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World Access Goes On the Takeover Trail

International voice, data and Internet service provider World Access announced Monday it has agreed on mergers with two companies and completed the acquisition of another.

World Access says it has signed a definitive merger agreement with Communication TeleSystems International ("WorldxChange"), a telecoms provider with a $600 million revenue from international operations.

In a second move, World Access has signed an agreement to acquire the independent European telecoms operator STAR Telecom in a deal that will create an extensive, combined network covering 14 Western European countries.

Thirdly, in a busy start to the week for World Access, Chairman and Chief Executive Officer John D. Phillips confirmed that the company had completed its acquisition of Long Distance International ("LDI"), following approval from shareholders.

"Our acquisition of WorldxChange represents a major step forward in our plans to be a leader in enhanced retail telecommunications services throughout Europe," said Phillips, whose company is assuming $225 million in WorldxChange debt as well as paying WorldxChange shareholders 31 million shares of World Access common stock.

Phillips said the main prize was WorldxChange's Internet-based information management systems, which incorporate all the key aspects of retail telecom services, complete with provisioning, billing, fraud protection and customer care.

Under the terms of the second, STAR Telecom deal, each share of STAR common stock will be converted into .3905 shares of World Access common stock. There is provision for World Access to pay up to 40 per cent of the merger consideration in cash, if it decides this is appropriate.

The third, completed acquisition of LDI brings 20,000 NETnet corporate customers in nine European countries: Austria, France, Germany, Italy, Norway, Spain, Sweden, Switzerland, and the United Kingdom. World Access says it will continue to use the NETnet name.

John D. Phillips said the acquisition was a first step towards World Access becoming a premier provider of bundled voice, data and Internet services to small and medium enterprise ("SME") markets throughout Europe and other strategic regions of the world.

"The combination of World Access with NETnet, Star and WorldxChange creates one of the largest independent telecom service companies focused on the European market," said Phillips.

Monday's announcements signal a consolidation of the fragmented European telecom industry where deregulation has led to dozens of operators, many of which are ripe for takeover. The cost savings of joining a larger group provides a compelling argument for merging.



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