Teleglobe International Holdings Ltd Announces First Quarter 2005 Results

Teleglobe International Holdings Ltd (NASDAQ:TLGB), a
leading provider of international telecommunications services to
Internet service providers and to fixed and mobile network operators,
announced today unaudited first quarter 2005 results for the period
ended March 31, 2005.
   First quarter 2005 revenue was $255.3 million versus $280.2
million in the fourth quarter of 2004 and $214.5 million in the first
quarter of 2004. Net loss for first quarter 2005 was $8.4 million
versus $9.2 million in the fourth quarter of 2004 and net income of
$2.5 million in the first quarter of 2004. Net loss attributable to
common shareholders for the first quarter of 2005 was $8.4 million or
$(0.22) per share versus $9.2 million, or $(0.23) per share in the
fourth quarter of 2004 and income of $105,000, or $(0.00) per share in
the first quarter of 2004. Prior period financials are not comparable
as ITXC Corp. (ITXC) results were included for the full period in
first quarter 2005 and fourth quarter 2004 and not at all in the
year-ago period. The merger with ITXC and related transactions were
consummated on May 31, 2004. As of March 31, 2005, the company had
39,105,756 shares outstanding.
   First quarter 2005 adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA) were $5.9 million including a
$1.9 million loss from foreign exchange translations versus $11.2
million including a $2.7 million gain from foreign exchange
translations in the fourth quarter of 2004. These figures exclude
integration expenses and professional fees incurred in connection with
the Company's internal Foreign Corrupt Practices Act ("FCPA")
investigation of $2.0 million and $3.6 million from each period,
respectively. EBITDA is a non-GAAP concept (see non-GAAP financial
data footnote in this press release).
   Liam Strong, president and CEO of Teleglobe, stated, "Teleglobe's
first quarter results reflect our progress in delivering our
integration synergies, offset to some extent by investments in
productivity, new product introductions and Sarbanes-Oxley compliance
in the quarter. Voice volume growth was limited in Q1 primarily by the
pending unification of our VoIP and TDM networks. However, since
March, we have made good progress in integration and improving gross
margin on routes unified. By the end of April, 66% of our voice
network was unified, and we are on track to complete integration by
the end of May, providing significantly greater precision in control
over pricing, routing and costing, the key factors in improving gross
margin. Data volume continued its pattern of solid sequential volume
increases. However, both data and value-added services revenues
decreased slightly due to planned pricing actions on certain customer
contracts. Gross margin contribution remained largely stable in spite
of revenue decline due to integration benefits in network costs and
telecommunications expenses. Finally, we increased our cash balance by
$8 million through improved capital spending efficiency as well as
active working capital management."
   Mr. Strong continued, "In the second quarter, we are on track to
complete the ITXC integration and to deliver $30 million in annual
synergies as network unification sustains gross margin, increased
automation lowers SG&A, and VoIP efficiencies reduce capital
expenditures. We continue to use some of these synergies to continue
to invest in new product introductions and efficiency projects.
Approximately 70% of synergies were included in the first quarter run
rate and the balance is planned to be achieved by the end of the
second quarter as our voice business is fully integrated."

   Fourth Quarter 2005 Outlook

   Based upon its 2005 strategic plan, Teleglobe currently targets
the achievement of the following results for the fourth quarter of
2005:

   --  Revenue in the range of $275 million to $310 million compared
        to $255 million in first quarter 2005, given an expectation of
        voice volume recovery after integration completion and some
        gains from seasonality

   --  Gross margin in the range of 15% to 17% compared to 17% in
        first quarter 2005, given the expectation of a higher
        contribution of voice revenue in the mix, stable IP revenues,
        and some incremental contribution from value-added mobile
        services revenues

   --  SG&A percent to sales in the range of 11% to 13% assuming a
        full ITXC synergy run rate and the completion of efficiency
        projects

   --  Capital expenditure continuing at 2% to 3% of revenue

   Mr. Strong concluded, "For the remainder of the year, we are
focused on the shift to a lower cost, more efficient operating
platform. On this platform, we plan to expand our portfolio of mobile
applications services and to launch new value-added products in our IP
business. Our opportunities in these higher-growth segments should
begin contributing to sales and gross margin in the fourth quarter of
the year."

