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

“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

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

“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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