest in a technology company, said Cliff Sobel, financial chief of Net2Phone. Sobel declined to name the company.

AOL already owns a small stake of Net2Phone.

On Friday, an AT&T-led consortium, which includes Liberty Media and British Telecom (NYSE: BTY), bought a controlling stake of Net2Phone.

AT&T chief C. Michael Armstrong said Ma Bell will look to pursue additional relationships with AOL. "It is our anticipation that we will pursue that relationship with vigor and expand it," said Armstrong, referring to AOL, on a conference call.

Jonas said he kept AOL informed throughout negotiations with AT&T.

Net2Phone has been an equal opportunity partner. In addition to partnerships with AOL and AT&T, Yahoo! Inc. (Nasdaq: YHOO) also bought a 5 percent stake in Net2Phone.

Under the terms of the Yahoo agreement, Net2Phone has issued and sold Yahoo about 2.8 million shares of Net2Phone stock for 806,000 shares of Yahoo. The value of the deal was about $150 million.

Net2Phone in 1999 announced distribution pacts with Qualcomm (Nasdaq: QCOM) and Go2Net (Nasdaq: GNET).

When asked whether Net2Phone could work with a bunch of competing partners, Jonas said it wouldn't be a problem. "We don't think there's any conflict," said Jonas. "Net2Phone has become an industry standard to carry calls over the Internet. The Internet is moving to one big network."
• AT&T buys controlling stake in Net2Phone, trumps AOL
• NTOP estimates>