UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, ~~2004~~2005

¨	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to .

Commission File Number: 000-50780

TELEGLOBE INTERNATIONAL HOLDINGS LTD

(Exact name of registrant as specified in its charter)

Bermuda		98-0417192
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
(State or other jurisdiction ofincorporation or organization)		(I.R.S. EmployerIdentification No.)

P.O. Box HM 1154, 10 Queen Street

Hamilton HM EX, Bermuda

(Address of principal executive office, including zip code)

(441) 296-4856

(Registrant’s telephone number, including area code)

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ¨x No x¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act.) Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

At ~~October~~August 2, ~~2004~~2005, there were 3839,~~985~~181,~~663~~220 shares of Common Stock, par value $0.01 per share, outstanding.

TELEGLOBE INTERNATIONAL HOLDINGS LTD

INDEX

		Page
Part I. Financial Information
Item 1.	Financial Statements
	Consolidated Balance Sheet (Successor) as of June 30, 2004 and December 31, 2003 (Unaudited)	1
	Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004 (Unaudited)	3
	Consolidated Statement of Operations (Successor) / Combined Statement of Operations (Predecessor) for the Three Months Ended June 30, 2004, One Month Ended June 30, 2003 and Two Months Ended May 30, 2003 (Unaudited)	2
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2005 and 2004 (Unaudited)	4
	Consolidated Statement of Operations (Successor) / Combined Statement of Operations (Predecessor) for the Six Months Ended June 30, 2004, One Month Ended June 30, 2003 and Five Months Ended May 30, 2003 (Unaudited)	3
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004 (Unaudited)	6
	Consolidated Statement of Cash Flows (Successor) / Combined Statement of Cash Flows (Predecessor) for the Six Months Ended June 30, 2004, One Month Ended June 30, 2003 and Five Months Ended May 30, 2003 (Unaudited)	4
	Consolidated Statement of Stockholders’ Equity for the Six Months Ended June 30, 2005 (Unaudited)	7
	Consolidated Statement of Stockholders’ Equity (Successor) (Unaudited)	5
	Notes to Consolidated Financial Statements (Unaudited)	8
	Notes to Consolidated Financial Statements (Successor) and Combined Financial Statements (Predecessor) (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	27
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	29
Item 4.	Controls and Procedures	28
Item 4.	Controls and Procedures	30
Part II. Other Information
Item 1.	Legal Proceedings	3229
Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	34
Item 4.	Submission of Matters to a Vote of Security Holders	29
Item 3.	Defaults Upon Senior Securities	34
Item 6.	Exhibits	29
Item 4.	Submission of Matters to a Vote of Security Holders	34
Signatures		30
Item 5.	Other Information	34
Item 6.	Exhibits and Reports on Form 8-K	35
Signatures		38

PART I - —Financial Information

Item 1.

Financial Statements

TELEGLOBE INTERNATIONAL HOLDINGS LTD

Consolidated Balance ~~Sheet~~Sheets ~~(Successor)~~

(amounts in thousands of United States Dollars, except share and per-share data)

(Unaudited)

	Successor
	June 30,2005			December 31,2004
	June 30,2004			December 31, 2003
ASSETS
Cash and cash equivalents	$	3018,~~979~~497		$	3527,~~279~~512
Marketable securities		~~10,635~~851			—1,824
Accounts receivable, (net of allowance for doubtful accounts of $34,991 at June 30, 2004 and $34,295 at December 31, 2003)		186,579			163,804
Accounts receivable, (net of allowance for doubtful accounts of $20,312 at June 30, 2005 and $25,068 at December 31, 2004)		213,869			210,588
Prepaid assets		89,~~697~~703			43,~~689~~774
Other current assets		65,~~751~~230			36,~~702~~415
Restricted cash		42,~~642~~099			—4,724
Total current assets		~~248~~250,~~283~~249			~~207~~254,~~474~~837
Property and equipment, (net of accumulated depreciation of $16,984 at June 30, 2004 and $6,743 atDecember 31, 2003)		140,799			121,839
Property and equipment, (net of accumulated depreciation of $34,756 at June 30, 2005 and $23,361 at December 31, 2004)		131,439			134,083
Prepaid pension asset		1918,~~328~~240			1918,~~838~~802
Other long-term assets		2,~~272~~227			42,~~254~~836
Long-term restricted cash		2,127			—
Investment		1,628			—
Intangible assets, (net of accumulated amortization of $3,430 at June 30, 2004 and $1,072 at December 31, 2003)		34,791			10,352
Intangible assets, (net of accumulated amortization of $15,957 at June 30, 2005 and $10,853 at December 31, 2004)		47,302			46,354
Goodwill		9796,~~947~~877			—96,877
Total assets	$	~~545,~~547,962		$	~~363~~553,~~757~~789
Accounts payable and accrued liabilities	$	236,613		$	234,340
LIABILITIES
Employee related payables		10,569			10,425
Accounts payable and accrued liabilities	$	267,675		$	259,915
Current portion of capital lease		768			—
Employee related payables		11,260			15,193
Current portion of deferred revenue		3,329			3,214
Accrued liabilities—affiliate company		77			537
Total current liabilities		251,279			247,979
Current portion of capital lease obligations		3,018			2,182
Deferred revenue		9,305			10,298
Current portion of deferred revenue		3,527			3,883
Deferred income tax liability		371			766
Current portion of senior notes payable—affiliate company		25,000			—
Long-term portion of capital lease		384			—
Total current liabilities		310,557			281,710
Other long-term liabilities		2,726			2,456
Deferred revenue		8,431			8,787
Senior notes payable		100,000			—
Deferred income tax liability		70			940
Total non-current liabilities		112,786			13,520
Long-term portion of capital lease obligations		1,590			1,112
Other long-term liabilities		2,920			3,090
Senior notes payable—affiliate company		75,000			100,000
Total non-current liabilities		88,011			113,929
Commitments and contingencies
Class A redeemable preferred stock (95,000 shares authorized, issued and outstanding, par value $0.01, liquidation preference of $1,000 per share plus any accrued or unpaid dividends)-parent company		—			95,000
STOCKHOLDERS’ EQUITY
Common stock (38,985,663 shares at June 30, 2004 and 28,106,757 shares at December 31, 2003 issued and outstanding and 400,000,000 shares authorized at June 30, 2004 and 28,106,757 shares authorized at December 31, 2003, par value $0.01)		390			281
Common stock (39,108,492 shares at June 30, 2005 and 39,084,793 shares at December 31, 2004 issued and outstanding and 400,000,000 shares authorized, par value $0.01)		391			391
Additional paid-in capital		~~191~~188,~~653~~550			12188,~~194~~495
Deferred compensation expense		(7227	)		—(44	)
Accumulated other comprehensive loss		(1822	)		—(40	)
Accumulated deficit		(1039,~~471~~498	)		(530,~~217~~652	)
Total stockholders’ equity		~~181~~149,~~482~~394			7158,~~258~~150
Total liabilities and stockholders’ equity	$	~~545,~~547,962		$	~~363~~553,~~757~~789

The accompanying notes are an integral part of these consolidated financial statements.

TELEGLOBE INTERNATIONAL HOLDINGS LTD

Consolidated ~~Statement~~Statements of Operations ~~(Successor) /~~

Combined Statement of Operations (Predecessor)

(amounts in thousands of United States Dollars, except share and per-share data)

(Unaudited)

	Successor			Successor			Predecessor
	Three Months EndedJune 30, 2005			Three Months EndedJune 30, 2004
	Three MonthsEnded June 30,2004			One MonthEnded June 30,2003			Two MonthsEnded May 30,2003
Telecommunication revenues	$	239,173		$	230,651
Operating revenues
Operating expenses
Telecommunication	$	~~230~~169,~~651~~596		$	69169,~~260~~370		$	~~101,098~~
Telecommunication revenues from related parties		—			—			30,402
Network, exclusive of amortization and depreciation shown below		22,729			24,068
Total operating revenues	$	230,651		$	69,260		$	131,500
Selling, general and administrative, exclusive of stock-based compensation expense, bad debt expense, depreciation and amortization shown below		37,439			32,189
Operating expenses
Stock-based compensation expense		6			5
Telecommunication		169,370			48,340			86,660
Bad debt expense		221			497
Telecommunication-paid to related party		—			—			2,492
Depreciation		5,762			5,108
Network, exclusive of amortization and depreciation shown below		24,068			9,641			20,545
Amortization of intangible assets		2,648			1,960
Selling, general and administrative, exclusive of bad debt expense, stock based compensation expense, depreciation and amortization shown below		32,189			7,765			13,903
Foreign exchange loss (gain)		1,594			(179	)
Stock based compensation expense		5			—			—
Total operating expenses		239,995			233,018
Bad debt expense		497			172			704
Interest expense		(82	)		2,933
Depreciation		5,729			1,493			6,005
Interest expense—related party		2,393			1,021
Amortization of intangible assets		1,339			156			—
Interest income		(210	)		(133	)
Foreign exchange gain		(179	)		(916	)		(6,581	)
Gain on sale of property and other income		(2,223	)		(67	)
Total operating expenses		233,018			66,651			123,728
Total expenses		239,873			236,772
Interest expense		3,954			212			187
Loss before income taxes		(700	)		(6,121	)
Interest income, other income and other expense		(200	)		87			748
Income tax recovery		(299	)		(2,345	)
Total expenses		236,772			66,950			124,663
Net loss	$	(401	)	$	(3,776	)
(Loss) income before reorganization items and income taxes		(6,121	)		2,310			6,837
Preferred stock dividends to parent company		—			(1,583	)
Reorganization items, net		—			—			9,931
Net loss attributable to common stockholders	$	(401	)	$	(5,359	)
(Loss) income before income taxes		(6,121	)		2,310			(3,094	)
Basic and diluted loss per share	$	(0.01	)	$	(0.17	)
Income tax (recovery) expense		(2,345	)		16			—
Number of common shares used for calculation		39,106,709			31,732,709
Net (loss) income	$	(3,776	)	$	2,294		$	(3,094	)
Preferred stock dividends		(1,583	)		(792	)
Net (loss) income attributable to common stockholders	$	(5,359	)	$	1,502
Basic (loss) income per share	$	(0.17	)	$	0.05
Weighted average common shares used in computation of basic (loss) income per share		31,732,709			28,106,757

The accompanying notes are an integral part of these consolidated financial statements.

TELEGLOBE INTERNATIONAL HOLDINGS LTD

Consolidated ~~Statement~~Statements of Operations —(~~Successor~~Continued) /

Combined Statement of Operations (Predecessor)

(amounts in thousands of United States Dollars, except share and per-share data)

(Unaudited)

	Successor			Successor			Predecessor
	Six Months EndedJune 30, 2005			Six Months EndedJune 30, 2004
	Six MonthsEnded June 30,2004			One MonthEnded June 30,2003			Five MonthsEnded May 30,2003
Telecommunication revenues	$	494,480		$	445,195
Operating revenues
Operating expenses
Telecommunication	$	~~445~~359,~~195~~176		$	69323,~~260~~726		$	~~256,263~~
Telecommunication revenues from related parties		—			—			105,105
Network, exclusive of amortization and depreciation shown below		45,508			47,802
Total operating revenues	$	445,195		$	69,260		$	361,368
Selling, general and administrative, exclusive of stock-based compensation expense, bad debt recovery, restructuring charges, depreciation and amortization shown below		75,371			57,811
Operating expenses
Stock-based compensation expense		17			5
Telecommunication		323,726			48,340			245,207
Bad debt recovery		(626	)		(590	)
Telecommunication-paid to related party		—			—			6,238
Depreciation		12,009			9,237
Network, exclusive of amortization and depreciation shown below		47,802			9,641			55,096
Amortization of intangible assets		5,103			3,363
Selling, general and administrative, exclusive of bad debt expense, stock based compensation expense, depreciation, amortization and restructuring charges shown below		57,811			7,765			40,948
Restructuring charges		—			893
Stock based compensation expense		5			—			—
Foreign exchange loss		3,520			306
Bad debt (recovery) expense		(590	)		172			3,656
Total operating expenses		500,078			442,553
Depreciation		10,241			1,493			15,037
Interest expense		1,668			5,398
Amortization of intangible assets		2,359			156			—
Interest expense—related party		4,778			1,021
Restructuring charges		893			—			—
Interest income		(413	)		(209	)
Foreign exchange loss (gain)		306			(916	)		(9,478	)
Gain on sale of property and other income		(2,199	)		(75	)
Total operating expenses		442,553			66,651			356,704
Total expenses		503,912			448,688
Interest expense		6,419			212			501
Loss before income taxes		(9,432	)		(3,493	)
Interest income, other income and other expense		(284	)		87			—
Income tax recovery		(586	)		(2,197	)
Total expenses		448,688			66,950			357,205
Net loss	$	(8,846	)	$	(1,296	)
(Loss) income before reorganization items and income taxes		(3,493	)		2,310			4,163
Preferred stock dividends to parent company		—			(3,958	)
Reorganization items, net		—			—			34,155
Net loss attributable to common stockholders	$	(8,846	)	$	(5,254	)
Income (loss) before income taxes		(3,493	)		2,310			(29,992	)
Basic and diluted loss per share	$	(0.23	)	$	(0.18	)
Income tax (recovery) expense		(2,197	)		16			—
Number of common shares used for calculation		39,100,830			29,919,733
Net (loss) income	$	(1,296	)	$	2,294		$	(29,992	)
Preferred stock dividends		(3,958	)		(792	)
Net (loss) income attributable to common stockholders	$	(5,254	)	$	1,502
Basic (loss) income per share	$	(0.18	)	$	0.05
Weighted average common shares used in computation of basic (loss) income per share		29,919,733			28,106,757

The accompanying notes are an integral part of these consolidated financial statements.