   Non-GAAP Results

   EBITDA (Earnings before interest, taxes, depreciation, and
amortization) for first quarter 2005 was $3.9 million versus $7.7
million in the fourth quarter 2004 and $10.5 million in the first
quarter of 2004. EBITDA is a non-GAAP concept, differing from GAAP
measures in that it excludes net interest expense, taxes, depreciation
and amortization. A more detailed reconciliation of the differences
between GAAP and non-GAAP results is included in the financial tables
in this press release.

   Non-GAAP Financial Data

   We are presenting EBITDA (Earnings before interest, taxes,
depreciation and amortization) and Gross Margin because management
considers them to be important supplemental measures of our
performance and believes that they are frequently used by interested
parties in the evaluation of companies in our industry. However,
EBITDA and Gross Margin have limitations as analytical tools, and you
should not consider them in isolation, or as a substitute for analysis
of our results as reported under GAAP. Some of these limitations
include the following:

   --  EBITDA does not reflect cash expenditures, future requirements
        for capital expenditures, or contractual commitments;

   --  EBITDA does not reflect changes in, or cash requirements for,
        working capital needs;

   --  EBITDA does not reflect the significant interest expense, or
        the cash requirements necessary to service interest or
        principal payments, on debt;

   --  Although depreciation and amortization are non-cash charges,
        the assets being depreciated and amortized will often have to
        be replaced in the future, and EBITDA does not reflect any
        cash requirements for such replacements;

   --  EBITDA reflects the impact on earnings of charges resulting
        from matters we consider not to be indicative of our ongoing
        operations; and

   --  Other companies in our industry may calculate EBITDA and Gross
        Margin differently than we do, limiting their usefulness as a
        comparative measure.

   --  The Gross Margin calculation excludes any depreciation or
        amortization relating to property, equipment and intangible
        assets required to generate revenues.

   Because of these limitations, we rely primarily on the GAAP
results and use EBITDA and Gross Margin only as supplemental measures.
   Adjusted EBITDA is a further supplemental measure of our
performance. We compute Adjusted EBITDA by adjusting EBITDA to
eliminate the impact of a number of items that management does not
consider indicative of our ongoing operating performance. You are
encouraged to evaluate each adjustment and the reasons we consider it
appropriate for supplemental analysis. In addition, in evaluating
Adjusted EBITDA, you should be aware that in the future we may incur
expenses similar to the adjustments in this presentation. The
presentation of Adjusted EBITDA should not be construed as an
inference that our future results will be unaffected by unusual or
nonrecurring items.

   About Teleglobe:

   Teleglobe International Holdings Ltd is a leading provider of
international voice, data, Internet and mobile roaming services with
over 50 years of industry expertise in international
telecommunications. Teleglobe became a public company trading on the
NASDAQ under the symbol TLGB with the acquisition of Voice over IP
(VoIP) network leader ITXC Corp. on June 1, 2004.
   Teleglobe owns and operates one of the world's most extensive
telecommunications networks, reaching over 240 countries and
territories with advanced voice, mobile, and data services. Teleglobe
is the carrier of choice to more than 1,400 wholesale customers
representing the world's leading telecommunications, mobile operators
and Internet service providers.
   With an annual run-rate of over 13 billion minutes, and a
significant portion of the world's Internet traffic, Teleglobe's
network is consistently ranked among the most robust and reliable,
performing at the high end of industry standards. Detailed information
about Teleglobe is available on the company's web site at
www.teleglobe.com.

   Forward-looking Statements

   Teleglobe has included in this press release forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including all statements concerning future or
expected events or results.
   Actual results could differ materially from those projected in the
companies' forward-looking statements due to numerous known and
unknown risks and uncertainties, including, among other things, the
risks and uncertainties described in the Form 10-Q that will be filed
by Teleglobe on or before May 16, 2005.
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Teleglobe International Holdings Ltd - Selected Financial Highlights 
for the periods indicated (Unaudited) (USD$, 000's):

                                            Q1-2005  Q4-2004  Q1-2004
Consolidated Statement of Operations -
 Selected Information                      ---------------------------
                     
Revenues                                   $255,307 $280,165 $214,544

Telecommunication expenses                  189,580  211,968  154,356
Network expenses, exclusive of amortization
 and depreciation                            22,779   23,651   23,734
                                           ---------------------------
 Total telecommunication and network
  expenses                                 $212,359 $235,619 $178,090

Selling, general & administrative, bad debt
 expenses, stock based compensation,
 restructuring charges, foreign exchange
 loss (gain) and other income               $39,046  $36,866  $25,905

