IDT
Corporation
Investor Day
January 17, 2007
Newark, NJ
1
IDT INVESTOR DAY
8:30 Registration
9:30 Company Overview
The Future of IDT- Howard Jonas
IDT Corporate Q&A
11:00Break
IDT Telecom Overview
IDT Telecom Q&A
IDT Capital Overview
IDT Capital Q&A
Concluding Remarks
1:15 Lunch
Agenda
2
IDT INVESTOR DAY
IDT Management Participants
Howard Jonas Chairman of the Board
Jim Courter Chief Executive Officer
Ira GreensteinPresident
Motti Lichtenstein Chief Operating Officer
Marcelo Fischer Chief Financial Officer
Yossi Cohn Director Investor Relations
CORPORATE TEAM
3
Yona Katz Chief Executive Officer
Kathleen Timko Chief Operating Officer
Norman Rosenberg Chief Financial Officer
Avi Lazar President, Global Wholesale and
International Emerging Businesses
Michael Leibov President, Union Telecard Alliance
Esti Witty SVP, Consumer Phone Services
Jose ColagrossiGeneral Manager, International Channel
Sales
IDT Management Participants
TELECOM TEAM
IDT INVESTOR DAY
4
Steve Brown Co-Chief Executive Officer
David Greenblatt Co-Chief Executive Officer
Geoff Rochwarger President
Yaacov Dior CEO, IDT Carmel
Morris Berger CEO, IDT Internet Mobile
Barry Luden CEO, IDT Local Media
IDT Management Participants
CAPITAL TEAM
IDT INVESTOR DAY
5
IDT
Corporation
Jim Courter
Chief Executive Officer
6
This presentation highlights certain information about the Company, its businesses and its financial
results and condition. It is not complete and should be considered in conjunction with the more
fulsome disclosures regarding the Company and its operations in the reports the Company files with
the SEC, including the audited and un-audited financial statements included with those reports.
This presentation may contain forward-looking statements that are either general or specific in
nature. These statements are subject to risks and uncertainties that may cause actual results to
differ materially from those we anticipate. These risks and uncertainties include, but are not limited
to the specific risks or uncertainties discussed in our reports that we file with the SEC.
We assume no obligation to update any forward-looking statements in this presentation or to update
any of the factors that may cause actual results to differ materially from those forecasted. All
information is given only as of the date indicated and should not be interpreted to imply anything
about the comparable information as of any other date. We do not undertake any duty to update
that information or indicate whether trends have continued or not continued other than in the filings
we make with the SEC.
7
IDT
Corporation
Motti Lichtenstein
Chief Operating Officer
8
About IDT
IDT OVERVIEW
Management and Employees
Dedicated professional team with operational excellence and financial discipline
Operating Businesses and Transaction
IDT has continually innovated and built new operating businesses
IDT will sell operating businesses for the correct price
Telecom
Largest Ethnic Prepaid Calling Calling Card Company
Selling approximately 280 million cards a year
Leading Global International Voice Carrier
Transporting over 20 billion minutes annually
Capital
Incubating, Building and Operating New Businesses
Spectrum
Largest Holder of 39 GHz Licensed Spectrum in the U.S.
9
Company Overview
IDT OVERVIEW
IDT Corporate
IDT Telecom
Calling Cards/
Prepaid Products
IDT Capital
IDT Spectrum
Consumer Phone
Services - US
Wholesale Carrier
Services
Other Initiatives
IDT Energy
IDT Local Media
Ethnic Grocery
Brands
Consumer Phone
Services –
International Sales
IDT Carmel
IDT Internet &
Mobile
Other Hispanic
Initiatives
10
IDT OVERVIEW
EXISTING OPERATIONS
OPPORTUNISTICALLY GROW
BUSINESS
Sustainable Free Cash Flow
Efficient Operations
That Fit our Risk Adjusted ROI Criteria
Strategically Fit with Existing Infrastructure and Businesses
Utilize Balance Sheet
Strategic Goals
BUILD SHAREHOLDER
VALUE
11
January 26, 2006- Remaining Winstar Operations & Liabilities Divested
March 3, 2006- Corbina Sold
March 13, 2006- Acquisition of Net2Phone Completed
3Q06 - Overhead Reductions Initiated
4Q05 – 4Q06- Open Market Buyback of 6.4 mm Shares ($79 mm)
4Q06 - IDT Energy surpassed 200,000 meters
September 29, 2006- Sale of IDT Entertainment to Liberty Media Completed
October 12, 2006- Sale of Toucan to Pipex Communications plc Completed
1Q07- Organizational Integration of Net2Phone Completed
January 9, 2007- JV with FFPM Formed; Debt Portfolios Purchased
Recent Events
IDT OVERVIEW
12
Transactions
Re-evaluation of all businesses
Integration of businesses
Efficiency in existing operations
Cost cutting initiated in 3Q06
Projected annual SG&A savings of
$35-40 million
Launch of new IDT Capital businesses
IDT In Transition
Stabilize IDT Telecom businesses
Pursue expansion opportunities
Deploy capital for future growth
IDT Capital
Technologies
Explore strategic alternatives for
IDT Spectrum
FISCAL 2006
IDT OVERVIEW
FISCAL 2007
13
Mature Telecom Businesses
-and-
Many opportunities, with small amounts of
capital deployed to date:
Calling Card Expansion
International Telecom Expansion
IDT Energy
IDT Carmel
Ethnic Grocery Brands
IDT Local Media
IDT Internet Mobile
IDT Spectrum, etc.