TELEGLOBE INTERNATIONAL HOLDINGS LTD

Consolidated ~~Statement~~Statements of Cash Flows ~~(Successor) /~~

Combined Statement of Cash Flows (Predecessor)

(amounts in thousands of United States Dollars)

(Unaudited)

	Successor			Successor			Predecessor
	Six Months EndedJune 30, 2005			Six Months EndedJune 30, 2004
	Six MonthsEnded June 30,2004			One Monthended June 30,2003			Five MonthsEnded May 30,2003
Cash flows from operating activities
Cash flows from operating activities
Net loss	$	(8,846	)	$	(1,296	)
Net (loss) income	$	(1,296	)	$	2,294		$	(29,992	)
Adjustments to reconcile net loss to net cash flows from operating activities:
Adjustments to reconcile net (loss) income to net cash flows from operating activities:
Depreciation and amortization		17,112			12,600
Depreciation and amortization		12,600			1,649			15,037
Net gain on sale of property and equipment		(1,813	)		—
Bad debt (recovery) expense		(590	)		172			3,656
Bad debt recovery		(626	)		(590	)
Stock based compensation expense		5			—			—
Stock-based compensation expense		17			5
Deferred income taxes		(~~395~~870	)		—(395	)		—
Reorganization items, net		—			—			34,155
Other items		670			(527	)
Other items		2,319			(571	)		(15,778	)
Changes in operating assets and liabilities:
Changes in operating assets and liabilities net of effects of acquisitions and disposals:
Accounts receivable		(2,655	)		16,627
Accounts receivable		16,627			2,772			(186,257	)
Prepaid assets		(5,929	)		(1,280	)
Prepaid assets		(1,280	)		(1,241	)		(297	)
Other current assets		1,185			(3,713	)
Other current assets		(3,713	)		(651	)		13,254
Accounts payable and accrued liabilities		4,912			(35,764	)
Accounts payable and accrued liabilities		(35,764	)		(1,636	)		265,061
Deferred revenue		(949	)		(878	)
Deferred revenue		(878	)		774			(5,082	)
Other liabilities		(170	)		270
Other liabilities		270			(32	)		(108	)
Net cash flows from operating activities		2,038			(14,941	)
Net cash flows from operating activities before reorganization items		(12,095	)		3,530			93,649
Cash flows from investing activities
Reorganization items
Purchase of property and equipment		(9,898	)		(4,930	)
Professional fees related to reorganization		—			—			(8,707	)
Proceeds on disposal of property and equipment		3,292			—
Interest income related to reorganization		—			—			530
Addition of intangible assets		(4,707	)		(1,004	)
Foreign exchange loss on pre-petition debt		—			—			(34,000	)
Sale of marketable securities		991			16,695
Net cash flows from operating activities		(12,095	)		3,530			51,472
Increase in long-term investment		(1,628	)		—
Cash flows from investing activities
Restricted cash		2,625			(451	)
Purchase of property and equipment		(8,780	)		(1,364	)		(4,016	)
Cash acquired from merger with ITXC, net of acquisition costs paid		—			4,854
Sale of marketable securities		16,695			—			—
Net cash flows from investing activities		(9,325	)		15,164
Restricted cash		(451	)		—			—
Cash flows from financing activities
Acquisition, net of cash acquired		—			(74,284	)		—
Retirement of preferred stock-parent company		—			(95,000	)
Cash acquired from merger with ITXC, net of acquisition costs paid		4,854			—			—
Dividend payment to parent company		—			(9,448	)
Proceeds on sale of liquidated subsidiaries, net		—			—			3,500
Issuance of senior notes to affiliate company		—			100,000
Net cash flows from investing activities		12,318			(75,648	)		(516	)
Capital lease repayment		(1,783	)		(75	)
Cash flows from financing activities
Issuance of common stock		55			—
Retirement of preferred stock-parent company		(95,000	)		—			—
Net cash flows from financing activities		(1,728	)		(4,523	)
Dividend payment to parent company		(9,448	)		—			—
Net decrease in cash and cash equivalents		(9,015	)		(4,300	)
Issuance of senior notes to affiliate company		100,000			—			—
Cash and cash equivalents at beginning of period		27,512			35,279
Capital lease repayment		(75	)		—			—
Cash and cash equivalents at end of period	$	18,497		$	30,979
Issuance of common stock		—			5,000			—
Issue of preferred stock to parent company		—			95,000			—
Proceeds of note payable-parent company		—			25,000			—
Repayment of note payable to parent company		—			(25,000	)		—
Net cash transfers in divisional equity/(deficit) of divisions and subsidiaries of Teleglobe Inc. not included in the Predecessor		—			—			1,674
Net cash flows from financing activities		(4,523	)		100,000			1,674
Net (decrease) increase in cash and cash equivalents		(4,300	)		27,882			52,630
Cash and cash equivalents at beginning of period		35,279			—			26,796
Cash and cash equivalents at end of period	$	30,979		$	27,882		$	79,426

The accompanying notes are an integral part of these consolidated financial statements.

TELEGLOBE INTERNATIONAL HOLDINGS LTD

Consolidated Statement of Stockholders’ Equity ~~(Successor)~~

(amounts in thousands of United States Dollars)

(Unaudited)

Six Months ended June 30, 2004	Common Stock		Additional Paid-in Capital		Accumulated Deficit			Deferred Compensation			AccumulatedOtherComprehensiveIncome (loss)			Total Stockholders’ Equity
Six Months ended June 30, 2005	CommonStock		AdditionalPaid-inCapital		AccumulatedDeficit			DeferredCompensationExpense			AccumulatedOtherComprehensiveloss			TotalStockholders’Equity
December 31, 2003	$	281	$	12,194	$	(5,217	)	$	—		$	—		$	7,258
December 31, 2004	$	391	$	188,495	$	(30,652	)	$	(44	)	$	(40	)	$	158,150
Issuance of common stock		~~109~~—		~~157,218~~55		—			—			—			~~157,327~~55
Issuance of stock options, net of amortization of deferred compensation expense of $5		—		19,453		—			(72	)		—			19,381
Amortization of deferred compensation expense		—		—		—			17			—			17
Issuance of warrants		—		2,788		—			—			—			2,788
Net unrealized holding gain on marketable securities		—		—		—			—			18			18
Unrealized holding (losses)		—		—		—			—			(18	)		(18	)
Net loss		—		—		(8,846	)		—			—			(8,846	)
Net loss		—		—		(1,296	)		—			—			(1,296	)
June 30, 2005	$	391	$	188,550	$	(39,498	)	$	(27	)	$	(22	)	$	149,394
Preferred stock dividends		—		—		(3,958	)		—			—			(3,958	)
June 30, 2004	$	390	$	191,653	$	(10,471	)	$	(72	)	$	(18	)	$	181,482

The accompanying notes are an integral part of these consolidated financial statements.

TELEGLOBE INTERNATIONAL HOLDINGS LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)

(Unaudited)

1. Basis of Presentation

The consolidated financial statements of the Successor include the accounts of Teleglobe International Holdings Ltd and its subsidiaries (the “Company” or “TIH”). The Company’s ultimate parent is Cerberus Capital Management, L.P. (“Cerberus”). All significant intercompany balances and transactions have been eliminated in consolidation. The Predecessor consists of the Telecommunications Group of Teleglobe Inc. and its subsidiaries (“Old Teleglobe”) that consists solely of the voice, data, internet and wireless roaming service businesses acquired by the Successor but also includes the portion of such businesses not acquired that were carried out by Old Teleglobe. The Successor acquired certain assets and assumed certain liabilities of Old Teleglobe pursuant to a Purchase Agreement entered into on September 18, 2002 between TLGB Acquisition LLC (“TLGB”), the parent company and an affiliate of Cerberus, and Old Teleglobe as more fully described in the Notes to Consolidated Financial Statements (Successor) and Combined Financial Statements (Predecessor) included in the Company’s Registration Statement on Form S-4/A (Amendment number 5) filed with the Securities and Exchange Commission (the “Commission”) on April 30, 2004 (the “Registration Statement”).

The financial statements of the Successor are not comparable to the Predecessor financial statements due to the new basis of accounting adopted on the acquisition of the businesses, certain assets and liabilities of Old Teleglobe not being acquired by the Successor and restructuring activities that occurred prior to the acquisition. For a more detailed description of the acquisition refer to the Notes to Consolidated Financial Statements (Successor) and Combined Financial Statements (Predecessor) included in the Registration Statement.

The June 30, 2004 and 2003 financial statements have been prepared by management of TIH and are unaudited. In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments, except for the reorganization items, purchase price allocations and prior period adjustments as discussed below) necessary to present fairly the consolidated and combined financial position, results of operations and cash flows of the Successor for the three and six months ended June 30, 2004 and for the month ended June 30, 2003 and the Predecessor for the two and five months ended May 30, 2003, have been made. Certain information and footnote disclosures required for annual financial statements under accounting principles generally accepted in the United States have been omitted from the consolidated and combined financial statements and notes thereto presented herein pursuant to the rules and regulations of the Commission. The consolidated and combined financial statements and notes thereto presented herein should be read in conjunction with the Consolidated Financial Statements of the Successor and the Combined Financial Statements of the Predecessor and notes thereto included in the Registration Statement, except for the policies described herewith. The results of operations of the Company for the three and six months ended June 30, 2004 are not necessarily indicative of the results to be expected for any other interim period or the entire fiscal year.

Adjustments that related to prior period quarters have been recorded during the second quarter resulting in a net charge of approximately $1.0 million to net loss before income taxes and a net credit of approximately $ 0.4 million to net loss. In addition, the purchase price allocation on the acquisition of the Teleglobe business as described in note 2 has been revised for foreign exchange adjustments resulting in a decrease in accounts payable and reduction in long lived assets of $3.8 million. These adjustments affect revenues, network expenses, foreign exchange and deferred income taxes. These adjustments were not considered material with respect to net income for 2003, estimated loss for full fiscal year 2004, to the trend of earnings or the balance sheet at the respective dates.

The accounting policies used in preparation of these financial statements are consistent with those reported in the consolidated financial statements of the Successor in its Registration Statement, except for the following which have been adopted further to the merger with ITXC Corp. (“ITXC”):

TELEGLOBE INTERNATIONAL HOLDINGS LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)—(Continued)

(Unaudited)

Marketable Securities

Marketable securities consist of fixed income investments which can be readily purchased or sold using established markets. In accordance with SFAS 115, “Accounting for Certain Investments in Debt and Equity Securities,” Management determines the appropriate classification of debt securities at the time of purchase and reevaluates such designations as of each balance sheet date. Such investments are classified as available-for-sale. Fair value is based on quoted market prices. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion, as well as interest, are included in interest income. Realized gains and losses and declines in value judged to be other-than temporary are included in investment income. The cost of securities sold is based on the specific identification method.

Comprehensive Income

The components of accumulated other comprehensive income are comprised of unrealized gains (losses) on available-for-sale securities.

Goodwill

The Company accounts for goodwill in accordance with Statement of Financial Accounting Standards No. 142 “Goodwill and Other Intangible Assets”, whereby goodwill is not amortized, but instead tested for impairment annually or more frequently if events or circumstances indicate that the asset might be impaired.

Intangible Assets

During the quarter ended June 30, 2004, the Company acquired intangible assets including technology and its related software, tradenames, patents and origination/termination contracts and related relationships. The technology, tradenames and patents are being amortized over their useful life of 7 years. The software related to the technology is being amortized over its useful life of four years and the origination/termination contracts and related relationships are being amortized over 5 years.

Segments

The operations of the Company are managed on an integrated basis with no separate operating results for its services or geographic locations. Accordingly, information on segments is not provided.

2. Acquisitions

(a) On May 31, 2004, the Company completed its merger with ITXC. ITXC is a provider of Voice over Internet Protocol (VoIP) wholesale services. The merger is intended to bring the Company greater size and breadth of product offerings and opportunities for synergies in the combination of the businesses. Upon consummation of the merger, all the outstanding shares of ITXC’s common shares were converted into 10,877,156 common shares of the Company at a fair value of $14.46 per share for a total fair value of $157.3 million, determined as of the date of announcement of the acquisition, November 4, 2003. All outstanding options and warrants of ITXC were converted into 1,595,323 stock options and 219,942 warrants of the Company for a total fair value of $22.2 million. The warrants are exercisable anytime prior to April 30, 2008 at an exercise price of $3.41 per share. The range of exercise price for the options is $0.02 to $430 per share. At May 31, 2004, 1,152,067 options had vested and 443,256 options were unvested. The intrinsic value applicable to the unvested stock options, valued at $77,000, will be expensed over the future vesting period of the stock options. The fair value of options and warrants was estimated using the Black Scholes valuation methodology. See Note 8 for more information regarding the weighted average assumptions used in the valuation.

TELEGLOBE INTERNATIONAL HOLDINGS LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ~~(SUCCESSOR) /~~

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)—(Continued)

(Unaudited)

The merger has been accounted for using the purchase method and the purchase price was allocated to the acquired assets and liabilities based on the estimated fair values determined using management’s best estimates and independent valuations as at the acquisition date1. ~~The~~Basis ~~allocation~~ of ~~the~~Presentation purchase price is preliminary pending the finalization of the valuation of receivables, certain liabilities and income taxes which will be completed by year-end. The final allocation of the purchase price may result in a different allocation and goodwill amount. The excess of the purchase consideration over the estimated fair value of net assets acquired, in the amount of $97.9 million has been accounted for as goodwill.

The ~~preliminary~~consolidated ~~allocation~~financial ofstatements include the ~~purchase~~accounts ~~consideration~~of toTeleglobe ~~the~~International ~~estimated~~Holdings ~~fair~~Ltd ~~value~~and ofits subsidiaries (the ~~net~~“Company”, “Teleglobe” ~~assets~~or ~~acquired~~“TIH”). The Company’s controlling shareholder is asCerberus ~~follows:~~Capital Management, L.P (“Cerberus”). All significant intercompany balances and transactions have been eliminated in consolidation.

	ITXC(000’s)
Estimated fair value of net assets acquired:
Cash and cash equivalents	$	7,915
Marketable securities (See Note 4)		27,348
Restricted cash (See Note 3)		6,317
Accounts receivable		41,221
Prepaids, deposits and other assets		3,600
Property and equipment		24,550
Intangible assets (See Note 5)		27,400
Goodwill		97,947
Accounts payable and accrued liabilities		(51,244	)
Capital lease obligations		(1,227	)
Deferred compensation expense		77
Net identifiable assets acquired	$	183,904
Purchase consideration:
Fair value of common shares issued	$	157,327
Fair value of warrants issued (See Note 9)		2,788
Fair value of stock options issued (See Note 8)		19,453
Acquisition costs		4,336
Total purchase consideration	$	183,904

The financial statements for the three and six months ended June 30, 2005 include the assets, liabilities and results of ITXC Corp. (“ITXC”). The merger with ITXC was consummated on May 31, 2004 and thus the financial statements for the three and six months ended June 30, 2004 include the assets, liabilities and results of ITXC only from June 1, 2004.

AsThe June at30, ~~May~~2005 ~~31,~~and 2004~~, ITXC~~ ~~has~~financial astatements ~~federal~~have been prepared by management of TIH and ~~state~~are ~~net~~unaudited. ~~operating~~In ~~loss~~the opinion of the Company’s management, all adjustments (~~NOL~~consisting of normal recurring adjustments except for purchase price allocations) ~~carryforward~~necessary ofto ~~approximately~~present ~~$210~~fairly ~~million.~~the ~~The~~consolidated ~~federal~~financial ~~NOL~~position, ~~carryforwards~~results ~~expire~~of ~~from~~operations ~~2012~~and tocash ~~2023.~~flows ~~The~~for ~~state~~the ~~NOL~~three ~~carryforwards~~and ~~expire~~six ~~from~~months ended June 30, 2005 and 2004 tohave ~~2010~~been made. ~~The~~Certain ~~Company~~information ~~has~~and ~~not~~footnote ~~performed~~disclosures arequired ~~detailed~~for ~~analysis~~annual tofinancial ~~determine~~statements ~~whether~~under anaccounting ~~ownership~~principles ~~change~~generally ~~under~~accepted ~~Section~~in ~~382~~the ofUnited ~~the~~States ~~Internal~~have ~~Revenue~~been ~~Code~~omitted ~~occurred~~from inthe ~~respect~~unaudited tointerim 1)Consolidated ~~ITXC’s~~Financial ~~initial~~Statements ~~public~~and ~~offering~~notes onthereto ~~October~~presented 1,herein ~~1999;~~pursuant 2)to ~~ITXC’s~~the ~~acquisition~~rules and regulations of ~~eFusion,~~the ~~Inc~~Securities and Exchange Commission. onThe ~~October~~unaudited ~~12,~~interim ~~2000~~Consolidated Financial Statements and ~~3) ITXC’s~~notes ~~merger~~thereto ~~with~~presented ~~Teleglobe~~herein onshould ~~May~~be ~~31,~~read ~~2004,~~in ~~but~~conjunction ~~believes~~with ~~that~~the itConsolidated isFinancial ~~likely~~Statements ~~that~~of ~~such~~the aSuccessor ~~change~~and ~~occurred.~~the ~~The~~Combined Financial ~~effect~~Statements of anthe ~~ownership~~Predecessor ~~change~~and ~~would~~notes bethereto ~~the~~included ~~imposition~~in ofthe anCompany’s annual ~~limitation~~Form 10-K onfor the ~~use~~year ofended ~~NOL~~December ~~carryforwards~~31, ~~attributable~~2004 toand ~~periods before~~filed ~~the~~on ~~change~~March 17, 2005. The results of operations of the Company ~~has~~for the three and six months ended June 30, 2005 are not ~~yet~~necessarily ~~determined~~indicative of the ~~amount~~results ofto be expected for any other interim period or the ~~potential~~entire ~~limitation~~fiscal year.

~~ITXC’s~~Certain ~~net~~comparative ~~deferred~~figures ~~tax~~have ~~assets~~been ~~related~~reclassified toin ~~temporary~~order ~~differences~~to ~~and~~conform ~~loss~~to ~~carry~~the ~~forwards~~presentation asadopted atin ~~May~~the ~~31,~~current ~~2004~~periods. ~~total~~Among ~~approximately $98 million and have been fully reduced by a valuation allowance as~~ the ~~Company believes~~reclassified ~~that it~~ items, is ~~more~~the ~~likely~~reclassification ~~than~~of ~~not~~software ~~that~~from ~~the~~property ~~related~~and ~~tax~~equipment ~~benefits~~to ~~will~~intangible ~~not be materialized~~assets.

