IDT Corporation (IDT)

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IDT Corporation (IDT)

F1Q10 Earnings Call

December 10, 2009 5:30 pm ET

Executives

Bill Ulrey – Investor Relations Officer

Howard Jonas – Chief Executive Officer, Chairman of the Board

Bill Pereira - Chief Financial Officer, Treasurer

Presentation

Operator

Welcome to IDT's Corporations first quarter fiscal 2010 earnings webcast. This is Bill Ulrey, Investor Relations Officer. IDT’s Chairman and Chief Executive Officer, Howard Jonas and Chief Financial Officer, Bill Pereira will be reporting to you shortly on IDT’s financial and operational results for the three months ended October 31, 2009.

This quarter we are following the same announcement format we have used in prior quarters. Our earnings release is available on the Investor Relations page of IDT Corporation's website at www.IDT.net. We have also filed the release on Form 8-K with the SEC.

These remarks are pre-recorded. If you have any questions after listening to them and reading the company’s earnings release, please email them to us at the following address: invest@idt.net. We will accept questions through the close of business tomorrow, December 11th. Please include your name and firm name, if applicable, in your email. If we can constructively answer to your question we will post your question, along with your name and your firm's name and our answer, on the Investor Relations page of IDT's website as early as next Wednesday, December 16th after market close or soon thereafter.

We will file a Form 8-K with the SEC containing the questions and the answers. If you have any questions or suggestions regarding our Q&A process please e-mail us at the exact same address.

Any forward-looking statements we make during this webcast or the written Q&A that are general or specific in nature, are subject to risks and uncertainties that may cause actual results to differ materially from those which we anticipate. These risks and uncertainties include, but are not limited to, specific risks and uncertainties discussed in the reports that we file periodically with the SEC. We assume no obligation to update any forward-looking statements that we have made or may make or to update you on the factors that may cause actual results to differ materially from those that we forecast.

In the prepared remarks you will hear today and also possibly in our written questions thereafter we will make reference to adjusted EBITDA, earnings before income taxes, depreciation and amortization. Adjusted EBITDA for all periods discussed during our remarks is a non-GAAP measure representing operating income exclusive of depreciation and amortization, restructuring and impairment charges and gains or losses as a result of business or asset sales.

Adjusted EBITDA is one of several key financial metrics management uses to evaluate the company’s and the different segment’s operating performances. The schedule provided in the earnings release reconciles adjusted EBITDA to the nearest corresponding GAAP measure, loss from operations for each of our segments and to both loss from operations and net loss for the company as a whole.

Now to begin the discussion of our operating results here is IDT Corporation’s Chairman and Chief Executive Officer, Howard Jonas.

Howard Jonas

Thanks Bill. Good afternoon. This is Howard Jonas. Let me begin while welcoming my fellow shareholders and IDT employees. Thank you for listening in. You are used to listening to James Courter present as CEO on these calls. I cannot hope to match Jim’s eloquence but I hope that my own confidence in IDT will keep your interest. Jim has been invaluable to IDT and we look forward to reaping the benefits of his advice and service as a Vice Chairman for years to come.

With our results this quarter IDT has achieved six consecutive quarters of positive EBITDA. Adjusted EBIDTA is one metric we use to provide a meaningful measure and basis of comparison of core operating results. During these six quarters we generated $65 million in adjusted EBITDA despite the worst global economic environment in a generation. That is not bad especially when you consider during the previous 18 months our adjusted EBITDA loss totaled $181 million. That is nearly one quarter-billion dollars net improvement.

A big part of the turnaround was achieved by divesting non-core businesses and aggressively cutting costs both in terms of corporate overhead and streamlining our core businesses. None of these moves have been easy. I have been with IDT since the beginning and some of the businesses cut were very dear to me and the people we had to let go were good friends but we did what was needed to provide a platform for future growth. So we have come a long way. That doesn’t mean much if we stop at cost cutting. So now we are all focused on growth strategies and our core businesses as well as in a few select projects where we are investing very judiciously.

At IDT Telecom we began leveraging a recent consolidation of our UTA business subsidiary by rolling out and promoting a new very competitive national brand of calling cards in the fourth quarter of last year. As a result, in the first quarter the rate of decline in US prepaid calling cards slowed and we are looking to turn this around and produce revenue growth in this line of business although probably at lower margins initially.

Overseas our retail business in Asia and Europe has had double digit sales increases year-over-year. Keep in mind that as our retail prepaid businesses generate more mass our wholesale carrier business can leverage their traffic to obtain better rates and margins. We have a healthy growing retail business and in order to have a carrier business and vice versa. We are also leveraging our UTA distribution network to resell international mobile top-up product line. This service allows our customers in the United States to buy minutes and transfer them to the accounts of their friends and family with participating wireless carriers overseas. We weren’t really even in this business a year ago but it really took off in the last half of 2009. We expect great growth for this business in the year ahead.

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