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TDC and iBasis Announce Strategic Outsourcing Agreement
iBasis, a KPN affiliate, and TDC, the leading telecommunications company in Denmark, have announced that the companies have reached an agreement that will make iBasis the exclusive provider of international voice services for TDC for a five-year period. iBasis will pay TDC approximately $10 million in cash, while the outsourcing arrangement is expected to generate approximately $80 million in new annual revenue for iBasis. TDC will become a preferred partner for terminating iBasis traffic into the Nordic region. Other financial details of the agreement are undisclosed.The outsourcing arrangement closely follows iBasis' transaction with Royal KPN, N.V. in October 2007, which resulted in the acquisition of KPN Global Carrier Services by iBasis, effectively outsourcing KPN's international voice business to iBasis. Combining KPN Global Carrier Services with iBasis has enabled iBasis to become a leading platform for international voice outsourcing by giving the company far greater scale, advanced features for mobile traffic, and a more complete premium quality product portfolio.
Upon completion of the agreement, which is pending consent from competition authorities, iBasis will acquire the voice-related assets, contracts, office rental and employees of TDC subsidiary TDC Carrier Services U.S., which will be fully integrated into iBasis. Approximately 130 non-Nordic international wholesale voice customers, as well as all of TDC's interconnection and bilateral agreements for inbound and outbound international phone calls will be transferred to iBasis. TDC will maintain its Nordic customer base and its pan-Nordic reach, and will benefit from becoming iBasis' preferred partner for termination of international traffic throughout the Nordic region.
The agreement affects approximately two billion international voice minutes annually including captive outbound traffic from TDC's retail services to non-Nordic destinations and inbound and transit traffic from non-Nordic countries. According to Telegeography 2007, approximately eight billion minutes of international voice traffic flow in and out of the Nordic region annually.
Intense competition in telecommunications is driving carriers worldwide to focus their resources on the implementation of innovative technologies and the development of compelling services that are highly valued by their consumer customers. TDC continues to invest massively in IT and fixed and mobile network technologies to deliver the highest quality TV, telephony, and broadband services in Denmark and through its subsidiaries in other Nordic countries. The convergence of network technologies and services provides TDC exciting market opportunities and requires increased focused on the development of consumer and business services.
"TDC has always been committed to delivering the highest quality of service for our fixed and mobile customers. The most efficient way for us to continue to provide reliable, high quality international voice services while addressing innovative technology initiatives such as fixed/mobile convergence is to establish a strategic partnership with a wholesale partner that specializes in outsourcing international voice services," said Ole Hvelplund, COO, TDC Wholesale. "We selected iBasis as the most qualified carrier, due to its focus on international voice, its expertise in IP, and particularly its combination with KPN Global Carrier Services."
"Carriers are increasingly recognizing that they can focus more effectively on meeting the challenges and opportunities of their core retail business by outsourcing the commoditized international voice business to specialized wholesale providers like iBasis," said Ofer Gneezy, president and CEO of iBasis. "Unlike most wholesale providers, international voice is our core business, and because of the efficiencies of scale we're able to leverage, iBasis is uniquely positioned to be the outsource solution for incumbent carriers like TDC."
The agreement, which is subject to the approval of relevant competition authorities, is expected to close in Q1 2008. Until the agreement is officially completed, the companies will continue to conduct business independently.
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