Liberty Media Takes $30 Million IDT Stake

By Erin Joyce

Telco provider IDT Corporation has a $30 million investment in the bank while it reckons with the cost of its recent acquisition of Winstar Communications and other telephony investments.

The New Jersey-based telecommunications carrier said Liberty Media , a cable company, made a strategic investment of $30 million in IDT Telecom, Inc., a subsidiary of IDT Corporation, at a “pre-money” equity valuation of $600 million.

In addition to its cable operations, Liberty has investments in broadband distribution, interactive technology services and communications businesses. The IDT stake buys it a 4.76 percent share of the telecom subsidiary.

The investment arrives as the New Jersey-based IDT, which sells telecommunications services to wholesale and retail customers worldwide, pushes into new markets such as financial services, while boosting its revenues with acquisitions.

IDT pulled in $374 million in revenues for its fiscal 2002 second quarter, up 30 percent over what it took in the same time a year ago.

Despite write-offs related to its $43 million acquisition of bankrupt telco Winstar Communications in December, and investment losses in voice-over-IP play Net2Phone , IDT narrowed its losses during the quarter that ended January 31st.

Overall, IDT lost $17.2 million, or 23 cents per, compared to a net loss of $117.1 million, or $1.77 per share, in last year’s second quarter.

The company took a $11.6 million loss related to its acquisition of Winstar. It also lost $11.4 million related to noncash investments in Net2Phone.

Not counting those items, the net loss would have been $2.3 million, or 3 cents per share.

Jim Courter, vice chairman and CEO of IDT Corporation, said the quarter showed solid improvement. “Record revenues, higher gross margins across all telecom business lines and a wholesale carrier business that has ‘turned the corner’ are just a few highlights of IDT’s remarkable story.”

The announcement also follows news from last week that it would lay off about 65 percent of Winstar’s remaining staff and scrap its wireline telephone business lines, services that relied on incumbent local phone carriers’ lines.

With its recent acquisition of Horizon Global Trading, which provides back-end clearing services to banking clients, IDT is also looking to leverage Winstar’s fixed wireless network for voice and data carrier services to the financial services industry.

Shares of IDT closed up 1 percent Thursday to $18.85

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