IDT Portfolio in Transition
Mature Telecom Businesses
-and-
Focused deployment of capital to specific
businesses
Continued innovation of new business ideas
Retain opportunistic mindset to all
opportunities
TODAY
FUTURE
IDT OVERVIEW
14
IDT Portfolio – Plan for the Future
Operating
Businesses
IDT OVERVIEW
Efficient operations and generation of free
cash flow
Transaction
IDT will sell operating businesses for the
correct price
Growth
Concentrate on specific opportunities:
Build upon existing infrastructure
Leverage strength of IDT’s balance
sheet
Consumer oriented
Deregulating markets
Fragmented/undercapitalized
businesses
15
IDT
Corporation
Marcelo Fischer
Chief Financial Officer
16
Capital Deployment
IDT OVERVIEW
Goal
Allocate capital to the highest returning opportunities companywide
Financial Metrics
Absolute hurdle rate – Risk-Free Rate
Targeted base hurdle rate – 15% IRR (risk adjusted); 3 year timeframe
Investment Approach
IDT has significant cash on hand
IDT is comfortable waiting for the correct opportunities
In the interim, earn absolute hurdle rate
17
IDT OVERVIEW
Revenue by Division
The IDT “Portfolio”
$ in millions
18
Total IDT Corporation
400
500
600
700
1Q 05
1Q 06
1Q 07
Total IDT Telecom
300
400
500
600
1Q 05
1Q 06
1Q 07
Total IDT Capital
30
60
90
1Q 05
1Q 06
1Q 07
Total IDT Entertainment
30
60
90
1Q 05
1Q 06
1Q 07
Total IDT Solutions
1
2
3
4
5
1Q 05
1Q 06
1Q 07
Equity Structure
CLASS A
CLASS B
CLASS C
3 Votes/ Share
1/10 Vote/ Share
1 Vote / Share
9.8 mm
56.7 mm
15.2 mm
Howard Jonas, Chairman and Founder of IDT, controls 17.75 mm shares
21% economic ownership
63% voting control
Not Traded
IDT
IDT.C
6.3 mm options outstanding
$9.44 average strike price
Votes per Share
Shares Outstanding
Ticker (NYSE)
Information as of most recent filings
IDT OVERVIEW
19
Stock Buyback
Fiscal 2005
1.2 mm shares
$16 mm
Fiscal 2006
5.2 mm shares
$64 mm
14.9 mm shares from Liberty Media in sale of IDT Entertainment
Purchased 7.9 mm options held by employees
Remaining Buyback Authorization
24.5 mm shares
IDT will continue to be an opportunistic purchaser of its shares on the open market
IDT OVERVIEW
20
Cash per Share
As of October 31, 2006
Cash & Marketable Securities $808
Investments 52
Capital Lease Obligations (47)
Severance Accrual (11)
Regulatory Accrual (Telecom) (51)
Working Capital Adjustment Accrual (Entertainment) (20)
Net Cash $731
Shares Outstanding (undiluted) 81.7
Cash per Share: $8.95
Calculation excludes Mortgage Notes Payable and Offsetting Real Estate Assets
In millions
IDT OVERVIEW
21
Operating Cash Flow – 1Q07
Adjusted EBITDA*
Telecom $23
Capital 2
Solutions -
Corporate (14)
Total Adjusted EBITDA $11
Capital Expenditures (10)
Distributions to UTA Minority Partners (4)
Interest, Taxes 1
Working Capital Changes (Telecom / Corporate) (5)
Working Capital Changes (Capital / Solutions) (12)
FCF Before Other Items ($19)
Restructuring (5)
Telecom Regulatory Payments (8)
Free Cash Flow ($32)
In millions
*Adjusted EBITDA, as calculated: Gross Profit – SG&A + Non-Cash Compensation
IDT OVERVIEW
22
IDT OVERVIEW
$ in millions
Adjusted EBITDA by Division
*Adjusted EBITDA, as calculated: Gross Profit – SG&A + Non-Cash Compensation
23