IfFor the three and ~~when~~six months ended June 30, 2005, the ~~tax~~Company’s ~~benefits~~operating ~~for~~results ~~those~~include ~~items~~$3.0 ~~are~~million ~~recognized~~of inrevenue ~~the~~due ~~financial~~to ~~statements~~major ~~after~~favorable ~~the~~settlement ~~acquisition~~agreements ~~date,~~with ~~the~~certain ~~amounts~~carriers ~~recognized~~and ~~shall~~$0.9 bemillion of similar ~~applied~~favorable ~~(a)~~agreements ~~first~~in tonetwork ~~reduce~~expense. toAdditionally, ~~zero~~for ~~any~~the ~~goodwill~~three ~~related~~and tosix ~~the~~months ~~acquisition,~~ended ~~(b)~~June ~~second~~30, to2005, ~~reduce~~the toCompany’s ~~zero~~telecommunication ~~other~~expense ~~noncurrent~~was ~~intangible~~reduced ~~assets~~by ~~related~~major tofavorable ~~the~~settlements ~~acquisition,~~with ~~and~~certain ~~(c)~~carriers ~~third~~for toapproximately ~~reduce~~$2.7 ~~income~~million ~~tax~~and $5.7 ~~expense~~million respectively.

The accounting policies used in preparation of these financial statements are consistent with those reported in the Consolidated Financial Statements of the Successor in its annual Form 10-K.

2. Acquisition

On May 31, 2004, the merger with ITXC was completed. The merger has been accounted for using the purchase method and the purchase price was allocated to the acquired assets and liabilities based on the estimated fair values determined using management’s best estimates and independent valuations as at the acquisition date. The allocation of the purchase price was finalized during the first quarter of 2005 without change to the amounts reported in the year-end Consolidated Financial Statements. The excess of the purchase consideration over the estimated fair value of net assets acquired, in the amount of $96.9 million has been accounted for as goodwill.

TELEGLOBE INTERNATIONAL HOLDINGS LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(~~SUCCESSOR~~Continued) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)—(Continued)

(Unaudited)

The ~~goodwill~~final ~~recognized~~allocation isof ~~not~~the ~~tax~~purchase ~~deductible~~consideration ~~for~~to ~~corporate~~the ~~income~~estimated ~~tax~~fair ~~purposes.~~value of the net assets acquired is as follows:

The results of operations of ITXC are included in the consolidated statement of operations of TIH as of June 1, 2004.


	ITXC (000’s)
Estimated fair value of net assets acquired:
Cash and cash equivalents	$	7,915
Marketable securities		27,348
Restricted cash		6,317
Accounts receivable		41,642
Prepaids, deposits and other assets		3,600
Property and equipment		24,550
Intangible assets		27,400
Goodwill		96,877
Accounts payable and accrued liabilities		(53,763	)
Capital lease obligations		(1,227	)
Deferred compensation expense		77

Net identifiable assets acquired	$	180,736

Purchase consideration:
Fair value of common shares issued	$	157,327
Fair value of warrants issued		2,788
Fair value of stock options issued		16,285
Acquisition costs		4,336

Total purchase consideration	$	180,736

~~(b)~~The Onresults ~~May 30,~~of ~~2003,~~operations ~~the~~of ~~Company~~ITXC ~~acquired~~are ~~100%~~included ofin the ~~shares~~consolidated ofstatement ~~companies formed by Old Teleglobe prior to closing to hold certain core assets and liabilities~~ of ~~the~~operations ~~Predecessor for a total cash consideration~~ of ~~$125~~TIH ~~million~~from ~~plus~~June 1, ~~acquisition costs of $9~~2004.6 ~~million (the “Acquisition”).~~

The Company accounted for the Acquisition as a purchase business combination and accordingly, the cost was allocated to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date3. ~~The~~Restricted ~~excess~~Cash of the fair value of the net assets acquired over the purchase price has been allocated as a pro-rata reduction of the property and equipment, customer relationships and certain other non-current assets other than prepaid pension asset and deferred income taxes.

~~The~~In conjunction ~~allocation~~with ofits ~~the~~letters ~~purchase~~of ~~price~~credit ~~was~~for ~~finalized~~its ~~during~~leased premises, the ~~second~~Company ~~quarter of~~has ~~2004~~$2.1 ~~The~~million ~~previous~~in ~~allocation~~restricted ~~was~~cash ~~revised~~as ~~based on the availability~~ of ~~more~~June ~~current information concerning certain assumed liabilities. As a result~~30, ~~current~~2005 ~~liabilities~~that ~~decreased~~represents bythe ~~$10.8~~collateral ~~million,~~supporting ~~other~~the ~~current~~letters ~~assets~~of ~~decreased by $3~~credit.7 ~~million, property~~The ~~and~~majority ~~equipment~~of ~~decreased~~the by $62.31 million, ~~intangible~~relates ~~assets~~to ~~decreased~~a byletter of ~~$0.6~~credit ~~million~~for ~~and~~the ~~other~~leased ~~assets~~premises ~~decreased~~in byPrinceton, ~~$0.2~~New ~~million~~Jersey. The ~~adjustments~~letters toof ~~depreciation~~credit ~~and~~related ~~amortization~~to ~~expenses~~the ~~are~~leased ~~being~~premises ~~applied~~expire ~~prospectively~~through July 2006.

~~The~~4. ~~final~~Investment ~~purchase price allocation is as follows:~~

(amounts in thousands)	Final
Cash	$	60,276
Other current assets		183,349
Property and equipment		114,043
Intangible assets		10,821
Prepaid pension asset		20,421
Other assets		3,335
Current liabilities		(242,004	)
Deferred revenue		(13,140	)
Other liabilities		(2,541	)
Total	$	134,560

During the first quarter of 2005, the Company purchased 2,207,202 shares of Wmode Inc. (“Wmode”), representing approximately 5% of the outstanding equity, and exclusive distribution rights to Wmode’s proprietary technology for $2.0 million Canadian dollars ($1.6 million US dollars equivalent). The exclusivity to the distribution rights are subject to attaining certain revenue levels. Wmode is a Canadian based, privately held leading provider of mobile content distribution services for content providers, mobile operators and media and brand companies. Teleglobe has agreed to purchase up to 4,415,402 shares of Wmode for total consideration of $4.0 million Canadian dollars in tranches upon the achievement of certain development and operational milestones throughout 2005. As at June 30, 2005, the remaining commitment to purchase shares of Wmode is $2.0 million Canadian dollars. The total amount of shares to be issued to Teleglobe under this agreement would total approximately 10% of the total shares outstanding of Wmode. The Company is currently finalizing the accounting of this investment including an allocation of the purchase consideration.

(c) The following reflects the unaudited pro-forma results of operations for the three months and six months ended June 30, 2003 giving effect to the ITXC merger and the Acquisition as if they had taken place on January 1, 2003, and for the three months and six months ended June 30, 2004 giving effect to the ITXC merger as if it had taken place on January 1, 2004.

(amounts in thousands, except per share amounts)	Three MonthsEnded June 30, 2004			Three Months Ended June 30, 2003			Six MonthsEnded June 30, 2004			Six MonthsEnded June 30, 2003
Operating revenues	$	286,012		$	280,609		$	590,825		$	587,169
Net loss before income taxes		(13,656	)		(2,957	)		(21,820	)		(22,609	)
Net loss		(11,466	)		(3,152	)		(19,847	)		(22,978	)
Net loss per common share	$	(0.29	)	$	(0.08	)	$	(0.51	)	$	(0.59	)

TELEGLOBE INTERNATIONAL HOLDINGS LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(~~SUCCESSOR~~Continued) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)—(Continued)

(Unaudited)

35. ~~Restricted~~Comprehensive ~~Cash~~Loss

~~In conjunction with its letters of credit for its leased premises, the Company has $2.3 million in restricted cash as of June 30, 2004 that represents the collateral supporting the letters of credit.~~ The ~~majority~~components of ~~this~~comprehensive ~~amount~~loss ~~relates to a long-term letter of credit~~ for the ~~leased~~periods ~~premises~~indicated inare ~~Princeton,~~as ~~New~~follows: Jersey. The letters of credit expire through July 2005. The remaining amount of restricted cash at June 30, 2004 relates to collateral provided for various commercial letters of credit expiring through March 2005.

4. Marketable Securities


(amounts in thousands)	Three Months Ended June 30, 2005			Three Months Ended June 30, 2004			Six Months Ended June 30, 2005			Six Months Ended June 30, 2004
Net loss	$	(401	)	$	(3,776	)	$	(8,846	)	$	(1,296	)
Net unrealized holding gain (loss) on marketable securities		10			(18	)		18			(18	)

Comprehensive loss	$	(391	)	$	(3,794	)	$	(8,828	)	$	(1,314	)

~~The Company’s available for sale investments, including amounts in cash equivalents ($18 million and $22~~6.2 ~~million~~Stock-Based atCompensation ~~June 30, 2004 and December 31,~~Plans ~~2003, respectively) and marketable securities, are as follows:~~

(amounts in thousands)	June 30,2004		December 31,2003
Money market funds and equivalent	$	18,057	$	22,199
U.S. Treasury securities and obligations of U.S. government corporations and agencies		496		—
Corporate bonds		5,507		—
Asset-backed securities		4,632		—
Total	$	28,692	$	22,199

The Company accounts for stock-based awards to employees and directors using the intrinsic value method of accounting in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”). Under the intrinsic value method, when the market price of the underlying stock on the date of grant exceeds the exercise price of the Company’s employee stock award, compensation expense is recognized over the vesting period. The Company is required under SFAS No. 123 to disclose pro-forma information regarding stock-based award grants made to its employees based on specified valuation techniques that produce estimated compensation charges.

~~Gross~~Fair ~~realized~~Value ~~gains for~~Assumptions ~~the three and six months ended June 30, 2004 is approximately $93 thousand and nil for the month ended June 30, 2003, for the two months ended May, 30, 2003 and five months ended May 30, 2003.~~

The Company’s ~~available~~granted ~~for~~120,000 ~~sale~~stock ~~securities~~options ~~have~~on ~~the~~January ~~following~~31, 2005 at an exercise price of $4.02 per share, 190,000 stock options on March 2, 2005 at an ~~maturities~~exercise price of $5.00 per share and 44,000 stock options on May 19, 2005 at ~~June~~an 30exercise price of $2.35. The exercise prices equal the NASDAQ closing price on the date of grants. The options vest at a rate of one third per year from the date of grant and terminate no later than seven years after the grant date. The weighted-average fair value of the options granted on January 31, ~~2004~~2005 is $3.23 per stock option, $4.03 per stock option granted on March 2, 2005 and $1.89 per stock option granted on May 19, 2005. The fair value was estimated using the Black-Scholes model with the following weighted-average assumptions:

	Cost		Market
	May 19,2005		March 2,2005		January 31,2005
Due in one year or less	$	9,080	$	9,065
Expected life (in years)	6		6		6
Due after one year through five years		1,573		1,570
Risk-free interest rate	3.86	%	4.20	%	3.92	%
	$	10,653	$	10,635
Volatility	100	%	100	%	100	%
Dividend yield	0	%	0	%	0	%

5. Intangible Assets and Goodwill

The following table summarizes the intangible assets at the dates indicated:

	June 30, 2004							December 31, 2003
(amounts in thousands)	Gross CarryingAmount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships	$	8,700	$	(1,986	)	$	6,714	$	9,184	$	(1,072	)	$	8,112
Other intangibles		2,121		(1,116	)		1,005		2,240		—			2,240
Tradenames		700		(8	)		692		—		—			—
Patents		6,500		(77	)		6,423		—		—			—
Technology		16,400		(196	)		16,204		—		—			—
Origination and termination contracts and related relationships		1,500		—			1,500		—		—			—
Internally developed software relating to technology		2,300		(47	)		2,253		—		—			—
Total intangible assets	$	38,221	$	(3,430	)	$	34,791	$	11,424	$	(1,072	)	$	10,352

TELEGLOBE INTERNATIONAL HOLDINGS LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(~~SUCCESSOR~~Continued) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)—(Continued)

(Unaudited)

The ~~tradenames,~~following ~~patents,~~table ~~technology~~summarizes ~~and~~relevant ~~internally~~information ~~developed~~as ~~software relating~~ to ~~the~~reported ~~technology~~results ~~were acquired~~under ~~as a result of~~ the merger with ITXC. The tradenames, patents and technology are being amortized over their useful lives of 7 years and the internally developed software relating to the technology is being amortized over its useful life of 4Company’s ~~years.~~intrinsic ~~Intangible~~value ~~assets~~method ~~also include $1.5 million~~ of ~~origination~~accounting ~~and~~for ~~termination~~stock ~~contracts~~options, ~~and~~with ~~related~~supplemental ~~relationships~~pro-forma ~~acquired~~information as aif ~~result of~~ the ~~merger~~fair ~~with~~value ~~ITXC.~~recognition ~~These~~provisions ~~contracts~~of ~~and~~SFAS ~~relationships are being amortized over 5 years~~No. ~~The~~123 ~~weighted average~~had ~~amortization~~been ~~period~~applied for ~~acquired~~the ~~Intangibles~~periods ~~equals~~indicated: ~~approximately 6.6 years.~~

Amortization expense for intangible assets totaled approximately $1.3 million and $0.2 million for the three months ended June 30, 2004 and for the month ended June 30, 2003, respectively and $2.4 million for the six months ended June 30, 2004 and nil for the two months ended May 30, 2003 and five months ended May 30, 2003. Aggregate amortization expense for intangible assets is estimated to be:


(amounts in thousands)	Three Months Ended June 30, 2005			Three Months Ended June 30, 2004			Six Months Ended June 30, 2005			Six Months Ended June 30, 2004
Net loss	$	(401	)	$	(3,776	)	$	(8,846	)	$	(1,296	)
Preferred stock dividends		—			(1,583	)		—			(3,958	)

Net loss attributable to common stockholders		(401	)		(5,359	)		(8,846	)		(5,254	)
Add: stock-based compensation, as reported pursuant to APB 25		6			5			17			5
Deduct: total stock-based compensation determined under fair value based methods for all awards		(1,465	)		(1,214	)		(3,073	)		(1,214	)

Pro-forma net loss, fair value method for all stock-based awards		(1,860	)		(6,568	)		(11,902	)		(6,463	)

Basic and diluted net loss per share, as reported	$	(0.01	)	$	(0.17	)	$	(0.23	)	$	(0.18	)

Pro-forma basic and diluted net loss per share, SFAS 123	$	(0.05	)	$	(0.21	)	$	(0.30	)	$	(0.22	)

Six months ending December 31, 2004	$	4.0 million
Year ending December 31, 2005	$	6.0 million
Year ending December 31, 2006	$	6.0 million
Year ending December 31, 2007	$	6.0 million
Year ending December 31, 2008	$	4.6 million

7. Common Stock and Earnings per Share

AsDuring athe ~~result~~six ofmonths ~~the merger~~ended ~~with~~June ~~ITXC~~30, ~~the~~2005, ~~Company~~stock options ~~recorded~~in ~~the~~respect ~~excess~~ of ~~the~~23,699 ~~purchase~~common ~~consideration~~shares ~~over~~were ~~the~~exercised ~~fair value of net identifiable assets acquired as goodwill. See Note 2~~ for ~~further~~cash ~~information~~consideration ~~regarding the recorded amount~~ of $9755,000.9 ~~million for goodwill.~~

6.Basic ~~Senior~~earnings ~~Notes~~per ~~and~~share ~~Preferred~~is ~~Shares~~calculated by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding during the period.

