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iBasis Accelerates Time to Profitability

BURLINGTON, MA - December 13, 2000 - iBasis, Inc., (Nasdaq: IBAS), the leader in advanced voice-based Internet communications, today announced that it has signed a definitive agreement to acquire privately held PriceInteractive for a combination of approximately 10.1 million shares of iBasis common stock and approximately $50 million in cash. Headquartered in Reston, Virginia, PriceInteractive is a Speech Application Service Provider (ASP) whose products and services give enterprises and service providers the ability to speech-enable business-critical, customer-facing solutions, such as e-commerce, call-center, employee self-service, product and sales information, customer care and other interactive applications. Connecting these services to the iBasis Network, with its extensive global reach and significantly reduced network costs, will greatly increase the value and scope of the solutions PriceInteractive provides to its large enterprise and carrier customers.

By leveraging the iBasis Network and its global footprint with these hosted speech-enabled services, iBasis will also accelerate its revenue generation from enhanced services. This expanding portfolio of comprehensive, outsourced solutions will enable the combined companies’ enterprise and service provider customers to affordably extend global access to customer service solutions - from mobile and fixed phones anywhere in the world. The acquisition of PriceInteractive is an important step in iBasis’ strategy to enhance the capabilities of its global VoIP infrastructure with new, speech-enabled services that combine the power of the Internet with the convenience, simplicity and ubiquity of the phone.

The companies’ customers include many of the largest enterprises and carriers in the world. PriceInteractive has delivered innovative, interactive voice response and speech-enabled solutions to many Fortune 500 companies and leading global service providers. PriceInteractive’s customers include AT&T, ExxonMobil, Gannett, H&R Block, Home Shopping Network, Morgan Stanley, Sabre Group, WorldCom, Sprint, Verizon, and Western Union. iBasis customers include 11 of the top 12 US-based international carriers and 10 of the top 20 global carriers, such as WorldCom, Cable & Wireless, NTT, Telstra and Concert, as well as four of the five largest carriers in China.

"PriceInteractive brings significant expertise in developing business-critical, speech-enabled applications for major customers. The combination of our two companies will allow us to more quickly realize our vision of delivering enhanced services for enterprises and service providers over our global VoIP network," said Ofer Gneezy, president and chief executive officer of iBasis. "We expect that our acquisition of PriceInteractive will enable us to offer a more complete portfolio of high-margin enhanced services that build upon our continuing success in Internet telephony and significantly accelerate our progress toward achieving profitability."

"Our solutions are used every day to connect businesses to millions of customers, prospects, suppliers, employees and others over the phone," said Dan Price, president and CEO of PriceInteractive. "iBasis has the vision, the leadership and the means to significantly expand the global reach and greatly enhance the overall value of PriceInteractive’s solutions. Leveraging the iBasis Network with its global footprint and proven quality of service will enable us to deliver new, international access and calling services to our enterprise and service provider customers."

PriceInteractive: Speech ASP Solutions

PriceInteractive provides the software, development, implementation, hosting and ongoing support for its three primary service offerings:

* SpeechPort: A hosted service that provides a speech-enabled interface to Web-based content and e-commerce applications;

* IPort: A portfolio of Interactive Voice Response (IVR) solutions for the Fortune 500 enterprise, carrier and call center markets; and

* PriceInteractive Professional Services: A full range of speech and mobile commerce consulting, development and implementation services for telephony and wireless applications.

The PriceInteractive acquisition builds on iBasis’ previously announced initiative to leverage its global infrastructure for the delivery of speech-enabled solutions that use technologies from leading speech recognition providers such as SpeechWorks International (see iBasis and SpeechWorks International Announce Plans To Provide Global Phone Access For Speech-Driven Web Services and Content - - December 4, 2000.)