Total IDT Corporation
5
10
15
20
25
1Q 05
1Q 06
1Q 07
Total IDT Telecom
10
20
30
40
1Q 05
1Q 06
1Q 07
Total IDT Capital
-3
-2
-1
1
2
3
1Q 05
1Q 06
1Q 07
Total IDT Entertainment
2
4
6
8
10
1Q 05
1Q 06
1Q 07
Total IDT Solutions
-7
-6
-5
-4
-3
-2
-1
1Q 05
1Q 06
1Q 07
Total Corporate
-20
-15
-10
-5
1Q 05
1Q 06
1Q 07
The Future of IDT
Howard Jonas
Chairman of the Board
24
IDT Corporate
Question and Answer
25
IDT Telecom
Yona Katz
Chief Executive Officer
26
We will provide a full suite of high-quality, favorably-priced communications
products and services to retail and wholesale customers worldwide
We will be driven by innovation and we will embrace technology, in order to
improve our products, services, processes and interaction with our customers
We will expand our operations internationally, taking advantage of the
numerous attractive opportunities presented by a constantly changing,
deregulating worldwide Telecommunications industry
We will remain focused on our ultimate goal: maximizing profits, cash flow and
shareholder value
Our Mission
IDT TELECOM
27
Market maturity and aggressive, price-based competition have resulted in
revenue declines in several key business units
New products and geographic markets have yet to gain traction, providing little
incremental revenue to offset core decline
Top-line pressure has continued into 2Q07
Steps to reverse trend could lead to narrower gross margins
Fixing the model:
Overall and unit profitability rebounding off 2Q06 low
SG&A expense savings began to materialize in 1Q07
Net2Phone integration proceeding
Will yield cost savings and revenue growth opportunities
IDT TELECOM
Current Status
28
IDT TELECOM
Revenues
$ in millions
29
IDT TELECOM
Gross Margins
30
IDT TELECOM
SG&A Expenses
$ in millions
31
Includes impact of non-cash compensation.
IDT TELECOM
EBITDA
$ in millions
32
Prepaid Services
Calling cards (US/Europe/South America/Asia Pacific)
Wireless services (US/Europe)
Carrier Wholesale Services
Voice (US/Europe/South America/Asia Pacific/Africa)
Portfolio of Carrier Services
Consumer Phone Services
CPS (US)
Net2Phone reseller
Net2Phone Cable Telephony (NCT)
IDT TELECOM
Businesses
33
Market leader in world’s #1 prepaid calling card market
TTM net revenues of approximately $1.0 billion
Distributed through Union Telecard Alliance
joint venture
Over 200,000 retail points of sale nationwide
Prepaid Solutions (PPS) unit distributes cards
through some of the largest retailers in the U.S.
Walgreen’s, Sears, Kroger’s, BP, Exxon Mobil
and 7-11
IDT TELECOM
U.S. Calling Cards
34
U.S. Calling Cards
Distribution network still too heavily
concentrated on East Coast
Mature, commodity product
Threatened by wireless substitution
Competition intensifying, resulting
in market share losses
Raises question of gross margin
sustainability
Continued build-out of nationwide
distribution network
Enhanced in-market, on-the-street
presence
TuYo Mobile will allow IDT to serve
its calling card customers’ wireless
needs
Selectively lower rates, where such
moves can be effective
Position IDT as high-quality, reliable
consumer friendly provider of calling
cards
IDT TELECOM
RISKS
RESPONSES
35
Based on minutes-of-use, FY 2007 to date.