InDiluted ~~connection~~earnings ~~with~~per ~~the~~share ~~ITXC~~is ~~merger~~determined onin ~~May~~the ~~31,~~same ~~2004,~~manner ~~the~~as ~~Company~~basic ~~retired its~~earnings ~~outstanding~~per ~~$95~~share ~~million~~except ofthat ~~stated~~the ~~value~~number of ~~preferred~~ shares ~~and~~is ~~paid~~increased ~~the~~assuming ~~accrued~~exercise ~~dividends on those shares. Concurrent with the retirement, senior notes~~ of ~~$100~~dilutive ~~million~~stock ~~were~~options ~~issued~~and towarrants anusing ~~affiliate of~~ the ~~Company’s~~treasury ~~ultimate~~stock ~~parent~~method. The ~~senior notes~~diluted ~~have~~earnings aper ~~maturity~~share ~~period~~amount ofequals 4basic ~~years~~earnings ~~and~~per ~~the~~share ~~annual~~because ~~interest rate is 10%, payable quarterly. The holder of~~ the ~~notes~~Company ishad ~~entitled to receive~~ a ~~fee~~net loss ~~equal to 1% of the outstanding balance at the end of the first year~~ and ~~2% of~~ the ~~outstanding balance~~impact ~~at the end~~ of the ~~second~~assumed ~~year.~~exercise ~~The estimated $3 million aggregate fee will be expensed over four years using the effective interest rate method. The Company is required to make principal payments~~ of ~~$25 million no later than~~ the ~~second anniversary,~~stock ~~$25~~options ~~million no later than the third anniversary~~ and ~~$50~~warrants ~~million~~is onnot ~~May 31, 2008~~dilutive.

~~The~~Basic ~~Company~~and ~~may,~~diluted atloss ~~its~~per ~~option,~~share ~~prepay~~calculation ~~all~~is oras ~~any~~follows ~~portion of the senior notes,~~ (in ~~a minimum principal amount of $5 million or integral multiples of $5 million in excess thereof~~thousands, atexcept ashare ~~purchase price in cash equal to 100% of the face amount of the notes plus all accrued~~ and ~~unpaid~~per-share ~~interest~~data): ~~thereon, if any, to the date of such prepayment.~~

If certain indebtedness or capital stock is issued, the Company shall be required to commence an Issuance Offer potentially resulting in the purchase of the aggregate principal amount of notes equaling the net available proceeds of such issuances. Upon the occurrence of a change in control, the Company will be required to offer to repurchase all or any portion of the outstanding senior notes, at a purchase price equal to 101% of the aggregate principal amount plus accrued and unpaid interest. Upon the occurrence of a sale of certain assets, the Company is also required to offer to repurchase all or any portion of the outstanding senior notes, at a purchase price equal to 100% of the aggregate principal amount plus accrued and unpaid interest. The note holders have full discretion in accepting or rejecting the offer in all circumstances described.


	Three Months Ended June 30, 2005			Three Months Ended June 30, 2004			Six Months Ended June 30, 2005			Six Months Ended June 30, 2004
Net loss attributable to common stockholders	$	(401	)	$	(5,359	)	$	(8,846	)	$	(5,254	)
Basic and diluted loss per share:	$	(0.01	)	$	(0.17	)	$	(0.23	)	$	(0.18	)
Weighted-average shares		39,106,709			31,732,709			39,100,830			29,919,733

Certain subsidiaries of the Company guarantee the payment of the senior notes.

TELEGLOBE INTERNATIONAL HOLDINGS LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(~~SUCCESSOR~~Continued) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)—(Continued)

(Unaudited)

78. ~~Comprehensive~~Retention ~~Income~~Bonuses ~~(Loss)~~

~~The~~Prior ~~components~~to the consummation of ~~comprehensive~~the ~~income~~merger ~~(loss)~~with ~~for~~ITXC, certain ITXC employees contractually agreed to complete a predetermined service period in order to obtain agreed-upon retention bonuses. Receipt of these amounts is fully conditional upon completion of the ~~periods~~entire ~~indicated~~service period. No other amounts are payable to these employees at the end of the service period. In the six months period ending June 30, 2005, some employees terminated their employment before the agreed upon-service period and other changes were made to the original terms of the contractual agreement of some employees. The Company is recognizing the total estimated liability of $3.3 million associated with this obligation on a pro-rata basis as ~~follows:~~services are provided. These amounts are included in accrued liabilities and selling, general and administrative expenses. The remaining liability is expected to be paid by the end of the third quarter of 2005.

	Successor			Successor		Predecessor			Successor			Predecessor
	Three MonthsEndedJune 30, 2004			One MonthEnded June 30, 2003		Two MonthsEnded May 30, 2003			Six MonthsEnded June 30, 2004			Five MonthsEnded May 30, 2003
Net (loss) income	$	(3,776	)	$	2,294	$	(3,094	)	$	(1,296	)	$	(29,992	)
Unrealized holding losses		(18	)		—		—			(18	)		—
Comprehensive (loss) income	$	(3,794	)	$	2,294	$	(3,094	)	$	(1,314	)	$	(29,992	)

The following table displays the activity and balances of the retention bonus liability from December 31, 2004 to June 30, 2005 and from May 31 to June 30, 2004.

8. Stock-Based Compensation Plans


(amounts in thousands)	Balance at December 31, 2004		Incurred		Amounts paid		Amounts written-off		Ending balance at June 30, 2005
Retention bonuses	$	1,731	$	461	$	1,485	$	593	$	114


(amounts in thousands)	Balance at May 31, 2004		Incurred		Amounts paid		Amounts written-off		Ending balance at June 30, 2004
Retention bonuses	$	1,959	$	249	$	31	$	0	$	2,177

On April 26, 2004, the Company adopted a share option plan for 2,334,125 common shares for key employees and directors. The plan was approved by the Company’s shareholders on April 27, 2004, by unanimous written consent, prior to the consummation of the ITXC merger. On June 9, 2004, the Board of Directors authorized the granting of 1,889,000 stock options under this plan, vesting at a rate of one third per year from date of grant, subject to earlier vesting in certain circumstances. ~~919,000~~Employee ofBenefit ~~these stock options were issued immediately~~Plans after the meeting. The balance of the options were authorized but have not yet been issued. The options terminate no later than seven years after the grant date. The exercise price for issued options is equal to $10.49 per share being the NASDAQ closing price on June 9, 2004.

AsThe afollowing ~~result~~table ofpresents the ~~merger~~components ~~with~~of net ~~ITXC~~periodic onbenefit ~~May~~cost ~~31,~~for ~~2004,~~pension ~~the~~benefits ~~Company~~and ~~issued~~other ~~1,595,323~~post-retirement ~~stock~~health ~~options~~care toand ~~ITXC~~life ~~employees,~~insurance ~~pursuant~~benefits: ~~to the conversion equity incentive plan approved by shareholders on May 27, 2004 by written unanimous consent. The range of exercise price for the options is $0.02 to $430 per share.~~

The Company’s stock option activity is as follows:


(amounts in thousands)	Three Months Ended June 30, 2005			Three Months Ended June 30, 2004			Six Months Ended June 30, 2005			Six Months Ended June 30, 2004
Service cost	$	726		$	577		$	1,457		$	1,171
Interest cost		1,851			1,662			3,714			3,370
Return on assets		(2,257	)		(1,988	)		(4,529	)		(4,031	)

Net periodic benefit cost	$	320		$	251		$	642		$	510

	Six Months ended June 30, 2004
	Number of Shares	Weighted- Average Exercise Price
Options outstanding, beginning of year	—	$	—
Options granted	2,514,323		15.29
Options exercised	1,750		4.64
Options cancelled	28,730		18.25
Options outstanding, end of period	2,483,843	$	15.27

The Company did not contribute to its pension plans during the three and six months ended June 30, 2005 and does not expect to contribute to its pension plans during the remainder of 2005 because the plans are in a surplus position. The Company contributed approximately $33,000 and $68,000 to its post-retirement health care and life insurance plan in the three and six months ended June 30, 2005 respectively ($nil for the three and six months ended June 30, 2004) and expects to contribute similar amounts in the remaining two quarters of 2005.

~~Fair~~10. ~~Value~~Interest ~~Assumptions~~Expense

~~The~~Interest ~~Company~~expense ~~has~~includes ~~adopted~~a recovery of $0.5 million and an interest expense of $1.0 million for the ~~disclosure-only~~three and six months ended June 30, 2005 respectively ($2.8 million and $5.0 million for the three and six months ended June 30, 2004 respectively) representing the accretion of the Comfone AG liability to ~~provisions~~the amounts expected to be paid. During the three months ended June 30, 2005, the recovery of ~~SFAS~~interest Noexpense of $0.5 ~~123~~million was recorded to reflect the final negotiated agreement with Comfone AG. The joint venture agreement, ~~“Accounting~~acquired ~~for~~as ~~Stock~~part of the acquisition of Old Teleglobe on May 30, 2003 as described in the Company’s annual Form 10-~~Based~~K, ~~Compensation.”~~was terminated in January 2004, requiring the Company to pay Comfone AG its share of any cash derived from the mobile

TELEGLOBE INTERNATIONAL HOLDINGS LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(~~SUCCESSOR~~Continued) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)—(Continued)

(Unaudited)

~~The~~ global ~~weighted-average~~roaming ~~fair~~business ~~value~~until ofthe ~~options~~end ~~granted~~of onfiscal ~~June 9,~~ 2004. ~~and~~At ~~May~~the ~~31,~~time ~~2004~~of ~~was~~the ~~$8.83~~acquisition, ~~per stock~~management ~~option~~recorded ~~and~~its ~~$12.19~~best ~~per~~estimate ~~stock~~of ~~option,~~the ~~respectively. The~~ fair value ~~for~~of ~~these~~the termination ~~options~~payment ~~was~~as ~~estimated~~an ~~using~~unfavorable ~~the~~contract ~~Black-Scholes~~in ~~model with~~ the ~~following~~purchase ~~weighted~~price ~~average~~allocation. ~~assumptions:~~

	June 9,2004		May 31,2004
Expected life (in years)	7		6.7
Risk-free interest rate	4.4	%	4.1	%
Volatility	100	%	100	%
Dividend yield	0	%	0	%

The three and six months ended June 30, 2005 include $2.4 million (net of $0.4 million interest capitalized) and $4.8 million (net of $0.7 million interest capitalized) respectively, of interest expense relating to senior notes, with a related party, issued in the second quarter of 2004 ($1.0 million for the three and six months ended June 30, 2004).

~~The~~11. ~~following~~Sale ~~table summarizes~~of ~~information~~Property ~~about fixed price stock options outstanding at June 30, 2004:~~

		Outstanding		Exercisable
Range of Exercise Prices	Number of Shares	Weighted- AverageRemainingContractual Life	Weighted- Average Exercise Price	Number Exercisable at June 30, 2004	Weighted- Average Exercise Price
$ 0.00—$ 5.00	332,464	2.4	$ 1.84	332,464	$ 1.84
5.01— 10.00	101,330	4.9	7.16	69,692	6.73
10.01— 15.00	1,187,044	7.0	10.59	109,931	10.58
15.01— 25.00	304,988	5.2	18.73	223,316	17.94
25.01—430.00	558,017	5.6	32.80	443,749	33.12
$ 0.00—$430.00	2,483,843	5.8	$15.27	1,179,152	$17.76

On June 30, 2005, as part of the Company’s plan to reduce operational expenses, the Company disposed the land, building and office equipment located in the Burnaby Vancouver Station for $3.2 million in cash, resulting in a pre-tax gain of $2.2 million, net of transaction costs of $0.2 million.

The following table summarizes relevant information as to reported results under the Company’s intrinsic value method of accounting for stock options, with supplemental information as if the fair value recognition provisions of SFAS No12. ~~123~~Restructuring ~~had~~Charges ~~been applied for the periods indicated:~~

	Successor			Successor		Predecessor			Successor			Predecessor
(amounts in thousands)	Three MonthsEnded June 30, 2004			One MonthEnded June 30, 2003		Two MonthsEnded May 30, 2003			Six MonthsEnded June 30, 2004			Five MonthsEnded May 30, 2003
Net (loss) income attributable to common stockholders	$	(5,359	)	$	1,502	$	(3,094	)	$	(5,254	)	$	(29,992	)
Add: stock-based compensation, as reported pursuant to APB 25		5			—		—			5			—
Deduct: total stock-based compensation determined under fair value based methods for all awards		(1,214	)		—		—			(1,214	)		—
Adjusted net (loss) income, fair value method for all stock-based awards		(6,568	)		1,502		(3,094	)		(6,463	)		(29,992	)
Basic and diluted net (loss) income per share, as reported	$	(0.17	)	$	0.05	$	—		$	(0.18	)	$	—
Basic and diluted net (loss) income per share, SFAS 123 adjusted	$	(0.21	)	$	0.05	$	—		$	(0.22	)	$	—

During the first quarter of 2004, the Company reduced its workforce by 15 people and incurred restructuring costs of $893,000 consisting of certain contractual amounts and other severance. As at June 30, 2004, the total severance liability was settled.

13. Intangible Assets

The following table summarizes the intangible assets at the dates indicated:


	June 30, 2005							December 31, 2004
(amounts in thousands)	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships	$	8,700	$	(3,696	)	$	5,004	$	8,700	$	(2,838	)	$	5,862
Other intangibles		2,121		(2,121	)		—		2,121		(2,121	)		—
Tradenames		700		(108	)		592		700		(58	)		642
Patents		6,500		(1,006	)		5,494		6,500		(542	)		5,958
Technology		16,400		(2,538	)		13,862		16,400		(1,367	)		15,033
Origination and termination contracts and related relationships		1,500		(300	)		1,200		1,500		(150	)		1,350
Software		27,338		(6,188	)		21,150		21,286		(3,777	)		17,509

Total intangible assets	$	63,259	$	(15,957	)	$	47,302	$	57,207	$	(10,853	)	$	46,354

The software acquired during the six months period ending June 30, 2005 is being amortized over its estimated useful life of three to five years. The weighted-average amortization period for acquired intangibles in the six months ended June 30, 2005 equals approximately 4.1 years.

Amortization expense for intangible assets totaled approximately $2.6 million and $5.1 million for the three and six months ended June 30, 2005 respectively and $2.0 million and $3.4 million for the three and six months ended June 30, 2004. Aggregate amortization expense for intangible assets is estimated to be:


Remainder of 2005	$	5.5 million
Year ending December 31, 2006	$	11.0 million
Year ending December 31, 2007	$	11.0 million
Year ending December 31, 2008	$	9.7 million
Year ending December 31, 2009	$	8.6 million

TELEGLOBE INTERNATIONAL HOLDINGS LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(~~SUCCESSOR~~Continued) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)—(Continued)

(Unaudited)

914. ~~Common~~Property ~~Stock~~ and ~~Earnings~~Equipment ~~per Share- Successor~~

OnThe ~~January~~components ~~14, 2004, the Board~~ of ~~Directors~~property approved a stock split, by way of a bonus issue of shares, whereby the holders of common shares received approximately 23.4 new common shares for each common share currently held. The stock split resulted in an increase in issued and ~~outstanding~~equipment ~~common~~are ~~shares~~as ~~from~~follows: ~~1.2 million to 28.1 million. Share and per-share data (except par value) for all periods have been restated to reflect this stock split.~~

On May 31, 2004, the merger with ITXC was consummated. Upon consummation of the merger, all the outstanding shares of ITXC’s common shares were converted into 10,877,156 common shares of the Company at a fair value of $14.46 per share determined as of the date of announcement of the acquisition. In addition, all outstanding warrants of ITXC were converted into 219,942 warrants of the Company for a total fair value of $2.8 million. The warrants are exercisable anytime prior to April 30, 2008 at an exercise price of $3.41 per share. All outstanding options of ITXC were converted into 1,595,323 stock options of the Company for a total fair value of $19.5 million. The range of exercise price for the options is $0.02 to $430 per share.


