Net2Phone’s enhanced services strategy is focused on enabling individuals and businesses to manage and simplify their information and communication needs from the desktop, the web and the phone. Net2Phone is executing this strategy by rolling out a portfolio of services in the areas of real-time inbound call management, outbound calling from any device (PC, wireless or landline phone) and information, communication and commerce speech recognition services. Working with its growing network of partners and vendors, these new services are expected to strengthen Net2Phone’s position as a leading provider of voice and enhanced Internet communications services to individuals, businesses and telephone carriers worldwide. Additional services will be rolled out over the remainder of the year and into 2001.

• Free PC-to-phone calling in the U.S.


• Low-cost PC-to-phone calling to any telephone outside the U.S.


• Low-cost PC-to-fax service to any fax machine in the world


• Free PC-to-PC calling anywhere in the world


• Free Internet Answering Machine powered by CallWave, enabling PC users to hear who’s calling while they are on the Internet


• Free Voice E-mails to anyone in the world

Net2Phone’s Internet call waiting and domestic PC-to-phone calling complement one another, providing a true inbound and outbound call management solution for households with a single phone line.

“We are excited to announce the next phase of our products and services, which will enable Net2Phone to increase our customer base and ultimately deliver higher margin, advanced services to a much greater audience, offering greater revenue growth opportunities for Net2Phone,” said Howard Balter, CEO of Net2Phone.

By offering a suite of services, Net2Phone:

• Drives customer volume to support the up-sell and cross-sell of higher margin, advanced communications services


• Creates new revenue streams for the company


• Dramatically lowers customer acquisition costs, while offering the potential to dramatically increase the company’s customer base and profitability

Ilan Slasky, CFO of Net2Phone, added, “Since our U.S. PC-to-phone service only represented less than five percent of our revenues in our most recent quarter, launching a free domestic service provides the company with substantial upside and minimal downside cannibalization risk.”

“A distinction between Net2Phone and our PC-to-Phone competitors is the integrated services and distribution we enjoy today, and our vision for tomorrow,” said Balter. “The suite of voice over IP communications services we can offer is unmatched by any company in our industry. That depth and breadth of product offerings coupled with unparalleled distribution from a who’s who list of leading companies, should favorably position us to serve customers at an unmatched growth rate going forward.

“As for our vision for tomorrow, it is one where voice over the web is ubiquitous and Net2Phone - through the delivery of advanced services - is at the center of it all. We believe that we are the only company in our industry with the combination of a global managed network, online and offline distribution and a multi-national paying customer base to succeed at this strategy.”

Unlike many of its competitors who rely solely on advertising sales, Net2Phone’s consumer revenue model enjoys multiple revenue streams from the up-sell and cross-sell of international phone calls, integrated sponsorships from related communications companies, enhanced subscription services, calling cards, Net2Phone devices, and through the sale of advertising and direct marketing programs to marketers seeking to reach Net2Phone’s global audience.

Aside from its PC-based calling services, Net2Phone also offers enterprise solutions, wholesale carriers services, phone-based IP calling, VoIP solutions for broadband, and VoIP devices.

Net2Phone, Inc is a leading provider of voice and enhanced Internet communications services to individuals and businesses worldwide. Net2Phone enables people to place low-cost high quality calls from their computer, telephone, or fax machine to any telephone or fax machine in the world. Net2Phone develops and markets technology and services for IP voice and e-commerce solutions for the web and other IP networks. Net2Phone's strategic investors include Softbank, America Online, GE/NBC, and Yahoo!. Additionally, AT&T has acquired a 39 percent voting stake in Net2Phone. For more information about Net2Phone's products and services, please visit www.net2phone.com.

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include, among other things, Net2Phone's expected operating performance for the three months ending January 31, 2001 and thereafter. Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others, the inherent uncertainty of financial estimates and projections, the competitive environment for Internet telephony, changes of rates of all related telco rates and services, legislation that may affect the Internet telephony industry, and Net2Phone's ability to operate the services described on a large scale commercial level.The forward-looking statements are made as of the date of this press release, and Net2Phone assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth herein and the other information set forth from time to time in Net2Phone's reports filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934.