VoIP Benefits and Obstacles

Nassia HanewichDirector, South East Europe

iBasis Overview

#1 International Wholesale Carrier*

• One of 10 largest carriers of international traffic

• Global Footprint – The iBasis Network– 90 countries; 700 PoPs– 160+ international carriers

• 2002 Revenue (est.): $180 - 200 million• Annual run-rate > 2.5 billion minutes• Average daily minutes: 7.6 million

* Atlantic-ACM 2002 Carrier Report Card

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Minutes In Millions

Revenue In Millions

iBasis Named #1 International Wholesale Carrier

Overall Score:

7.06.05.5 5.75 6.25 6.755.25 6.50

Atlantic-ACM2002 International Wholesale Carrier Report Card

One of the Top International Carriers

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KDDI

TelMex

Singapore Telecom

Teleglobe

PTT Telecom (KPN)

PCCW HK Telecom

Bell Canada

Telefonica

China Telecom

Swisscom

iBasis

Telecom Italia

Cable & Wireless

Sprint

France Telecom

Deutsche Telecom

British Telecom

ATT

Worldcom

millions of minutes

Source: Telegeography 2002*iBasis based First Half ‘02 traffic volume

International Telecom: Large and Growing

132.761.633.5Minutes of Int’l Traffic(billions of min.)

31%5%<1%Market Share of New Carriers

50%72%86%Top 20 Carriers’ Share of Traffic

49186Countries Permitting Competition

$70$55$37Revenues from Int’l Traffic(billions of US$)

200019951990Indicator

Source: Telegeography 2002

Explosion in Worldwide VoIP

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Worldwide Wholesale VoIP Revenues (Billions $US)

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Worldwide Wholesale VoIPMinutes of Use (In Billions)

iBasis has 13% share of Int’l VoIP TrafficIDC, IP Telephony Market Forecast 2002

iBasis Services

• International Wholesale Voice ServicesOrigination and termination of voice and fax traffic

• IBOxpress Enables Carriers to Originate and terminate international traffic and prepaid traffic over the iBasis Network w/o capital expense

• IP CallCard A full turnkey prepaid & postpaid platform leveraging the iBasis IP infrastructure

• ConnectPoint Global Access services Local access numbers that terminate to service providers’ platform, conference bridges, prepaid server or IVR in any location and country

Breadth & Depth of International Coverage

Meet carriers needs• Comprehensive outsourced worldwide

coverage• Full country coverage with overflow capacity

& redundancy• Termination in select destinations using

iBasis direct routes

Match carriers’ requirements• Competitive prices• Completion rate • High quality

The iBasis Network™

Largest International Cisco Powered Network for Voice on the Internet

Internet Central OfficesInternet Branch Offices

Over 700 Points of Presence in 90 Countries

Network Operations Center (Hong Kong)

Network Operations Center (Burlington)

Challenges facingSouth East European carriers

• Diverse regulatory frameworks and markets

• Low teledensities and underdeveloped infrastructure

• Lower level of foreign investment

• Rapid progress towards modernization & liberalization

• Growing demand for services

International VoIP: Strong and Growing

• Improves service margins

• Efficiently expands global reach

• Provides competitive advantage

• Quality indistinguishable from PSTN

• Penetration on many routes exceeds 20%

• 6% of global traffic –double the level in 2000

International VoIP Forecast, 2000-2006

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OU

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Million MOU PenetrationSource: TeleGeography 2002, Probe Research 2001

Global Circuit-switched Deployments Shrinking

• VoIP equipment deployments growing

• Circuit-switched equipment deployments declining

• VoIP being adopted by leading carriers

–Cable & Wireless

–BT

–SBC

–China Unicom

–Sprint

Global Equipment Sales, 2000-2006Circuit Switched vs IP

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Circuit Switched Equip IP Toll Gateways

Source: Wintergreen Research 2001, IDC 2001

VoIP: A Worldwide Phenomenon

Worldwide VoIP Growth 57% (total traffic growth 15%)

VoIP Growth Rates by Region 2000 - 2006

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oIP

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N America Latin Amer Af & M EastW Eur E & S Eur Asia Pac

Origination Termination

Source: Probe Research 2001, TeleGeography 2002

Same Trend Underwayin South East Europe

• Regions

• Regulations

• Infrastructure capacities

• Economic development

• Culture and history

Varying markets Same VoIP Benefits• Lower costs

• Improved service

• Increased access &

connectivity

• Advanced technology

transfer

• Economic development

South East Europe Seeing Growth in VoIP Termination

International Inbound VoIP Traffic

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Croatia Greece Turkey Bulgaria Romania

Source: Probe Research 2001

VoIP Origination Also Growing

International Outbound VoIP Traffic

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1,000

2000 2002 2004 2006

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Croatia Greece Turkey Bulgaria Romania

Source: Probe Research 2001

VoIP Penetration in South East Europe

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2001 2006

Inbound Outbound

• VoIP penetration will increase four-fold in the next five years

• iBasis traffic in the region grew 217%from Q3 00 to Q3 01

International: Not Core for Most Major Carriers

% Revenue from International Traffic

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AT&T

Belga

com

Deuts

che

Tele

com

Fran

ce T

elec

om

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tSw

issc

omTe

leco

m I

talia

Tele

fonic

aTe

lmex

Tels

tra

Wor

ldCo

m

OTE

Sing

apor

e Te

leco

m

Source: TeleGeography 2002

Major Carriers Adopting VoIP

ARGENTINAARGENTINA

OTEnet Case Study

• Interconnection with The iBasis Network for global Internet Telephony since 2001 OTE, the national carrier of Greece was privatized

• Accelerate creation of a new, fast-growing international service, offered by the OTE ISP subsidiary, OTEnet

• Over past 8 months, The network has supported a nearly ten-fold growth in OTEnet’s international traffic.

• OTEnet routes international voice traffic over The iBasis Network through an iBasis Internet Branch Office (IBO) facility, enabling an efficient, low cost, high quality IP-to-IP interconnection

The Move to VoIP in The Region

• Predicted to post four-fold growth in VoIPtraffic by 2006 (Probe Research 2001).

• iBasis provides international service in Bulgaria, Greece, Romania, and Slovenia

• More than 45 European carriers are connected to iBasis for international service

• Traffic growth in Southeastern Europe: + 173% from 2000 to 2001

VoIP is Poised for Growth

• Governments see VoIP as “Leapfrog” technology, growth

driver

– China

– Latin America

– Africa

– Central & Eastern Europe

• Opportunities to capture new revenues– International service expansion

– Value-added services

• Carriers outsourcing international service to VoIP providers

to focus on “core” domestic businesses– Fixed-line

– Wireless, etc.

VoIP: Threat or Opportunity?

• Reduces capital expenditure, operational & transport costs

• Helps manage settlements• Provides instant global footprint• Offers access to new markets• Enables new services• Delivers PSTN reliability & quality

Thank You