	June 30, 2005			December 31, 2004
	(amounts in thousands)
Land	$	1,430		$	2,000
Telecommunications equipment		44,245			38,411
Buildings and equipment		4,827			4,681
Cable systems		59,181			59,168
Computer equipment		4,920			4,240
Leasehold improvements		3,205			3,172
Construction in progress		9,925			8,395

		127,733			120,067
Less: Accumulated depreciation		(28,877	)		(19,280	)

		98,856			100,787
Leased property under capital leases		38,462			37,377
Less: Accumulated depreciation		(5,879	)		(4,081	)

		32,583			33,296

Property and equipment, net	$	131,439		$	134,083

~~Basic~~15. ~~earnings~~Related ~~per~~Party ~~share is calculated by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding during the period.~~

~~Diluted~~The ~~earnings~~Company ~~per~~concluded ~~share is determined in~~ the ~~same~~following ~~manner~~transactions asat ~~basic~~exchange ~~earnings~~value ~~per share except that the number of shares is increased assuming exercise of dilutive stock options and warrants using the treasury stock method. The diluted earnings per share amount equals basic~~with ~~earnings~~related ~~per~~parties ~~share~~in ~~because~~ the ~~Company~~normal ~~had~~course ~~a net loss and the impact~~ of ~~the assumed exercise of the stock options and warrants is not dilutive~~business.

Basic Earnings per share calculation is as follows (in thousands, except per share amounts):


(amounts in thousands)
Nature of transaction with the related party	Classification in the Company’s consolidated financial statements	Three Months Ended June 30, 2005		Three Months Ended June 30, 2004		Six Months Ended June 30, 2005		Six Months Ended June 30, 2004
Cerberus and affiliates
Financing	Interest expense (1)	$	2,758	$	1,021	$	5,488	$	1,021
Preferred stock dividend	Preferred stock dividends to parent company	$	—	$	1,583	$	—	$	3,958

	Three Months EndedJune 30, 2004			Six Months EndedJune 30, 2004			One Month EndedJune 30, 2003
Net (loss) income attributable to common stockholders	$	(5,359	)	$	(5,254	)	$	1,502
Basic earnings per share:	$	(0.17	)	$	(0.18	)	$	0.05
Weighted Average Shares		31,732,709			29,919,733			28,106,757

Amounts payable to related parties at June 30, 2005 total $100.1 million and $100.5 million at December 31, 2004.

10(1) During the three and six months ended June 30, 2005, the Company capitalized approximately $0.4 ~~Restructuring~~million ~~Charges~~ and $0.7 million respectively of the total $2.8 million and $5.5 million of interest to property and equipment and software included in intangible assets ($nil for the three and six months ended June 30, 2004).

~~The Company reduced its workforce by 15 people during the three months ended March 31, 2004~~16. AsContingencies a consequence, the Company incurred restructuring costs in the first quarter of 2004 of $893,000 consisting of certain contractual amounts and other severance. As at June 30, 2004, the total severance liability was settled.

11As previously reported, as part of its normal ongoing review of ITXC’s operations in connection with the post-merger integration of Teleglobe and ITXC, Teleglobe had identified potential instances of noncompliance with the United States Foreign Corrupt Practices Act (“FCPA”) relating to ITXC’s operations in certain African countries prior to its merger with Teleglobe, consummated on May 31, 2004. ~~Reorganization~~Teleglobe ~~Items~~voluntarily notified the

Reorganization items included in the two and five months ended May 30, 2003 result from the bankruptcy proceedings of the Predecessor. Presented below are the components of the reorganization items.

(amounts in thousands)	Two Months EndedMay 30, 2003			Five Months EndedMay 30, 2003
Professional fees directly related to the bankruptcy filings	$	4,884		$	8,707
Foreign exchange loss on pre-petition debt		17,343			34,000
Settlement gains on supplier contracts		(7,201	)		(7,201	)
Other		(5,095	)		(1,351	)
Total	$	9,931		$	34,155

TELEGLOBE INTERNATIONAL HOLDINGS LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(~~SUCCESSOR~~Continued) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)—(Continued)

(Unaudited)

12 Securities and Exchange Commission (the “SEC”) and the U.S. ~~Employee~~Department ~~Benefit~~of ~~Plans~~Justice (the “DOJ”) of the matter, and has been cooperating fully with the SEC and the DOJ. The SEC had previously advised Teleglobe that it was conducting an informal inquiry into the matter. Teleglobe has been informed that the SEC issued a formal order of investigation on February 15, 2005 concerning ITXC’s possible violations of the FCPA and possible related violations of the securities laws. On July 27, 2005, the SEC issued a subpoena to the Company for documents relating to its investigation. Teleglobe intends to continue to cooperate fully with the SEC and DOJ in the investigation. Teleglobe cannot predict the extent to which the SEC, the DOJ or any other governmental authorities will pursue administrative, civil or criminal proceedings, the imposition of fines or penalties or other remedies or sanctions. Teleglobe has not identified, and does not believe it is likely that, any material adjustment to its financial statements is or will be required in connection with the results of this investigation, although it is possible that a monetary penalty, if any, may be material to its results of operations in the period in which it is imposed.

~~The~~On ~~following~~April ~~table~~14, ~~presents~~2004, Acceris Communications Technologies, Inc. commenced a patent infringement suit in the ~~components~~United States District Court of ~~net~~the ~~periodic~~District ~~benefit~~of New ~~cost~~Jersey, against ITXC Corp., alleging that ITXC’s VoIP services and systems infringe Acceris’ U.S. Patent No. 6,243,373, entitled “Method and Apparatus for ~~pension~~Implementing ~~benefits:~~a Computer Network/Internet Telephone System.” On May 7, 2004, ITXC filed a lawsuit against Acceris for infringement of a number of ITXC’s VoIP patents. The suit alleged infringement of five of ITXC’s United States Patents, numbers 5,889,774, 6,026,087, 6,404,864, 6,628,760 and 6,661,878, directed generally to the transmission of telephone calls over the Internet and the completion of telephone calls by switching them off the Internet and onto a public switched telephone network (PSTN). On July 6, 2004, the Court rejected Acceris’ initial motion to dismiss ITXC’s case based upon alleged failure to conduct an adequate pre-complaint investigation. The Company intends to vigorously defend against the allegations of infringement in that case and believes it has substantial defenses to them. However, an adverse result in this litigation could either result in injunctive relief precluding all or a portion of ITXC’s VoIP activity or materially impact the Company’s revenue and profitability. Litigation of such matters may require significant management and financial resources of the Company and adverse outcomes in such lawsuits could materially adversely affect our financial condition or operating results.

	Successor			Successor			Predecessor			Successor			Predecessor
(amounts in thousands)	Three MonthsEnded June 30,2004			One MonthEnded June 30,2003			Two MonthsEnded May 30,2003			Six MonthsEnded June 30,2004			Five MonthsEnded May 30,2003
Service cost	$	577		$	233		$	344		$	1,171		$	860
Interest cost		1,662			663			966			3,370			2,416
Expected return on plan assets		(1,988	)		(527	)		(1,423	)		(4,031	)		(3,558	)
Amortization of net loss (gain)		—			(223	)		382			—			956
Net periodic benefit cost	$	251		$	146		$	269		$	510		$	674

ITXC and certain of its former officers/directors were named as defendants in several purported shareholder class action lawsuits commenced in 2001. The lawsuits allege, among other things, that, in connection with ITXC’s public offerings of securities, its Prospectus did not disclose certain alleged practices involving its underwriters and their customers. These actions seek compensatory and other damages, and costs and expenses associated with the litigation. No discovery has taken place with respect to ITXC and the other issuer defendants. ITXC is one of hundreds of issuers named as defendants in substantially identical lawsuits. Management believes that ITXC and its officers/directors did not engage in any improper or illegal conduct. All of these cases have been consolidated for pretrial purposes before Judge Scheindlin in the Southern District of New York, who refused to dismiss the cases in an opinion issued in February 2003. All of the individual defendants who had been named as defendants in the Company’s case have now been dismissed from the proceeding without prejudice, pursuant to a stipulation with the plaintiffs. Neither the individual defendants nor the Company nor its insurers paid any consideration for these dismissals. The issuer defendants, their insurance carriers and the plaintiffs have negotiated a settlement pursuant to which the insurance carriers would fund any monetary consideration, and it is anticipated that this proposed settlement will be submitted to the Court for approval in the near future. This settlement was approved by the court on February 15, 2005 on a preliminary basis. Under the terms of the proposed settlement, the Company would be dismissed from the litigation with prejudice and should neither have future liability to plaintiffs nor any significant expenses in connection with the litigation, except for a limited obligation to cooperate in discovery in the plaintiffs’ continuing cases against the underwriters.

The Company did not contribute to its pension plans during the three and six months ended June 30, 2004 and does not expect to contribute to its pension plans during the remainder of 2004 because the plans are in a surplus position.

13. Interest Expense

Interest expense includes an amount of $2.8 million for the three months ended June 30, 2004 and $5.0 million for the six months ended June 30, 2004, representing the accretion of certain liabilities recognized at the date of Acquisition, to the amounts currently payable.

The three and six months ended June 30, 2004 includes $1 million of interest expense relating to the senior notes issued in the second quarter of 2004. See note 14.

14. Related Party

Successor

On May 31, 2003, the Successor entered into a note payable with TLGB, an affiliate of the Company’s ultimate parent, for $25 million. This loan was repaid in full in June 2003, plus interest expense of approximately $292,000. The Successor also repaid $3.9 million in June 2003 to Cerberus for direct costs incurred on behalf of the Successor related to the Acquisition on May 30, 2003.

On May 30, 2003, the Successor issued Class A Redeemable Preferred Stock to the parent company for cash proceeds of $95 million. The preferred shares pay dividends at a rate of 10%. On May 31, 2004, the Company redeemed the preferred shares including accrued dividends and issued senior notes totaling $100 million to an affiliate of the Company’s ultimate parent.

Predecessor

Bell Canada (a subsidiary of BCE Inc.) and its affiliated and significantly influenced companies Northwestel Inc., Telebec Ltd, Northern Telephone Limited, Aliant Inc. and Manitoba Telecom Services Inc. provided, directly or through subsidiaries, telecommunication services in various provinces of Canada. A significant portion of the telecommunications traffic originating in Canada that was routed over the Predecessor’s network was generated by such companies or their respective affiliates and represented a significant portion of revenue. In addition, a significant portion of the telecommunications traffic originating overseas that was routed over the Predecessor’s network was terminated in Canada by such companies or their respective affiliates.

TELEGLOBE INTERNATIONAL HOLDINGS LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(~~SUCCESSOR~~Continued) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)—(Continued)

(Unaudited)

~~BCE~~We ~~Inc.~~are ~~and~~routinely ~~its~~party ~~affiliates~~to ~~transferred~~suits ~~all~~for ofcollection, ~~the~~commercial ~~outstanding~~disputes, ~~and~~claims ~~issued~~from ~~common~~customers and/or suppliers ~~preferred~~over ~~shares~~ reconciliation of ~~Teleglobe~~payments ~~Inc.~~for voice minutes, circuits, Internet bandwidth and/or access to the ~~court~~public ~~appointed~~switched ~~monitor;~~telephone ~~accordingly~~network, ~~transactions~~leased ~~with~~equipment, ~~BCE~~and ~~Inc~~claims from estates of bankrupt companies alleging that we received preferential payments from such companies prior to their bankruptcy filings. While management currently believes that resolving such suits and ~~its~~claims, ~~affiliates~~individually ~~subsequent~~or toin ~~December~~aggregate, 31will not have a material adverse impact on our financial position, ~~2002~~the FCPA investigation and ~~prior~~other litigation proceedings noted above are subject to ~~May 30,~~inherent ~~2003~~uncertainties ~~continue~~and management’s view of these matters may change in the future. Were an unfavorable final outcome to beoccur, ~~included~~such an outcome could have a material adverse impact on our financial position and results of operations for the period in which the ~~following~~effect ~~disclosures~~becomes reasonably estimable.

~~The~~17. ~~Successor~~Subsequent ~~and~~Events ~~Predecessor concluded the following transactions at exchange value with related parties in the normal course of business.~~

(amounts in thousands)

Successor

Predecessor

Successor

Predecessor

Nature of transaction with the related party

Classification in theCompany’s consolidatedfinancial statements

Three MonthsEndedJune 30, 2004

One MonthEndedJune 30, 2003

Two MonthsEnded May 30, 2003

Six MonthsEndedJune 30, 2004

Five MonthsEndedMay 30, 2003

BCE and its affiliates

Sales of services

Operating revenues

N/A

30,402

N/A

105,105

Acquisition of services

Operating expenses

N/A

2,492

N/A

6,238

Administrative services**

Selling, general and administrative

N/A

417

N/A

671

Network

Network expenses

N/A

1,868

N/A

5,145

Cerberus and affiliates

Financing

Interest expense

1,021

292

N/A

1,021

N/A

Debtor-in-Possession financing

Interest expense

N/A

126

Preferred stock dividend

1,583

792

N/A

3,958

N/A

Management agreement

Selling, general and administrative

N/A

262

N/A

1,110

i) Plan of Amalgamation

*On AsJuly 25, 2005, the Company entered into an Agreement and Plan of Amalgamation (the “Amalgamation Agreement”) with Videsh Sanchar Nigam Limited (“VSNL”) and VSNL Telecommunications (Bermuda) Ltd., a ~~result~~wholly owned subsidiary of VSNL (“Amalgamation Sub”). Pursuant to the ~~acquisition~~Amalgamation onAgreement, ~~May~~which 31is subject to approvals and closing conditions, ~~2003~~Teleglobe will be amalgamated with Amalgamation Sub, ~~BCE~~and ~~Inc~~the resulting company will be a wholly owned subsidiary of VSNL (the “Amalgamation”). isAt the effective time of the Amalgamation, each common share of Teleglobe issued and outstanding immediately prior to the effective time (other than shares, if any, held directly or indirectly by Teleglobe, VSNL, Amalgamation Sub or any Teleglobe shareholder that has properly perfected its right to appraisal for such shares in accordance with the Companies Act 1981 of Bermuda (the “Companies Act”)) will be exchanged for the right to receive $4.50 per share, all in accordance with the provisions of the Companies Act and the Amalgamation Agreement. Upon consummation of the Amalgamation, each option to purchase common shares of Teleglobe outstanding immediately prior to the effective time of the Amalgamation that has an exercise price per share less than $4.50 (whether or not ~~considered~~then exercisable or vested) will entitle the holder thereof to the right to receive a ~~related~~cash ~~party~~payment ~~subsequent~~in an aggregate amount equal to ~~May~~the 30product of (A) the excess of $4.50 over the exercise price per share of such option and (B) the number of shares subject to such option, ~~2003~~and such option will be terminated and cancelled immediately prior to such effective time. Upon consummation of the Amalgamation, each option to purchase common shares of Teleglobe outstanding immediately prior to the effective time of the Amalgamation that has an exercise price per share equal to or greater than $4.50 will automatically be terminated and cancelled, without any consideration, as of such effective time. Upon consummation of the Amalgamation, each warrant to purchase common shares of Teleglobe outstanding immediately prior to the effective time of the Amalgamation (whether or not then exercisable or vested) shall entitle the holder thereof to the right to receive, upon exercise and payment of any applicable warrant consideration, a cash payment in an aggregate amount equal to the product of (A) $4.50 and (B) the number of shares subject to such warrant.

**Teleglobe’s ~~Management~~Board ~~fees~~of ~~paid~~Directors tohas ~~BCE~~approved ~~were~~the ~~based~~Amalgamation Agreement. The Amalgamation is conditioned on, ~~direct~~among ~~costs~~other things, the approval of the Amalgamation Agreement by the required vote of shareholders of at least a majority of the outstanding shares in Teleglobe’s common share capital, expiration or termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended and other applicable antitrust laws, the receipt of certain regulatory approvals specified in the Amalgamation Agreement, expiration of the time period for ~~providing~~any ~~these~~applicable ~~services~~review process by ~~BCE~~the Committee on Foreign Investment in the United States without any action or recommendation by such committee to prevent consummation of the Amalgamation, and the number of shares of shareholders properly exercising their appraisal rights pursuant to the Companies Act does not exceed, in the aggregate, 5% of the outstanding Teleglobe’s common shares capital. The Amalgamation Agreement also includes certain termination rights and

Amounts payable to related parties at June 30, 2004 total $100.1 million and $0.2 million at December 31, 2003. Amounts receivable from related parties at December 31, 2003 total $0.3 million and nil at June 30, 2004.

