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Net2Phone Lands $20 Million Vo-IP Pact

Voice-over Internet Protocol (Vo-IP) pioneer Net2Phone, Inc. on Friday announced a $20 million licensing deal with multimedia and communications firm Liberty Media Group.

Under terms of the five-year pact, the Englewood, CO.-based Liberty Media would pay $20 million to use Net2Phone's Vo-IP technology to resell broadband telephone service to its international cable affiliates.

Sarah Hofstetter, a spokesman for the New Jersey-based Net2Phone, said the deal could be valued much higher than the $20 million figure once Liberty Media's customers use Net2Phone's network to route Web-based phone service. Those charges are computed on a per-minute usage basis.

Net2Phone's Vo-IP technology allows the transmission of voice calls over Internet-based networks, making it a cheaper alternative to traditional telcos. Liberty Media's cable affiliates, which serve 25 million households around the world, would offer dial tone, voice-activated dialing and add-on messaging features over their high-speed networks.

Net2Phone, which posted a net loss of $119 million ($2.06 per share) in its fiscal third quarter earnings announcement, said the Liberty Media deal would open up a new source for revenues. In the same year-ago quarter, Net2Phone posted a loss of $16 million, or 30 cents a share.

"The license marks two new milestones for Net2Phone. The significant entry into the International cable sector with one of the most substantial players in the space, and the introduction of licensing as a new revenue stream for Net2Phone," the company said in a statement.

"Net2Phone expects to enter into other licensing agreements with additional telcos and broadband providers, enabling them with core Voice over IP technology and services."

Howie Balter, chief executive of Net2Phone, said "together with Liberty, we can provide cable operators with the tools they need to generate new high-margin lines of revenue by offering voice and enhanced services over their existing networks."



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