IDT TELECOM
U.S. Calling Cards- Geographic
Breakdown
36
IDT TELECOM
Prepaid Wireless- TuYo
37
Pan-European operation
Sales in 19 countries
Expanding to 21 by year-end 2007
Headquartered in London, England
and Dublin, Ireland
Offices in 13 countries
Selling nearly 300 different cards
through various distribution channels
Including > 100,000 (3rd party) point-of-sale
activation (POSA) terminals
IDT TELECOM
Europe Calling Cards
38
Market share losses to aggressive
competitors
“One-dimensional” distribution
network has narrow, limited reach
Changing customer needs require
new products
24 month investment plan launched
Allowing each market to cycle through
“investment” and “harvest” phases
Enabling electronic distribution
Development of point-of-sale activation
(POSA) terminal network
Adding prepaid MVNO and prepaid
debit card to product suite, and
enhancing feature set on traditional
card products
IDT TELECOM
Europe Calling Cards
RISKS
RESPONSES
39
Based on minutes-of-use, November 2006
IDT TELECOM
Europe Calling Cards- Geographic
Breakdown
40
Historically an arbitrage-driven minutes trading operation
Wholesale business has evolved into a multi-faceted carrier services business
over the past few years
Serving > 500 carrier customers worldwide
Generating over $500 million in annual revenues
Offers a wide variety of services, including:
Voice Services
VoIP Solutions
Mobile Solutions
Fixed/Mobile Convergence
Platform Services
Also responsible for provisioning and routing minutes for IDT’s calling card
businesses
IDT TELECOM
Carrier Wholesale
41
Traditionally narrow margin
business, with questionable
customer loyalty
Customers increasingly seeking IP
interconnection and related
services
Mobile carriers accounting for a
growing share of the global
wholesale market
Addition of higher-margin,
“contracted” revenues from strong
partners
Cable companies
Integration of NTOP network
Speeding up IDT network’s IP evolution
IDT now offers a full suite of
services targeting mobile carrier
customers, including:
Voice premium routing service
Inter-carrier SMS/MMS services
Premium messaging services
Mobile partnering service
IDT TELECOM
Carrier Wholesale
RISKS
RESPONSES
42
IDT TELECOM
Carrier Wholesale
$ in millions
43
Local and long distance (LD) voice services
Broadband Internet access
VoIP services
Satellite TV
Sold to residential and small business customers
Bundled local and LD customers: ~110,000 in 13 states (as of 12/31/06)
LD-only customers: ~235,000 nationwide (as of 12/31/06)
Recently launched IDT Passport
Internationally-targeted LD service
1Q07, launched two new services
IDT Voiceline
IDT Triple Play
IDT TELECOM
Consumer Phone Services (CPS)
44
With abolishment of UNE-P rules in
late 2004, costs have increased,
making it more difficult to compete
with incumbent carriers
Residential VoIP taking some
market share from traditional
wireline services
Local calling and domestic LD
markets provide little opportunity to
undercut competition
Base business in harvest mode,
steps have been taken to increase
profit/customer
Launched IDT Voiceline, powered
by Net2Phone
IDT Passport, targeting
international callers
provides significant cost savings vs.
incumbents, while allowing IDT to
generate healthy margins
IDT TELECOM
Consumer Phone Services (CPS)
RISKS
RESPONSES
45
Voiceline
Residential Internet Telephone Service
Unlimited local and long distance to US, Canada and Puerto Rico
$19.95 per month through 1/31/07
$5.00 less than Vonage
Free modem; no installation fee
Customer Pitch
Value
Significantly lower than traditional phone service or other VoIP competitors
Feature Rich
Reliability
30 day money back guarantee
Simple
Easy to install
Migrate existing number
IDT TELECOM
Consumer Phone Services (CPS)
46
IDT TELECOM
Consumer Phone Services (CPS)
47
IDT TELECOM
VoIP Customers
48
Use forward-ROI approach to determine investment potential of each business
existing and potential
Monetize businesses whose projected future cash flows fall below ROI
threshold
via sale or harvest
Take advantage of existing network capacity to add incrementally profitable
minutes
Allocate financial and human resources towards areas of highest growth and
return potential
IDT TELECOM
The Plan
49
January 2006: 843,594 total ports
January 2007: 844,338 total ports
IDT TELECOM
Global Telecom Network Capacity
Utilization
50
Global Network Topology
IDT TELECOM
IDT Telecom
Question and Answer
52
IDT Capital
David Greenblatt
Co-Chief Executive Officer
53
The Business Development Incubator for IDT
Provides a process-driven infrastructure for business development
Assess, filter and process new opportunities for IDT
With strict financial discipline and analysis
IDT Capital is Focused on Businesses that
Are consumer-oriented
Build upon IDT’s existing infrastructure and expertise
Leverage the strength of IDT’s balance sheet
What is IDT Capital?