15. Contingencies

In the normal course of operations, the Company may become involved in various claims and litigation.

In connection with the post-merger integration of the Company with ITXC, the Company identified and investigated potential instances of noncompliance with the United States Foreign Corrupt Practices Act (the “FCPA”) relating to ITXC operations in certain African countries. The investigation was conducted by an outside law firm engaged by the Company’s Audit Committee. The Company voluntarily notified the SEC and the Department of Justice (the “DOJ”) of the matter and has been cooperating fully with these agencies. As a result of the investigation, certain employees are no longer employed by the Company. The investigation has been completed and based on the findings of the independent law firm, no additional resignations or terminations are expected. The Company intends to resolve any potential claims that the SEC or DOJ may have with respect to these matters as promptly as practicable, but there can be no assurance that a satisfactory resolution of any such claims would be reached. At this time the Company cannot predict the extent to which the SEC, the DOJ or any other party will pursue administrative, civil injunctive or criminal proceedings, the imposition of fines or penalties or other remedies or sanctions. Although the Company has not identified and does not believe it is likely that any material adjustments to its financial statements is or will be required in connection with this matter, it is possible that a monetary penalty, if any, may be material to the Company’s results of operations in the period in which it is imposed.

On May 31, 2004, TIH consummated its merger with ITXC. ITXC has been subject to various legal proceedings relating to claims arising in the ordinary course of business. The following are legal proceedings pending against ITXC.

TELEGLOBE INTERNATIONAL HOLDINGS LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(~~SUCCESSOR~~Continued) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)—(Continued)

(Unaudited)

On provides ~~April 14~~that, ~~2004,~~upon ~~Acceris~~termination ~~Communications Technologies, Inc. commenced a patent infringement suit in the United States District Court~~ of the ~~District~~Amalgamation ofAgreement ~~New~~under ~~Jersey,~~certain ~~against ITXC Corp.~~circumstances, ~~alleging~~Teleglobe ~~that~~would ~~ITXC’s~~be ~~VoIP~~required ~~services~~to ~~and~~pay ~~systems~~VSNL ~~infringe~~a ~~Acceris’~~termination ~~U.S.~~fee ~~Patent~~of No$4. ~~6,243,373, entitled “Method and Apparatus for Implementing a Computer~~5 ~~Network/Internet Telephone System~~million.” AIn ~~responsive~~addition, ~~pleading~~the ~~has~~Amalgamation ~~been~~agreement ~~filed~~includes ~~and~~certain ~~discovery~~interim ~~commenced.~~operating ~~On May 7~~covenants, ~~2004,~~subject ~~ITXC~~to ~~filed~~certain aexceptions, ~~lawsuit~~that ~~against~~required ~~Acceris~~Teleglobe ~~for~~to ~~infringement~~obtain ~~of a number of ITXC~~VSNL’s ~~VoIP~~prior ~~patents.~~written ~~The suit alleged infringement of five of ITXC’s United States Patents~~consent, ~~numbers~~which ~~5,889,774,~~consent ~~6,026,087,~~may ~~6,404,864,~~not ~~6,628,760~~be ~~and~~unreasonably 6withheld,~~661,878,~~ ~~directed~~for taking ~~generally~~certain toactions. ~~the~~In ~~transmission~~connection ofwith ~~telephone calls over~~ the ~~Internet~~signed ~~and~~Amalgamation ~~the~~Agreement, ~~completion of telephone calls by switching them off~~ the ~~Internet~~ ~~and~~Company ~~onto~~incurred aprofessional ~~public~~fees ~~switched~~from ~~telephone~~its ~~network(PSTN).~~financial Onadvisor ~~July~~in ~~6, 2004,~~ the ~~Court~~amount ~~rejected~~of ~~Acceris’ initial motion to dismiss ITXC’s case based upon alleged failure to conduct an adequate precomplaint investigation~~$900,000. The ~~Company intends~~fees tobecame ~~vigorously~~due ~~defend~~upon ~~against~~ the ~~allegations~~execution of ~~infringement~~the inAmalgamation ~~that~~Agreement ~~case~~on ~~and~~July 25, ~~believes it has substantial defenses to them~~2005. ~~However,~~The anremaining ~~adverse result in this litigation could either result in injunctive relief precluding all or a~~ portion of ~~ITXC’s~~ ~~VoIP activity or materially impact~~ the ~~Company’s~~fees ~~revenue~~will ~~and~~become ~~profitability.~~due ~~Litigation~~upon ofconsummation ~~such matters may require significant management and financial resources~~ of the ~~Company and adverse outcomes in such lawsuits could materially adversely affect our financial condition or operating results~~Amalgamation.

AIn ~~complaint~~connection ~~was~~with ~~filed~~the onexecution ~~February~~of ~~24,~~the ~~2004~~Amalgamation asAgreement, aTeleglobe ~~class~~Bermuda ~~action~~Holdings ~~suit~~Ltd, inan ~~New~~affiliate ~~Jersey~~of ~~Superior~~Cerberus ~~Court~~Capital ~~naming~~Management, ~~ITXC Corp~~L.P. and ~~directors~~the holder ~~Tom~~of ~~Evslin,~~approximately ~~Edward~~66.2% ~~Jordan,~~of ~~Frank~~Teleglobe’s ~~Gill~~outstanding ~~and~~common ~~Fred~~shares, ~~Wilson~~has asexecuted ~~defendants,~~a ~~which~~voting ~~has~~agreement ~~now~~with ~~been~~VSNL ~~settled~~pursuant ~~and~~to which ~~settlement~~ ~~has~~it ~~now~~agreed ~~been~~to ~~approved~~vote byits ~~the~~Teleglobe ~~Court~~shares in ~~its~~favor ~~October~~of ~~14,~~the ~~2004~~Amalgamation ~~Final~~Agreement ~~Order~~ and ~~Judgement (~~the ~~“Final~~Amalgamation ~~Order~~ and ~~Judgement”). Two claims had been asserted~~ against any ~~the~~alternative ~~individual defendants~~transaction, ~~one~~not ~~for~~to ~~breach~~transfer ofits ~~fiduciary~~Teleglobe ~~duty~~shares, and ~~the other~~not ~~for~~to ~~breach~~take ofcertain ~~the~~actions ~~duty~~specified oftherein ~~candor.~~to ~~Although~~encourage ~~ITXC~~or ~~was~~facilitate ~~identified~~any assuch aalternative ~~defendant,~~transaction. noThe ~~cause~~voting ofagreement ~~action~~also ~~was~~provides ~~asserted~~for ~~against~~Teleglobe ~~ITXC~~Bermuda .Holdings ~~The action sought~~ Ltd to ~~enjoin~~pay ~~the stockholders’ meeting~~ to ~~approve~~VSNL ~~ITXC’s~~75% ~~proposed~~of ~~merger~~any ~~with~~proceeds ~~Teleglobe until certain alleged deficiencies~~ in ~~the~~excess ~~proxy~~of ~~statement~~$4.50 ~~had~~per ~~been~~share ~~cured~~that ~~and~~may ~~sought~~be toreceived ~~permanently~~for ~~enjoin~~its ~~the~~Teleglobe ~~consummation~~shares ofif the ~~merger.~~Amalgamation NoAgreement ~~motion~~is ~~for~~terminated aunder ~~preliminary~~certain ~~injunction~~circumstances. ~~was~~Certain ~~ever~~trusts ~~filed~~affiliated ~~and~~with ~~the~~Gerald ~~stockholders’~~Porter ~~meeting~~Strong, ~~was~~president ~~held~~ and ~~the~~ ~~merger~~chief ~~completed.~~executive Onofficer ~~June~~of 22Teleglobe, ~~2004,~~and ~~the defendants entered into a stipulation of settlement~~ with ~~plaintiff’s~~Richard ~~counsel~~D. OnWillett ~~July 26~~II, ~~2004,~~chief ~~the~~operating ~~Court~~officer ~~ordered that notice~~ of ~~the settlement be provided to all putative class members who were record holders as of March 31~~Teleglobe, ~~2004,~~have ~~and~~executed ~~that~~similar avoting ~~final~~agreements ~~settlement~~with ~~hearing be held on October 14, 2004, which has now been conducted~~VSNL. AtEach ~~that~~of ~~hearing~~ the ~~Court~~above-referenced ~~and~~voting ~~the~~agreements ~~Final~~will ~~Order~~terminate ~~and~~on ~~Judgement, gave final approval of~~ the ~~settlement.~~earliest ~~Under~~to ~~the~~occur ~~settlement~~of ~~stipulation,~~(i) the ~~defendants~~effective ~~expressly~~time ~~deny and do not admit liability or any improper conduct~~ of ~~any kind. Consistent with~~ the ~~parties’ agreement~~Amalgamation, ~~the~~(ii) ~~Court has granted plaintiffs’ counsel’s request for $145,000 in attorneys’ fees for~~ the ~~plaintiff’s~~termination ~~counsel.~~of Nosuch ~~other~~voting ~~payment~~agreement isby ~~required from ITXC,~~ the ~~Company~~mutual orwritten ~~any~~agreement of the ~~individual~~parties ~~defendants~~thereto, ~~except~~and (iii) the ~~costs~~date of ~~printing~~termination ~~and~~of ~~mailing~~ the ~~notice~~Amalgamation ~~to shareholders~~Agreement. ~~Management has accrued its best estimate in its accrued liabilities.~~

Onii) ~~May~~Operating ~~23,~~Lease ~~2000, Connectel, LLC, had filed suit against ITXC in the United States District Court~~ for ~~the~~Administrative ~~Eastern~~Office District of Pennsylvania. Connectel alleged in its complaint that ITXC infringed on the claims of a patent owned by Connectel by, acting alone or with others, assembling, offering to sell, selling or using communications networks or switching systems within the United States and for export worldwide without license from Connectel. Connectel also sought unspecified damages. On June 9, 2004, the Court entered an Order dismissing Connectel’s complaint in its entirety with prejudice. No compensation was paid. Thereafter, only ITXC’s counterclaim seeking a declaration that Connectel’s patent was invalid, as well as certain other relief, remained in the lawsuit. On June 18, 2004, the Court entered an Order dismissing the remainder of the case pursuant to a settlement reached between the parties. The Order is now final.

On July 8, 2005, the Company signed a new lease agreement for its administrative premises with an initial term of 15 years ending December 31, 2020. The total lease payments amounting to approximately $16.2 million have been included in Note 19, Commitments and Contingencies, of the Company’s 2004 audited annual Consolidated Financial Statements. The Company provided the lessor a first-ranking collateral hypothec of $3.0 million Canadian dollars over one of its properties.

18. Recent Accounting Pronouncements

In December 2004, the FASB issued SFAS 153, Exchanges of Nonmonetary Assets, an amendment of APB No. 29, Accounting for Nonmonetary Transactions. SFAS 153 requires exchanges of productive assets to be accounted for at fair value, rather than at carryover basis, unless (1) neither the asset received nor the asset surrendered has a fair value that is determinable within reasonable limits or (2) the transactions lack commercial substance. SFAS 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company’s adoption of this standard did not have any impact on its Consolidated Financial Statements.

In December 2004, the FASB released its final revised standard, SFAS No. 123R, Share-Based Payment. SFAS 123R requires that a public entity measure the cost of equity based service awards based on the grant-date fair value of the award. That cost will be recognized over the period during which an employee is required to provide service in exchange for the award or the vesting period. A public entity will initially measure the cost of liability based service awards based on its current fair value; the fair value of that award will be remeasured subsequently at each reporting date through the settlement date. Changes in fair value during the requisite service period will be recognized as compensation cost over that period. Adoption of SFAS 123R is required for the fiscal year beginning after June 15, 2005. The Company is evaluating SFAS 123R and believes the impact on the financial statements should be consistent with the FAS 123 pro forma disclosure contained in Note 6 of the unaudited interim Consolidated Financial Statements.

TELEGLOBE INTERNATIONAL HOLDINGS LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(~~SUCCESSOR~~Continued) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)—(Continued)

(Unaudited)

~~ITXC~~In ~~and~~May ~~certain~~2005, ofthe ~~its~~FASB ~~officers/directors~~issued ~~were~~SFAS ~~named~~154, asAccounting ~~defendants~~Changes inand ~~several~~Error ~~purported~~Corrections. ~~shareholder~~SFAS 154 ~~class~~eliminates ~~action~~the ~~lawsuits~~requirement ~~commenced~~ in ~~2001.~~APB ~~The~~Opinion ~~lawsuits~~No. ~~allege~~20, ~~among~~Accounting ~~other things~~Changes, ~~that,~~to ininclude ~~connection~~the ~~with~~cumulative ~~ITXC’s~~effect ~~public offerings~~ of ~~securities,~~changes ~~its~~in ~~Prospectus~~accounting ~~did~~principle ~~not~~in ~~disclose~~the ~~certain~~income ~~alleged~~statement ~~practices~~in ~~involving~~the ~~its~~period ~~underwriters~~of ~~and their customers~~change. ~~These actions seek compensatory and other damages~~Instead, ~~and costs and expenses associated with the litigation. No discovery has taken place with respect~~ to ~~ITXC~~enhance ~~and~~ the ~~other~~comparability ~~issuer defendants. ITXC is one~~ of ~~hundreds~~prior ~~of companies named in~~period ~~substantially~~financial ~~identical~~statements, ~~lawsuits.~~SFAS ~~Management~~154 ~~believes~~requires that ~~ITXC~~changes ~~and its officers/directors did not engage~~ in ~~any~~accounting ~~improper~~principle orbe ~~illegal~~retrospectively ~~conduct~~applied. ~~All~~Under ~~of these cases have been consolidated for pretrial purposes before Judge Scheindlin in~~ the ~~Southern District~~retrospective ~~of New York~~application, ~~who refused to dismiss~~ the ~~cases~~new inaccounting anprinciple ~~opinion~~is ~~issued~~applied inas ~~February~~of ~~2003.~~the ~~All~~beginning of the ~~individual~~first ~~defendants~~period ~~who~~presented ~~had been named~~ as ~~defendants~~if inthat principle ~~the~~had ~~Company’s~~always ~~case have now~~ been ~~dismissed from the proceeding without prejudice, pursuant to a stipulation with the plaintiffs~~used. ~~Neither~~Adoption ~~the~~of ~~individual~~SFAS ~~defendants~~154 ~~nor~~is ~~the~~required ~~Company nor its insurers paid any consideration~~ for ~~these~~accounting ~~dismissals.~~changes ~~The issuer defendants, their insurance carriers~~ and ~~the~~corrections ~~plaintiffs~~of ~~have~~errors ~~negotiated~~made ~~a settlement~~in ~~pursuant to which~~ the ~~insurance~~fiscal ~~carriers~~year ~~would~~beginning ~~fund~~after ~~any~~December ~~monetary consideration~~15, ~~and~~2005. itThe isCompany ~~anticipated~~will ~~that~~adopt this ~~proposed~~new ~~settlement~~accounting ~~will~~standard beon ~~submitted~~January ~~to the Court for approval in the near future. If approved by the court~~1st, under the terms of the proposed settlement, ITXC would be dismissed from the litigation with prejudice and should neither have future liability to plaintiffs nor incur any significant expenses in connection with the litigation, except for a limited obligation to cooperate in discovery in the plaintiffs’ continuing cases against the underwriters2006.