Net (loss) income                           $(8,445) $(9,150)  $2,480



Teleglobe International Holdings Ltd - Selected Financial Highlights 
for the periods indicated (USD$, 000's) (Unaudited):

Consolidated Balance Sheet as at the Period          March    December
 Indicated - Selected Information                  31, 2005   31, 2004
                                                   -------------------

Cash, Marketable Securities and Restricted Cash      $41,898  $34,060
Accounts Receivable                                  198,155  210,588
Other Current Assets                                  13,647   10,189
                                                   -------------------
Total Current Assets                                 253,700  254,837

Property and Equipment                               131,277  134,083
Intangible Assets                                    142,826  143,231
Other Non-Current Assets                              22,408   21,638
                                                   -------------------
Total Assets                                        $550,211 $553,789

Accounts Payable and Accrued Liabilities            $281,750 $275,645
Other Current Liabilities                              5,858    6,065
                                                   -------------------
Total Current Liabilities                            287,608  281,710

Other Non-Current Liabilities                         12,829   13,929
Senior Notes                                         100,000  100,000
Total Equity                                         149,774  158,150
                                                   -------------------
Total Liabilities and Shareholders' Equity          $550,211 $553,789



Teleglobe International Holdings Ltd - Selected Financial Highlights 
for the periods indicated (USD$, 000's) (Unaudited):

(a)Reconciliation of EBITDA to GAAP Measure  Q1-2005 Q4-2004  Q1-2004
for the periods indicated
----------------------------------------------------------------------

Net (loss) income                            $(8,445) $(9,150) $2,480
Add:
  Interest expense, net                        3,932    6,217   2,389
  Income tax expense (recovery)                 (287)     676     148
  Depreciation                                 6,247    7,111   4,129
  Amortization of intangible assets            2,455    2,826   1,403
                                             -------------------------
EBITDA                                        $3,902   $7,680 $10,549
Add:
  Integration costs                            1,331    2,611     800
  Professional fees incurred in connection
   with Foreign Corrupt Practices Act
   investigation                                 664      954       -

Adjusted EBITDA                               $5,897  $11,245 $11,349


(a)Reconciliation of Gross Margin to GAAP   Q1-2005  Q4-2004  Q1-2004
Measure for the periods indicated
----------------------------------------------------------------------

(Loss) income before income taxes           $(8,732) $(8,474)  $2,628
Add:
  Interest expense, net and other income      3,956    6,112    2,381
  Foreign exchange loss (gain)                1,926   (2,714)     485
  Depreciation                                6,247    7,111    4,129
  Amortization of intangible assets           2,455    2,826    1,403
  Bad debt expense (recovery)                  (847)     645   (1,087)
  SG&A, stock based compensation and
   restructuring charges                     37,943   39,040   26,515
                                            --------------------------
Gross Margin                                $42,948  $44,546  $36,454
                                            --------------------------
Gross Margin as a Percentage of Revenue        16.8%    15.9%    17.0%



Revenue Information

The following table presents relevant revenue-related information
for the periods indicated for Teleglobe International Holdings Ltd
(Unaudited)

                                             Three    Three    Three
                                             Months   Months   Months
                                             Ended    Ended    Ended
                                             March   December  March
                                               31,      31,      31,
                                              2005     2004     2004
                                           ---------------------------
Revenues per line of business (in millions
 of U.S. dollars)
 Voice - transport                              $206     $228    $166
 Data - transport                                 26       27      28
 Value - added services                           23       25      21
                                           ---------------------------
 Total                                          $255     $280    $215

Total revenues excluding Bell Canada (1)
 revenues                                       $228     $246    $192
Percentage of revenues from Bell Canada (1)     10.6%    12.3%   10.5%


Minutes of traffic (in millions)
 Voice - transport                             3,432    3,536   2,092
 Other                                            63       62      50
                                           ---------------------------
 Total                                         3,495    3,598   2,142

Average voice revenue per minute              $0.060   $0.065  $0.079

Geographic distribution of revenues
  Asia                                             8%       8%      9%
  Canada                                          15%      17%     13%
  Europe                                          32%      31%     30%
  USA                                             31%      30%     33%
  Latin America                                    4%       4%      5%
  Other                                           10%      10%     10%
                                           ---------------------------
Total                                            100%     100%    100%


    (1) Bell Canada is Canada's largest telecommunications company.
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