The iBasis Network: Infrastructure for the Voice Web

The iBasis Network is a robust, global platform for the delivery of IP-based communications services, including wholesale, phone-to-phone VoIP and enhanced Voice Web services. iBasis enhanced services include voice-enabled email and Unified Communications. The company also plans to further leveraging its global network and VoIP expertise to develop and deliver speech-driven, Web-based content, e-commerce and customer service applications. The iBasis Network delivers IP-based voice services using large carrier-class switching and application hosting facilities called Internet Central OfficesTM, strategically located in Amsterdam, Cambridge (Mass.), Frankfurt, Hong Kong, London, Los Angeles, Miami, New York, Paris, Singapore, Stockholm, Sydney, Tokyo, and Toronto. The network also comprises numerous smaller points of presence called Internet Branch OfficesTM, which play an important role in connecting providers to iBasis services. With this global infrastructure in more than 45 countries and through its peering relationships with other communications providers, iBasis can provide IP-based voice services virtually anywhere in the world.

New Guidance, Accelerated Profitability

iBasis is providing new financial guidance based on business factors that are independent of the PriceInteractive transaction, as well as guidance based upon the anticipated successful completion of the transaction.

Consistent with previous guidance, as a stand-alone entity (without giving effect to the PriceInteractive transaction), iBasis expects to achieve full-year 2001 revenue in the range of $130-140 million. Under new guidance, on a stand-alone basis, the company now anticipates accelerated improvement in gross margin, and expects to begin approaching its steady-state gross margin target of 20-25% in the fourth quarter of 2001. Further, iBasis anticipates that it will achieve a net loss in the range of $2.10 - $2.25 per share in 2001 (based on an assumed 35 million shares outstanding). In addition, the company now expects to achieve positive EBITDA (earnings before interest, taxes and depreciation and amortization) in Q1 2002, and net income profitability in Q2 2002, two quarters earlier than previous guidance. The company is maintaining its previous guidance on aggregate capital expenditure, which is expected to be in the range of $30-40 million in 2001.

The company’s accelerated guidance (detailed above) is primarily due to the following business factors: 1) strong continuing momentum in the company’s core wholesale VoIP (Voice-over-Internet-Protocol) business - including success in generating a higher percentage of revenue from Tier-1 carrier traffic and an increase in overseas traffic origination; 2) the adoption of a new "success-based" deployment process for incremental capacity at existing Internet Branch Office (IBO) and Internet Central Office (ICO) facilities in 2001; 3) limiting new ICO deployments in 2001 until higher network utilizations are achieved; 4) anticipated traction in its higher-margin, enhanced services businesses; and 5) incremental improvements in cost management.

PriceInteractive Transaction-Related Guidance

PriceInteractive generated 1999 revenue of approximately $11.8 million, gross margin of approximately $6.2 million, positive EBITDA of approximately $1.9 million, and positive net income of approximately $707,000. PriceInteractive expects to generate 2000 revenue of approximately $17-18.5 million, with gross margins of approximately $8-9 million, positive EBITDA of approximately $1.5-1.8 million and expects to be net income positive for the full-year 2000. On a stand-alone basis, PriceInteractive is expected to generate 2001 revenue in the range of $27-30 million with gross margins of approximately 40-50%. PriceInteractive is currently EBITDA positive and expects to generate positive EBITDA of approximately $3-4 million in 2001.

On a pro forma basis that assumes the successful completion of the PriceInteractive transaction in the first quarter of 2001, iBasis expects PriceInteractive to be accretive to EBITDA in the first year of combined operations. iBasis also anticipates that the combined company will achieve positive EBITDA in the fourth quarter of 2001. Independent of any special charges related to the transaction, including the financial impact of future goodwill and amortization charges, iBasis anticipates the combined company will become net income positive in the first quarter of 2002 - one quarter earlier than indicated in iBasis’ updated stand-alone guidance.

With more than $340 million in cash and equivalents at September 30, 2000, iBasis believes that it continues to be fully-funded for growth through to profitability even after giving effect to the anticipated closing of the PriceInteractive transaction. The company does not anticipate the need to access the capital markets for additional financing under its current business model.