Interactive Marketing Technologies, Inc., (“IMT”) is a telecommunications service bureau headquartered in Erlanger, Kentucky, to which ITXC had discontinued service on February 20, 2003, and from which ITXC had demanded payment of a multimillion dollar past due balance, after the parties were unsuccessful in efforts to restructure IMT’s obligations to ITXC. IMT then sued ITXC seeking unspecified compensatory and punitive damages in the United States District Court for the Eastern District of Kentucky alleging breach of contract, bad faith, tortious[sic] interference with contract and negligent misrepresentation, among other claims. ITXC thereafter commenced an arbitration action against IMT seeking to recover the amounts owed by IMT, and on July 8, 2003, the United States District Court dismissed IMT’s case in favor of the arbitration proceeding. IMT asserted its claims in the arbitration, and has now filed for bankruptcy protection. ITXC believes IMT’s claims are without merit. ITXC’s claims against IMT will be pursued, if at all, in the bankruptcy proceeding, which has been converted into a Chapter 7 proceeding.

We are not party to any other legal proceeding, the adverse outcome of which is expected to have a material adverse effect on our business, financial condition, operating results or future prospects.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the Consolidated and Combined Financial Statements, the related Notes to Consolidated and Combined Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Registration Statement filed with the Commission on April 30, 2004 and the Unaudited Consolidated Financial Statements and related Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

The Company has included in this Quarterly Report certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 concerning TIH’s business, operations and financial condition. “Forward-looking statements” consist of all non-historical information, and the analysis of historical information, including any references in this Quarterly Report to future revenue growth, future expense growth, future credit exposure, future profitability, anticipated cash resources, anticipated capital expenditures,

~~capital~~Item ~~requirements,~~2. ~~and the Company~~Management’s ~~plans~~Discussion ~~for~~and ~~future~~Analysis ~~periods.~~of InFinancial ~~addition,~~Condition ~~the words “could”, “expects”, “anticipates”, “objective”, “plan”, “may affect”, “may depend”, “believes”, “estimates”, “projects”~~ and ~~similar~~Results ~~words~~of ~~and phrases are also intended to identify such forward-looking statements.~~ Operations

~~Actual~~The ~~results~~following ~~could~~discussion ~~differ materially from those projected in the Company’s forward-looking statements due to numerous known~~ and ~~unknown~~analysis ~~risks~~should ~~and~~be ~~uncertainties,~~read ~~including, among other things, (i) uncertainties inherent~~ in ~~the~~conjunction ~~merger~~ with ~~ITXC, including but not limited to,~~ the ~~integration~~audited ~~effort~~Consolidated and ~~retention~~Combined ~~of key employees~~Financial Statements, ~~customers and suppliers through~~ the ~~merger~~related ~~process;~~Notes ~~the inability~~ to ~~capture~~audited ~~anticipated~~Consolidated ~~synergies; the existence of undisclosed or unanticipated contingent liabilities;~~ and ~~the~~Combined ~~risk~~Financial ~~that the~~Statements ~~Company may not be able to effectively execute its business plan~~ and ~~(ii)~~Management’s ~~other~~Discussion ~~risks, including the volatile~~ and ~~competitive~~Analysis ~~environment~~of ~~for~~Financial ~~telecommunications;~~Condition ~~changes in domestic~~ and ~~foreign~~Results ~~economic, market and regulatory conditions; the inherent uncertainty~~ of ~~financial~~Operations ~~estimates~~included ~~and projections; uncertainty inherent~~ in ~~litigation;~~the ~~unanticipated~~Company’s ~~technological~~annual ~~difficulties;~~Form ~~the~~10-K ~~risk~~for ~~that~~ the ~~Company~~year ~~may~~ended December ~~not~~31, be2004 ~~able~~and tofiled ~~access~~with ~~sufficient capital;~~ the ~~creditworthiness~~Securities of and ~~relationship~~ ~~with~~Exchange ~~our~~Commission ~~customers;~~on ~~the~~March ~~Company’s~~17, ~~debt~~2005 ~~level~~ and the ~~inherent~~unaudited ~~lack~~interim ofConsolidated ~~flexibility~~Financial ~~resulting~~Statements ~~therefrom;~~and ~~future~~related ~~transactions;~~Notes ~~risks inherent in being subject~~ to ~~significant~~Consolidated ~~regulation;~~Financial ~~and~~Statements ~~other~~included ~~considerations described as “Risk Factors”~~ in ~~the~~Item ~~Registration~~1 ~~Statement.~~of ~~All~~Part ~~such~~I ~~forward-looking statements are current only as~~ of ~~the date on which such statements were made. The Company does not undertake any obligation to publicly update any forward-looking statement to~~this ~~reflect~~Quarterly ~~events~~Report ~~or circumstances after the date~~ on ~~which~~Form ~~any such statement is made or to reflect the occurrence of unanticipated events~~10-Q.

~~Presentation~~The Company has included in this Quarterly Report certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 concerning TIH’s business, operations and financial condition. “Forward-looking statements” consist of all non-historical information, and the analysis of historical information, including any references in this Quarterly Report to future revenue growth, future expense growth, future credit exposure, future profitability, anticipated cash resources, anticipated capital expenditures, capital requirements, and the Company’s plans for future periods. In addition, the words “could”, “expects”, “anticipates”, “objective”, “plan”, “may affect”, “may depend”, “believes”, “estimates”, “projects” and similar words and phrases are also intended to identify such forward-looking statements.

~~The~~Actual ~~historical~~results ~~financial~~could ~~information~~differ ~~and~~materially ~~the~~from ~~unaudited~~those ~~financial~~projected in the Company’s forward-looking statements due to ~~which~~numerous ~~the~~known ~~following~~and ~~discussion~~unknown ~~relates~~risks ~~for~~and uncertainties, including, among other things, (i) uncertainties inherent in the ~~three~~execution ~~and~~of ~~six~~the ~~months~~Company’s ~~ended~~Amalgamation Agreement with VSNL, including but not ~~June~~limited 30to, ~~2004~~transactions costs, retention of key employees and ~~for~~customers through the ~~month~~acquisition process, the risk of ~~June~~approval ~~2003~~with requirements, ~~which~~limitations weor ~~refer~~costs, disapproval, or delay by governmental entities of the proposed transaction, the risks of delay in consummation of the transaction, the existence of undisclosed or unanticipated contingent liabilities, that material adverse changes to aseither entity may prevent the ~~“Successor~~transaction ~~Financial~~from ~~Statements~~closing and (ii) other risks,” ~~are~~including the volatile ~~consolidated~~and competitive environment for telecommunications; changes in domestic and foreign economic, market and regulatory conditions; the inherent uncertainty of financial ~~statements~~estimates and projections; uncertainty inherent in litigation; unanticipated technological difficulties; the risk that the Company may not be able to access sufficient capital; the creditworthiness of ~~Teleglobe~~and ~~International~~relationship ~~Holdings~~with ~~Ltd~~our ~~for~~customers; ~~such~~the ~~period.~~Company’s ~~The~~debt ~~Successor~~level ~~Financial~~and ~~Statements~~the inherent lack of flexibility ~~reflect~~resulting ~~the~~thereof; ~~assets,~~future ~~liabilities~~transactions and ~~businesses~~risks ~~acquired~~inherent ~~from~~in ~~Old~~being ~~Teleglobe~~subject to significant regulation. (See also discussion on ~~May~~Risk ~~30,~~Factors ~~2003,~~on page 48 of the Company’s annual Form 10-K). All such forward-looking statements are current only as ~~discussed~~of the indate ~~detail~~on inwhich such statements were made. The Company does not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the ~~Registration~~date ~~Statement~~on which any such statement is made or to reflect the occurrence of unanticipated events.

~~The~~More ~~financial~~details ~~information~~on ~~for~~ the Agreement ~~two months ended May 30, 2003~~ and ~~for~~Plan ~~the~~of ~~five~~Amalgamation ~~months ended May 30, 2003, which we refer to as the “Predecessor Financial Statements,”~~ are ~~derived~~provided ~~from~~in the ~~books~~Company’s ~~and~~Form ~~records~~8-K offiled ~~Old~~July ~~Teleglobe~~25, ~~from~~2005 ~~which we purchased certain assets, liabilities~~ and ~~businesses.~~in ~~The~~Note ~~“Predecessor”~~17 ~~represents the Telecommunications Group~~ of ~~Old Teleglobe that consisted solely of~~ the ~~voice,~~unaudited ~~data,~~interim ~~Internet~~Consolidated ~~and~~Financial ~~wireless~~Statements ~~roaming~~included ~~services businesses and includes the portions of such businesses not acquired~~herein.

The results of operations contained in the unaudited ~~financial~~interim ~~statements for the two months ended May 30, 2003 and for the five months ended May 30, 2003~~Consolidated ~~for~~Financial ~~the~~Statements ~~Predecessor and the unaudited financial statements~~ for the three and six months ended June 30, ~~2004~~2005 ~~for~~and ~~the~~2004 ~~Successor~~ are results of operations for such interim periods and are not necessarily indicative of the results to be expected for an entire year or for any other period.

Recently Issued Accounting Standards

~~Overview~~ provide service in exchange for the award or the vesting period. A public entity will initially measure the cost of liability based service awards based on its current fair value; the fair value of that award will be remeasured subsequently at each reporting date through the settlement date. Changes in fair value during the requisite service period will be recognized as compensation cost over that period. Adoption of SFAS 123R is required for the fiscal year beginning after June 15, 2005. The Company is evaluating SFAS 123R and believes the impact on the financial statements should be consistent with the FAS 123 pro forma disclosure contained in Note 6 of the unaudited interim Consolidated Financial Statements.

WeIn ~~are~~May a2005, ~~global~~the ~~telecommunications~~FASB ~~company~~issued ~~providing~~SFAS a154, ~~range~~Accounting ofChanges ~~international~~ and ~~domestic~~Error ~~telecommunications~~Corrections. ~~services~~SFAS on154 aeliminates ~~wholesale~~the ~~basis~~requirement in APB Opinion No. We20, ~~categorize~~Accounting Changes, to include the cumulative effect of changes in accounting ~~our~~principle ~~products~~in ~~and~~the ~~services~~income ~~into~~statement ~~three~~in ~~primary~~the ~~groups:~~period ~~voice~~of change. Instead, ~~data~~to enhance the comparability of prior period financial statements, SFAS 154 requires that changes in accounting principle be retrospectively applied. Under the retrospective application, the new accounting principle is applied as of the beginning of the first period presented as if that principle had always been used. Adoption of SFAS 154 is required for accounting changes and ~~value-added~~corrections ~~services~~of errors made in the fiscal year beginning after December 15, 2005. The ~~following~~Company ~~table~~will ~~summarizes~~adopt ~~our~~this ~~key~~new ~~service~~accounting ~~offerings:~~standard on January 1st, 2006.

~~Sample~~ITXC ~~Service~~Integration ~~Offering~~Plan Voice – Transport Services International Switched Transit Virtual Transit Premium Virtual Transit VoIP services Data – Transport Services IP Transit (Local and International InternetAccess) DVB/IP Satellite Access International Private Leased Circuits Hard Patched Transit Broadcast Indefeasible Rights of Use Value-Added Services Mobile Global Roaming and Signaling Network Management Multi-Point Access International Toll-Free Inbound collect

~~Revenue~~The ~~Drivers~~following is an update on the Company’s ITXC integration plan:

~~Our~~The ~~revenues~~Company’s ~~are~~ITXC ~~impacted~~merger integration plan to achieve annual post-merger benefits of approximately $25 to $30 million continued to progress in the second quarter of 2005. The integration plan centered around facility and headcount reductions, termination cost savings and consolidation of the Teleglobe and ITXC networks resulting in reduced capital expenditures. The original completion date was set for the first quarter of 2005, however there was a delay of one quarter from the original plan exclusively related to planned integration of routing capabilities. As of June 30, 2005, the Company estimates that $22.5 million of the annualized post-merger benefits have been realized with the remaining benefits from unified routing expected to be realized over the next two quarters. Prior to the acquisition of ITXC by the ~~following~~Company, ~~factors:~~ITXC stand alone, reported a negative EBITDA of $27.8 million, including unusual charges of $7.3 million, for its twelve months ended December 31, 2003. Integration costs, including consultant fees, severances and retention bonuses and other costs directly related to the integration of ITXC, of approximately $1.3 million, are included in the consolidated results of operations for the six months ended June 30, 2005.

•ITXC ~~with~~access ~~respect~~ to ~~our~~Teleglobe ~~voice~~IP ~~transport~~network ~~revenues,~~and ~~complete~~Teleglobe connectivity: ~~dependence upon voice traffic volume;~~

•The ~~with~~combination ~~respect~~of toTeleglobe ~~our~~and ~~data~~ITXC ~~transport~~provided opportunities ~~revenues~~to inlower the ~~second~~operating ~~quarter~~expenses of ~~2004~~our network, ~~approximately~~resulting ~~14%~~in ofa ~~data~~decrease ~~transport~~in ~~revenue~~network expenses. IP access charges is ~~dependent~~a significant example. ITXC on ~~data~~a ~~traffic~~stand-alone ~~volume~~basis ~~with~~purchased ~~the~~IP ~~remainder~~access services from Teleglobe as well as other competitive wholesale IP service carriers. We have cancelled many of ~~such~~these ~~revenues~~third-party ~~subject~~services, toreplacing ~~fixed~~access ~~pricing~~via ~~arrangements;~~Teleglobe’s network. The marginal cost of doing so is very low, yielding operating expense reductions.

•We have also realized network savings in the ~~rate~~short-term ~~and~~by ~~terms~~migrating some common customers from two interconnects to one, improving utilization rates. This provides us growth capacity with lower investment requirements for a period of ~~contractual~~time. ~~renewals;~~In the longer term we anticipate benefits from network growth via VoIP, an inherently more cost effective medium than TDM. To date, the Company has achieved its integration goal related to network consolidation. The benefits of our completed network consolidation is reflected in our network expenses.

•Facilities ~~our~~and ~~ability~~headcount toreductions: ~~satisfy or exceed service level agreements in customer contracts;~~

•To date, the ~~rate~~Company has achieved its integration goal related to closures of ~~usage~~overlapping facilities. Further savings may be achieved from the sublet of ~~our~~excess ~~global~~floor ~~roaming~~space. The two first quarters of 2005 have not been significantly impacted by savings from headcount reductions mainly because the results include retention bonus earned in the period. However, ~~ITFS~~SG&A ~~(international~~for ~~toll~~the ~~free~~third ~~services)~~quarter of 2005 and ~~inbound~~onwards ~~collect~~is ~~services;~~expected to reflect net benefits from these reductions.

• pricing pressures resulting from competitive market conditions; and

• the commercial provisions of the Bell (BCE) Agreement.

Primary Expense Drivers

Our primary expenses are comprised of telecommunication and network expenses, selling, general and administrative expenses, and depreciation/amortization expenses.

Telecommunications and Network Expenses

Variations in telecommunications and network expenses are primarily due to:

• volume of voice, data and global roaming traffic;

• reduction in network costs resulting from competitive market conditions;

• additions or cancellations of customers and associated local access costs of interconnection circuits;

•Termination ~~choice~~cost ofsavings: ~~equipment suppliers and terms of agreement with vendors~~

•In ~~network~~the ~~redesign~~future, ~~and~~due ~~efficiency~~to ~~planning~~the ~~conducted~~nature of the international wholesale voice industry, the increase in ~~order~~volume from the merger with ITXC will result in termination cost savings for the combined company with other carriers. The integration of the combined company least cost routing capabilities will allow the combined company to ~~maximize~~route ~~profitability~~traffic ~~and~~using ~~optimize~~the ~~quality~~lowest cost available in any of ~~service;~~the ~~and~~combined company’s routes. While our benefits to date are limited, we anticipate the synergies to occur in the future now that we have completed the unification of routing.

•Results ~~expansion~~of orOperations—Comparison ~~reduction~~ of ~~POPs~~the ~~for~~Three ~~interconnection~~and ~~with~~Six ~~customers~~Months Ended June 30, 2005 and ~~suppliers.~~2004

~~Selling~~Set forth below is a description of the results of operations for the three and six months ended June 30, ~~General~~2005 and ~~Administrative~~June ~~Expenses~~30, 2004. The results of ITXC are included in the consolidated results of operations from June 1, 2004. Thus, the results of ITXC are included in the six months ended June 30, 2005 and from June 1, 2004 in the three and six months ended June 30, 2004.