IDT CAPITAL
54
IDT Capital Incubation Process
IDT CAPITAL
Model the Opportunity
Research
Identify key assumptions
Design business model/project plan based on the assumptions
Create a budget to test the opportunity
Test the Model
Create a small test of the target business (with internal IDT business, if applicable)
Validate key assumptions in advance of significant capital deployment
Build an Accretive Business
Evolve successful “test” into a successful businesses
Identify and hire the correct management team to bring the business to the next level
Operate the Business
Execute as an ongoing business operation
Bring business to cash-flow positive
Stand-Alone Business Unit
55
IDT Energy
Gas & Electric ESCO (Energy Service Company) in New York State
IDT Carmel
Receivables Purchasing/Sales and Contingency Collections
IDT Internet Mobile
Zedge
Content-focused business, at the intersection of Mobile platforms and the Internet
Capital Companies
IDT CAPITAL
56
IDT Local Media
CTM Brochure Display, WMET Radio, New Media
Local advertising opportunities
Ethnic Grocery Brands
Vitarroz
Branding and distribution of ethnic oriented grocery products
IDT Global Services
Call Center and BPO (Business Process Outsourcing) Services
IDT Hispanic
Ingles Para Hoy (ESL), Confie Seguros (Insurance), Sigo (Financial Services)
Hispanic consumer focused business initiatives
Capital Companies (continued)
IDT CAPITAL
57
IDT Energy
IDT CAPITAL
IDT Energy Vision
Create a large and robust base of retail energy customers
Low customer cost of acquisition
Low churn
Through multiple products and services
Focus on brand awareness
Up-sell additional energy oriented products and services
Continually enhance the customer experience
IDT Energy is the Energy Solution for its customers
IDT ENERGY
59
Deregulation
Non-utilities can resell natural gas and energy
In New York State, deregulation model offers resellers low risk programs
Purchase of receivables (POR)
Utility-provided billing
Dual meters (natural gas and electricity) available for resell
Dynamic supply management, with mature markets for buying energy
Other states have been slow to adopt the New York State model
Low Risk
Customer acquisition costs are recouped in first ~6 months
Receivables are guaranteed by the utilities
Customers are on a variable rate plan
Builds on Existing Infrastructure
Leverages IDT’s balance sheet
Letters of credit and guarantees provide IDT Energy with the flexibility to manage
scheduling and purchasing of energy and natural gas
IDT Energy’s ESCO Business
IDT ENERGY
60
New York State ESCO Market Landscape
New York State Total Meters:
Natural Gas Meters:
Upstate: 1,300,000
Downstate: 1,400,000
Electric Meters:
Upstate: 2,500,000
Downstate: 3,000,000
Market Breakdown of IDT Meters
Upstate: 48,500
Downstate: 209,500
NY State meter count source: PSC website
IDT Energy meter count: as of Oct. 31, 2006
IDT Energy has Captured Over 20% of the New York
Residential ESCO Market
IDT ENERGY
61
Where are we now?
Regulatory-friendly regions within NY State
Upstate utility markets (NFG, NIMO/National Grid, RG&E)
Downstate utility markets (Central Hudson, Con Edison, Keyspan, Orange & Rockland)
How do we acquire customers?
