VoIP Benefits And Obstacles

VoIP Benefits and ObstaclesNassia HanewichDirector, South East Europe

iBasis Overview700#1 International Wholesale Carrier*Minutes In Millions600500400 One of 10 largest carriers of300international traffic200100 Global Footprint – The iBasis Network0– 90 countries; 700 PoPs– 160 international carriers 2002 Revenue (est.): 180 - 200 million 4540 Annual run-rate 2.5 billion minutes35 Average daily minutes: 7.6 million30Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3Revenue In Millions2520151050* Atlantic-ACM 2002 Carrier Report CardQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

iBasis Named #1 International WholesaleCarrierOverall 2 International Wholesale Carrier Report Card

One of the Top International CarriersWorldcomATTBritish TelecomDeutsche TelecomFrance TelecomSprintC able & WirelessTelecom ItaliaiBasisSwisscomC hina TelecomTelefonicaBell C anadaPC C W HK TelecomPTT Telecom (KPN)TeleglobeSingapore TelecomTelMexKDDI02000400060008000millions of minutesSource: Telegeography 2002*iBasis based First Half ‘02 traffic volume100001200014000

International Telecom: Large and GrowingIndicatorRevenues from Int’l Traffic(billions of US )Minutes of Int’l Traffic(billions of min.)Countries PermittingCompetitionTop 20 Carriers’ Share ofTrafficMarket Share of New CarriersSource: Telegeography 2002199019952000 37 55 7033.561.6132.76184972%50%5%31%86% 1%

Explosion in Worldwide VoIP 5Worldwide Wholesale VoIPRevenues (Billions US)100 480 360 240 120 0020012002200320042005Worldwide Wholesale VoIPMinutes of Use (In Billions)200120022003iBasis has 13% share of Int’l VoIP TrafficIDC, IP Telephony Market Forecast 200220042005

iBasis Services International Wholesale Voice ServicesOrigination and termination of voice and fax traffic IBOxpressEnables Carriers to Originate and terminateinternational traffic and prepaid traffic over the iBasisNetwork w/o capital expense IP CallCardA full turnkey prepaid & postpaid platform leveragingthe iBasis IP infrastructure ConnectPoint Global Access servicesLocal access numbers that terminate to serviceproviders’ platform, conference bridges, prepaidserver or IVR in any location and country

Breadth & Depth of InternationalCoverageMeet carriers needs Comprehensive outsourced worldwidecoverage Full country coverage with overflow capacity& redundancy Termination in select destinations usingiBasis direct routesMatch carriers’ requirements Competitive prices Completion rate High quality

The iBasis Network Largest International Cisco Powered Network for Voice on the OperationsCenter(Hong Kong)Over 700 Points of Presencein 90 CountriesInternet Central OfficesInternet Branch Offices

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 servicemargins Penetration on manyroutes exceeds %40,00020%30,00015%20,00010%10,0005%00% 6% of global traffic –double the level in 2000020 0020 1020 2020 30420052006 Quality indistinguishablefrom PSTN100,00020 Provides competitiveadvantagemillion MOU Efficiently expandsglobal reachMillion MOUSource: TeleGeography 2002, Probe Research 2001PenetrationpenetrationInternational VoIP Forecast,2000-2006

Global Circuit-switched Deployments ShrinkingGlobal Equipment Sales, 2000-2006Circuit Switched vs IP 2 15 2 10 1 52000200120022003200420052006 0Circuit Switched EquipIP Toll GatewaysSource: Wintergreen Research 2001, IDC 2001 US billion 3 20 US billion VoIP equipmentdeployments growing 3 25 Circuit-switchedequipment deploymentsdeclining 1 VoIP being adopted byleading carriers 0–Cable & Wireless–BT–SBC–China Unicom–Sprint

VoIP: A Worldwide PhenomenonAverage Annual Growth of VoIP Minutes%Worldwide VoIP Growth 57% (total traffic growth 15%)120100806040200N AmericaLatin AmerW EurOriginationE & S EurAf & M EastAsia PacTerminationVoIP Growth Rates by Region2000 - 2006Source: Probe Research 2001, TeleGeography 2002

Same Trend Underwayin South East EuropeVarying marketsSame VoIP Benefits Regions Lower costs Regulations Improved service Infrastructure capacities Increased access & Economic development Culture and historyconnectivity Advanced technologytransfer Economic development

South East Europe Seeing Growth inVoIP TerminationInternational Inbound VoIP Traffic900minutes eece2004TurkeyBulgaria2006RomaniaSource: Probe Research 2001

VoIP Origination Also GrowingInternational Outbound VoIP Traffic1,000minutes aGreece2004TurkeyBulgaria2006RomaniaSource: Probe Research 2001

VoIP Penetration in South East Europe50.0% VoIP penetration willincrease four-fold inthe next five years45.0%40.0%35.0%30.0% iBasis traffic in theregion grew 217%from Q3 00 to Q3 und

International: Not Core for Most Major Carriers% Revenue from International Traffic30%25%20%15%10%5%Source: TeleGeography eTeFrleancocemTelecom0%

Major Carriers Adopting VoIPARGENTINA

OTEnet Case Study Interconnection with The iBasis Network for globalInternet Telephony since 2001 OTE, the nationalcarrier of Greece was privatized Accelerate creation of a new, fast-growinginternational service, offered by the OTE ISPsubsidiary, OTEnet Over past 8 months, The network has supported anearly ten-fold growth in OTEnet’s internationaltraffic. OTEnet routes international voice traffic over TheiBasis Network through an iBasis Internet BranchOffice (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 inBulgaria, Greece, Romania, and Slovenia More than 45 European carriers areconnected 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, growthdriver– China– Latin America– Africa– Central & Eastern Europe Opportunities to capture new revenues– International service expansion– Value-added services Carriers outsourcing international service to VoIP providersto 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

Atlantic-ACM 2002 International Wholesale Carrier Report Card. One of the Top International Carriers 0 2000 4000 6000 8000 10000 12000 14000 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 .