Terms of the Transaction

Under terms of the agreement, existing PriceInteractive stockholders and holders of vested options to purchase PriceInteractive capital stock will receive approximately 10.1 million shares of iBasis common stock and approximately $50 million in cash. iBasis will assume any unvested PriceInteractive options. The cash and stock transaction will be accounted for using the purchase method of accounting. The transaction is expected to close in the first quarter of 2001 and is contingent upon iBasis shareholder approval, applicable regulatory approvals, and other customary closing conditions. Stockholders of iBasis, including several members of the Board of Directors of iBasis, holding in the aggregate approximately 30% of iBasis' outstanding common stock, have agreed to vote in favor of the transaction.

PriceInteractive will become an iBasis line of business and PriceInteractive president and CEO Dan Price will join the iBasis board of directors and become senior vice president and general manager of the new line of business reporting directly to iBasis president and CEO Ofer Gneezy. PriceInteractive’s approximately 140 employees will continue to be based in Reston, Virginia. iBasis currently has 333 full-time employees.

About PriceInteractive

PriceInteractive is a leading Speech Application Service Provider (ASP) that delivers a comprehensive, speech-enabling solution for accessing Web content and applications via any phone or wireless device. Founded in 1997 and located in Reston, Virginia, PriceInteractive develops and hosts speech applications for Fortune 500 and e-business market leaders such as AT&T, ExxonMobil, H&R Block, Home Shopping Network, WorldCom, Sprint, Verizon and Western Union. SpeechPort technology partners include SpeechWorks, BEA, Oracle, Sun Microsystems, Cisco Systems, and Intel/Dialogic. For more information about the company visit

About iBasis

Founded in 1996, iBasis (Nasdaq: IBAS) is the leader in advanced Internet-based communications. iBasis delivers toll quality voice and fax, as well as other advanced hosted communications solutions to service providers and enterprises. More than 100 international service providers, including 11 of the top 12 US-based international carriers and four of the five largest carriers in China route traffic over the iBasis Network. iBasis customers include Worldcom, Cable & Wireless, NTT, Concert, China Unicom, China Mobile and Telstra. iBasis offers hosted, enhanced service solutions, including VoCoreSM Unified Communications and the IP CallCard pre- and post-paid calling card platform. In addition, the company is further leveraging its global network and VoIP expertise to develop and deliver speech-driven web-based content, e-commerce and customer service applications. The iBasis Network is the world's largest international Cisco Powered Network for Internet Telephony and the first to receive the Unified Communications-Cisco Powered Network (UC-CPN) designation. iBasis is listed in both the Russell 2000® and Russell 3000® Indexes. The company can be reached at its worldwide headquarters in Burlington, Mass., USA at 781-505-7500 or on the Internet at .

Except for historical information, all of the expectations, projections and assumptions contained in the foregoing press release, including those set forth under the heading "Outlook" and relating to the company's current expectations regarding revenue growth, sources of revenue, margin improvement and future capital expenditures constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties. Important factors that could cause actual results to differ materially from such forward-looking statements include, but are not limited to, (i) the extent of adoption of the company's new voice-based Internet services and the timing and amount of revenue generated by these services; (ii) fluctuations in the market for and pricing of VoIP services; and (iii) the other considerations described as "Risk Factors" in iBasis' prospectuses dated March 9, 2000, and the company's other SEC filings.

Assured Quality Routing and AQR are registered trademarks, VoCore is a service mark and iBasis, The iBasis Network, Internet Central Office and Internet Branch Office and IP CallCard are trademarks of iBasis, Inc. PriceInteractive, SpeechPort and IPort are registered trademarks of PriceInteractive, Inc. Cisco and Cisco Powered Network are registered trademarks of Cisco Systems, Inc. SpeechWorks is a trademark of SpeechWorks International, Inc. in the United States and other countries. All other trademarks are the property of their respective owners.

This press release was distributed by ResponseSource Press Release Wire on behalf of Landmark Consultants in the following categories: Consumer Technology, Personal Finance, Business & Finance, Computing & Telecoms, for more information visit