Residential consumers
Door-to-door sales strategy
Refer-a-friend program
Web portal
Direct mail
Small businesses
Agent programs
Strategy forward
Grow New York footprint
Expand into new territories as they embrace a deregulated environment similar to NY State
Up-sell additional products and services to our existing ESCO customers
IDT Energy’s ESCO Business
IDT ENERGY
62
Competition/Marketing Risks
Competitors with deep pockets and large marketing budgets may enter the market
Current ESCO discount may prove insufficient to convince customers to switch from incumbent
providers
Comparison shopping as customers and the market matures
Political Risks
New York State pro-deregulation policy could reverse
Expansion beyond New York State requires favorable ESCO environment in other states
Enactment of a do-not-knock law could stop or restrict door-to-door marketing campaign
Commodity Risks
Volatility in pricing could force IDT Energy to pass along higher costs to our customers, which
could increase churn
Weather (warm or cool) can effect customer usage
High volume/Low margin business
General ESCO Risk Factors
IDT ENERGY
63
The Portal Opportunity
Internet offers the infrastructure for the world to shop for energy products and information
One-stop source for energy consumers
Comprehensive energy information to better understand the energy industry and how it impacts their home
IDT Energy Portal
Multiple web environments designed to cover the broad field of energy
ESCO customer acquisition - www.idtenergy.com
E-Commerce - www.shopidtenergy.com
Traditional products
Energy efficient products
Alternative energy products
Sale of our energy services
Information and expertise - idtenergy.wordpress.com
Social Community
Goal
Interact with our energy customers
Build a web brand
Act as a consolidator, private-labeling energy products
Develop and maintain a master database of energy users
Keep a finger on the pulse of energy consumers
IDT Energy Web Portal
IDT ENERGY
64
www.IDTENERGY.com
Main E-Commerce Site
New customer acquisition
Online bill pay
Customer Stories
Energy Saving Tips
Entry to blogs/social community
Green Energy Information
Education
News
Links to energy sites
Services
Home Energy Audits
Energy Insurance
Weatherization
IDT ENERGY
65
www.IDTENERGYSTORE.com
Traditional energy products
Batteries
Thermostats
Filters
Energy efficient products
Heat Pump
Humidistats
Propane Heaters
Alternative energy products
Hydropower
Power Panels
Solar Air Heating
IDT ENERGY
Additional products and
services continuously
added
66
Key Economic Drivers
Number of Customers/Meters
Consumption
Price per Unit
Customer Acquisition Cost
Drives volume and revenues
Determined by weather patterns, drives
volume and revenues
Generated by capturing and managing costs
and rate setting
Together with customer turnover determines
the rate of return of the business
IDT ENERGY
67
Number of customers needed to cover fixed SG&A: ~120,000
Number of customers at end of 1Q07: ~180,000
Number of energy meters at end of 1Q07: ~258,000
Incremental Customer Acquisition
Acquisition cost payback period: ~6 months
IRR assuming avg. customer life of 3 years: 152%
IDT Energy – Key Financials Metrics
IDT ENERGY
Based on current churn expectations
68
IDT Energy – 1Q07 Financial Highlights
Revenue $36
Direct Cost 28
Gross Profit $8
Gross Margin 22%
Impact of Market Pricing Opportunities $6
Normalized Gross Profit $2
Gross Margin 6%
Model assumes ~6% gross margin
In millions
IDT ENERGY
69
IDT CAPITAL
Consumer Debt Growth
Consumer charged off debt growing at a ~14% CAGR since 1993
Charge-offs and delinquency rates have decreased over the last 5 years, with a slight
increase over the last two quarters
Creditors
Consolidation amongst the largest issuers of credit card debt has led to larger portfolios
offered for sale
Collection Industry
Industry generated $9.5B in revenue in 2004
Majority of revenue concentrated in top five contingency collection firms
Debt Buying
Top 15 debt buyers purchase approximately 80% of all debt that is sold in today’s market
Consumer debt portfolio pricing has increased in the past two years
20% average price increase for national portfolios
Consumer Debt Industry Overview
IDT CARMEL
71
Consumer debt focus – opportunity still maturing
Room for a big player - 95% of the players generate less than $8 mm annual revenue
International opportunities - international debt markets are opening up
$48B in face value was purchased in international markets in 2005
Brazil, Mexico and Poland
Maintain a strong balance sheet with minimal capital at risk
Purchased portfolios are a highly liquid asset; real market value that can be resold
Leverages existing IDT infrastructure & relationships
IDT as corporate parent lends legitimacy to the business
Relationships in the Telecom & Utilities industries lend themselves to the possibility of
purchasing and collecting debt from those sectors
IDT has presence in international markets with infrastructure in every major region
The “Fit” Into IDT Capital
IDT CARMEL
72
Build strong management
Maintain balance between purchasing and contingency collections
Accelerate portfolio purchases
Strategic acquisitions - niches, along with management expertise
Maintain balance between collecting purchased debt in-house and through an
established outsourcing collection network
Strategy For Growth
IDT CARMEL
73
Portfolio Pricing
Margins can be impacted as excess liquidity and growth pressures may lead to aggressive
portfolio purchasing, causing portfolio prices to increase
Availability of Portfolios
Purchase of more lucrative portfolios is often relationship driven
Economic Environment
Employment and general economic conditions could alter consumer’s ability to repay debt
Execution
Inefficient collection process can diminish liquidation rates and increase collection costs
Debt purchasing analytics must be strong to ensure profitability
Legal & Legislative
Industry heavily regulated at both the Federal and State levels
Risk Factors
IDT CARMEL
74
First Half Fiscal 2005 - Launched IDT Carmel
June 2006 - Acquired Big Ten Capital Management, a debt purchasing company
located in Minnesota
FY 2006 - Trained and built collection staff in Minnesota and Israel
~120 employees today in Minnesota and Israel, 75 collectors
FY 2006 - Executed many small and medium debt portfolio purchases and sales
Acquired Big Ten with ~50 portfolios
Purchased additional face value of ~$250 mm, at a cost of ~$13 mm (1Q07: $6 mm)
Flips and resales generated proceeds of ~$5mm (1Q07: $4 mm)
IDT Carmel - Timeline
IDT CARMEL
75
January 2007 - Formed joint venture with First Financial Portfolio Management
(FFPM)
JV to purchase fresh credit card debt from a major financial institution
Forward-flow portfolio for a total of twelve months
Total over twelve months will range from $45 mm to $121 mm
FFPM is a debt purchasing/collections company with over 30 years of
management experience
FFPM is managing the JV, subject to Carmel’s approval of major decisions
Purchasing fresh debt
No post charge off collection attempts
Fresh forward-flow debt is infrequent in the debt purchasing market, as creditors generally
first outsource such debt for collection
Joint Venture Overview
IDT CARMEL
76
IDT Internet Mobile
IDT CAPITAL
Consumer
Attractive product to build a brand identity
Early stages
First mover advantage
Zedge is the largest Internet Mobile portal today
~3.7 million users
~500,000 pieces of content
Minimal Risk
Small acquisition price, and minimal investment necessary for further build out
Build on existing infrastructure and expertise
IDT Entertainment experience in content
Net2Phone technological expertise
Business Characteristics - IDT’s Opportunity
IDT INTERNET MOBILE
78
Exploding demand for content on mobile devices
Driven by mobile phone penetration, and wireless broadband service
Mobile content market is presently PC based
Load content from PC to mobile device
Nascent space
No incumbent
Zedge is presently the largest portal
User generated content
Growing popularity, similar to MySpace, YouTube, Flickr, etc.
Alternative to the ‘Walled Gardens’ of standard mobile operators and content providers
Mobile community sites
Will link users to the web, and to other users on their mobile phones
Commerce platforms
Affiliate programs have emerged which empower web sites to sell content for mobile phones
Industry Overview
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Global destination
Users are global
~11% US and UK based
Rapidly adding users
Zedge has acquired over 3.7 million registered users in 2 years
Adding 165,000 registered users per month
Content leader
~500,000 unique pieces of mobile content
Adding ~45,000 pieces per month
Broad based approach
We also own a US Latino social community – Mimun2.com
IDT Internet Mobile - Today
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80
Competition
Many others are making significant investments in the mobile community
and content aggregation markets
Low barriers to entry
Revenue Model
Other than ringtones, mobile content has yet to become a significant
source of revenues in the US market
Risk Factors
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User Forums
>500,000 posts
Mobile Applications
Screensavers
Wallpapers
User Generated Content
~500,00 pieces
User Profiles
~100,000
The Zedge Experience
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Financial Overview
Purchase Price: $3.4 million
paid over 2 years
Ownership Acquired: 90%
Planned Investment: $7 million
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Build the brand
Become a household name for the purpose of obtaining mobile content
Mobile portal for all types of products and services
Growth
User base
Increase user base through viral and targeted marketing
Goal is to have 5.5 million registered users by the end of FY07
Content
Increase content through users and toolsets
Goal is to have 650,000 pieces of content by the end of FY07
Revenue Model
Increase monthly page views
Increase traffic from monetizable locations (e.g. US/UK)
Sell CPM or sponsorship type advertising
Create premium areas for paying Zedge members
IDT Internet Mobile - Strategy
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IDT Capital
Question and Answer
85
IDT
Corporation
Ira Greenstein
President
86
IDT
Corporation
Thank You for Attending
87