Variations in selling, general and administrative expenses are primarily due to:

• headcount reductions associated with the Old Teleglobe bankruptcy proceedings;

• increases in average wages and inflation;

• changes in the number of POPs; and

• fluctuations in the US dollar-Canadian dollar exchange rate.

Cash Flow Generation

We generate cash through two settlement processes: net settlement and traditional settlement. If industry practices regarding net settlement were to change, our cash flow could be adversely affected.

Net Settlement

Because a significant portion of our business is conducted through bilateral arrangements, we generate a substantial amount of our cash flow by periodic “netting” or “settlement.” The fees payable to each party are declared, typically monthly or quarterly, and we either make payments to or receive payments from correspondent carriers based on the net volume and rate of inbound and outbound traffic. Fees are typically settled on a monthly or quarterly basis, but may also be settled biannually or annually. Due to these extended settlement periods, there can be material variations in quarterly cash flows.

Traditional Settlement

We also employ what we consider a more traditional settlement process under which customers are bound by industry standard contracts with terms of generally net 30 days.

In the three months ended June 30, 2004, approximately 70% and 30% of our revenue was generated through net settlement and traditional settlement, respectively.

Critical Trends; Performance Drivers

Price Erosion

Throughout the late 1990’s, the number of companies deploying and managing international fiber optic networks for the provision of voice and data transport services increased dramatically, fueled by expectations for substantial increases in demand as well as investor optimism. The resulting oversupply, coupled with competition among suppliers, has resulted in transport and capacity prices plummeting. Although the price for data transport is highly variable as a function of geography and transport system, according to industry sources the price for data transport has declined due to overcapacity and intense competition. Our average revenue per minute, or ARPM, for international voice traffic has decreased significantly per year since the beginning of 2000, as price erosion has been offset to some extent by favorable product mix. We have continued to experience price erosion in 2004 and anticipate this trend to continue.

Cost Deflation

The same factors contributing to price erosion, namely oversupply and competition among suppliers, as well as enhancements to network technology, have caused significant price deflation for voice termination and interconnection circuits. As a result, we expect to benefit from ongoing reductions in telecommunications and network expenses.

Migration to VoIP

As a result of increased reliability and efficiency of VoIP technology, voice traffic using the technology has increased substantially since 2001. We believe that the addition of ITXC’s proprietary technology will permit the Company to maintain quality and reliability while benefiting from the cost advantages of VoIP transport.

Bell Canada Revenue Trends

The Bell Agreement was amended on June 12, 2003 to extend the agreement and Bell Canada’s minimum purchase commitment for two additional years, from January 1, 2006 to December 31, 2007. In exchange for Bell Canada’s agreement to eliminate the requirement that Teleglobe purchase telecommunications services for delivery in Canada exclusively from Bell Canada, Teleglobe agreed to eliminate the requirement that Bell Canada purchase certain telecommunications services for delivery outside of Canada exclusively from Teleglobe (i.e., IP transit, IPL and international voice), thereby permitting Teleglobe to enter into its agreements with other major Canadian telecommunications carriers such as Telus. The amendment also reduced annually, in each of the years 2004 through 2007, by specified amounts, the percentage of the traffic that each party is committed to purchase from the other. In addition, the pre-existing requirement to provide Bell Canada the most favorable pricing available to any customer, known as a most favored nations clause, was maintained. As a result of these provisions and the overall trend in the international telecommunications industry toward continual price declines, revenues generated by Bell Canada have been and are expected to continue to decline over time.

Critical Accounting Policies and Estimates

The discussion and analysis of its financial condition and results of operations are based upon the Consolidated Financial Statements and Combined Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to bad debts, investments, intangible assets, restructuring and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Company believes the following critical accounting policies apply to and affect significant judgments and estimates used in the preparation of its Consolidated and Combined Financial Statements:

Allowance for Doubtful Accounts. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The Company estimates the amount of the allowance for doubtful accounts required to reduce accounts receivable to expected net realized value by reviewing the status of significant past-due receivables and analyzing historical bad debt trends and industry and customer specific conditions.

Revenue Recognition. There are limited estimates required in connection with recognition of revenue because voice and data traffic are measured in automated switches and routers, and contractual rates for traffic are used to bill or declare revenue on a monthly basis. However, for certain voice contracts, historical traffic may be retroactively re-rated within a contract period. This traffic re-rating is calculated and recognized immediately in the month the new contractual rate is established.

Although relatively infrequent, there can be material disputes with customers over volume or traffic recognized on our or our customers’ switches. Our practice is to maintain recorded revenue based on our traffic data until the merits of a dispute are identified.

Telecommunications Expense. Recognition of voice termination expense for basic termination agreements is similar to revenue recognition and requires minimal estimation. However, material estimates are currently required for our more complex longer-term enhanced bilateral agreements, or EBAs. For these contracts which have an average term of approximately seven months, a termination rate is estimated at the beginning of the contract based on anticipated net inbound/outbound traffic and surcharges. Our current practice is to reconcile actual net traffic and surcharges after the contract terminates, which can result in material periodic adjustments.

Network Expenses. Maintenance and restoration expenses for undersea cables vary from period to period based on cable reliability and lit capacity within a sub-sea region. We accrue for these expenses using estimates of costs based on historical trends. On occasion, unanticipated events may require a material adjustment during a reporting period. Additionally, because of the complexity of industry practices for provisioning and disconnecting access circuits, disputes regarding termination timing and associated charges can occur. From time to time, we have experienced material adjustments during a reporting period from resolution of these disputes.

Results of Operations - Comparison of the Three Months Ended June 30, 2004 and 2003 and the Six Months Ended June 30, 2004 and 2003

Set forth below is a description of the results of operations derived from the Successor financial statements for the three and six months ended June 30, 2004 and for the month ended June 30, 2003. These results include only the results of operations arising from the purchase of certain businesses from Old Teleglobe. The discussion below sets forth the results of operations derived from the Predecessor financial statements for the five months ended May 30, 2003 and the two months ended May 30, 2003 consisting of all businesses owned by Old Teleglobe. For purpose of comparing periods, the June 2003 monthly results of the Successor have been grouped with the Predecessor financial statements for the five months ended May 30, 2003 and two months ended May 30, 2003 by mathematically adding the relevant periods without making any adjustments. The results of operations for the three and six months ended June 30, 2003 would have been different if the entire periods were part of the Successor. The results of ITXC are included in the consolidated results of operations as of June 1, 2004.

Non-GAAP Financial Data (Unaudited)

We are presenting EBITDA (earnings before interest, taxes, depreciation and amortization) because management considers it an important supplemental measure of our performance and ~~believes~~believe that it is frequently used by interested parties in the evaluation of companies in our industry, in particular in connection with offerings of debt securities. However, EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•

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 differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to our company to invest in its business. We compensate for these limitations by relying primarily on the GAAP results and using EBITDA ~~and Adjusted EBITDA~~ only ~~supplementally~~in supplemental.

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.

EBITDA (earnings before interest, taxes, depreciation and amortization)

	Three months endedJune 30,						Six months endedJune 30,
(amounts in thousands)	Three Months EndedJune 30, 2005			Three Months EndedJune 30, 2004			Six Months EndedJune 30, 2005			Six Months EndedJune 30, 2004
(amounts in thousands)	2004			2003			2004			2003
Net loss	$	(401	)	$	(3,776	)	$	(8,846	)	$	(1,296	)
Net (loss) income	$	(3,776	)	$	(800	)	$	(1,296	)	$	(27,698	)
Add:
Interest, net		32,~~821~~101			~~615~~3,821			6,~~210~~033			~~713~~6,210
Income taxes		(~~2,345~~299	)		16(2,345	)		(~~2,197~~586	)		16(2,197	)
Depreciation		5,~~729~~762			75,~~498~~108			1012,~~241~~009			169,~~530~~237
Amortization expense		12,~~339~~648			~~156~~1,960			25,~~359~~103			~~156~~3,363
EBITDA	$	49,~~768~~811		$	74,~~485~~768		$	1513,~~317~~713		$	~~(10~~15,~~283~~317	)
Add:
Reorganization charges		—			9,931			—			34,155
ADJUSTED EBITDA	$	4,768		$	17,416		$	15,317		$	23,872

The EBITDA for the three and six months ended June 30, 2005 includes a non-recurring gain of $2.2 million relating to the disposal of the Burnaby Vancouver Station. See Note 11 of the unaudited interim Consolidated Financial Statements included herein for more details.

In addition, for the three and six months ended June 30, 2005, the Company’s operating results include $3.0 million of revenue due to major favorable settlement agreements with certain carriers and $0.9 million of similar favorable agreements in network expense. For the three and six months ended June 30, 2005, the Company’s telecommunication expense was reduced by major favorable settlements with certain carriers for approximately $2.7 million and $5.7 million respectively.

Revenues

The following table presents revenues derived from each product group and other relevant revenue-related information for the periods indicated. The results of ITXC are included from June 1, 2004.

	Three Months Ended June 30, 2004			Three Months Ended June 30, 2003			Six Months Ended June 30, 2004			Six Months Ended June 30, 2003
	Three Months Ended June 30, 2005			Three Months Ended June 30, 2004			Six Months Ended June 30, 2005			Six Months Ended June 30, 2004
	Successor			Successor/ Predecessor			Successor			Successor/ Predecessor
Revenues per line of business (in millions of U.S. dollars)
Voice – transport	$	183		$	148		$	349		$	320
Voice—transport	$	190		$	183		$	396		$	349
Data – transport		26			32			54			70
Data—transport		25			26			51			54
Value - added services		22			21			42			41
Value—added services		24			22			47			42
Total	$	~~231~~239		$	~~201~~231		$	~~445~~494		$	~~431~~445
Total revenues excluding BCE revenues	$	211		$	155		$	403		$	310
Total revenues excluding Bell Canada (1) revenues	$	215		$	211		$	443		$	403
Minutes of traffic (in millions)
Voice – transport		2,444			1,752			4,536			3,610
Voice—transport		3,328			2,444			6,760			4,536
Other		5370			5953			~~102~~134			~~121~~102
Total		23,~~497~~398			12,~~811~~497			46,~~638~~894			34,~~731~~638
Average voice revenue per minute	$	0.~~075~~057		$	0.~~085~~075		$	0.~~077~~059		$	0.~~089~~077
Percentage of revenues from BCE		8.7	%		22.9	%		9.4	%		28.1	%
Percentage of revenues from Bell Canada (1)		10.1	%		8.6	%		10.4	%		9.5	%
Number of customers at period-end		1,~~328~~487			1,~~030~~328			1,~~328~~487			1,~~030~~328
Geographic distribution of revenues
Asia		97	%		109	%		97	%		109	%
Canada		1115	%		2311	%		1215	%		2812	%
Europe		2832	%		2628	%		2933	%		2429	%
USA		3531	%		3235	%		3431	%		2834	%
Latin America		4	%		54	%		54	%		5	%
Other		1311	%		413	%		1110	%		511	%
Total		100	%		100	%		100	%		100	%

(1) ~~BCE (~~Bell Canada ~~Enterprises)~~ is Canada’s largest telecommunications company.

24Total revenues, excluding revenues from Bell Canada, increased by $4.2 million or 2.0% in the current quarter as compared to the same prior year period, and by $40.2 million or 10.0% in the year-to-date period ended June 30, 2005 as compared to the same period in 2004. The increase in revenues, excluding the Bell Canada revenue, mainly results from the inclusion of ITXC revenue from June 1, 2004. Revenues from Bell Canada increased by $4.4 million or 22.0% in the quarter ended June 30, 2005 as compared to the quarter ended June 30, 2004 and by $9.1 million or 21.4% in the six months ended June 30, 2005 as compared to the same period in 2004. The increase is mainly due to abnormally low volume with Bell Canada in both comparative periods of 2004. The number of customers in the current quarter-end represents an increase of 159, including customers obtained through the merger with ITXC, as compared to June 30, 2004.

~~Predecessor~~Revenue ~~revenue~~generated ~~includes~~from ~~portions~~voice oftransport ~~the~~services ~~Predecessor~~increased ~~business not acquired~~ by ~~Successor~~approximately ~~and may not be directly comparable~~$7.4 ~~Total revenues excluding revenues from Bell Canada increased by $56~~ million or 364.0 % in the current quarter as compared to the ~~second~~same ~~quarter~~prior ofyear ~~2003~~period. For the six months ended June 30, ~~2004~~2005, ~~total~~revenue ~~revenues~~generated ~~excluding revenues~~ from ~~Bell~~voice ~~Canada~~transport increased by $9347.7 million or 3013.7% ~~from~~as ~~the~~compared ~~six~~to ~~months~~the ~~ended~~same ~~June~~prior ~~30,~~year ~~2003~~period. The ~~revenues~~increase ~~generated~~is ~~from~~mainly ~~Bell~~explained by ~~Canada~~the ~~decreased~~inclusion ~~due~~of toITXC ~~the~~revenue ~~renegotiated~~from ~~volume~~June 1, 2004 and ~~pricing~~from ~~arrangements~~an asincrease ~~discussed~~in ~~above.~~minutes ~~The~~of ~~increase~~traffic carried in ~~revenues, excluding~~both ~~the~~comparable ~~Bell~~periods. ~~revenue,~~Minutes ~~mainly~~of ~~results~~traffic ~~from~~carried in the ~~inclusion~~current ofquarter ~~$24~~versus ~~million~~the ofsame ~~revenue~~quarter ~~generated~~in 2004 increased by ~~ITXC~~36.2% inand increased by 49.1% for the ~~month~~six ofmonths ended June ~~2004.~~30, ~~The~~2005 ~~remaining~~as ~~increase~~compared to the same period in ~~revenues~~2004. The increase is ~~partially~~mainly due to anthe ~~increasingly~~inclusion ~~diverse customer base~~ of ~~Teleglobe (excluding~~ ITXC). ~~The~~related ~~number~~minutes offrom ~~customers~~June at1, ~~current~~2004 ~~quarter-end~~while ~~represents~~excluding ansuch ~~increase~~volume offor ~~298,~~the ~~including~~first ~~customers~~five ~~obtained~~months ~~through~~of ~~the~~2004. ~~merger~~The ~~with~~increase ~~ITXC,~~in revenue aswas ~~compared~~offset toby the ~~comparable~~current ~~period~~competitive pricing trends in ~~2003~~the telecommunication industry.

~~Revenue~~During ~~generated from voice transport services increased by approximately $34.6 million or 23.4% during~~ the quarter ~~ended~~and ~~June 30, 2004 as compared to~~ the ~~three~~six months ended June 30, ~~2003.~~2005, ~~During~~ the ~~six~~average ~~months ended June 30, 2004,~~ voice ~~transport~~ revenue ~~increased~~per byminute was approximately $290.3057 ~~million~~and ~~or 9~~$0.2%059 ~~from~~as ~~the~~compared ~~six months ended June~~with ~~30, 2003~~$0.075 ~~The increase is mainly due to the inclusion of ITXC revenue for the month of June 2004~~ and ~~by an increase in minutes of traffic carried~~$0.077 ~~Minutes~~per ofminute ~~traffic~~during ~~carried increased mainly due to a network expansion in Europe and significant market penetration in~~ the ~~USA. Including 358 million minutes generated by ITXC in the month of June 2004, minutes of traffic carried in the current~~ quarter ~~versus the same quarter in 2003 increased by 39%~~ and ~~by 26% in~~ the six months ended June 30, 2004 ~~versus the six months ended June 30, 2003~~respectively. The ~~increase~~decrease in average revenue ~~was~~per ~~partially~~minutes ~~offset~~was byprimarily ~~the~~attributable ~~current~~to ~~competitive~~changes ~~pricing trends~~ in ~~the~~our ~~telecommunication~~route ~~industry~~destination mix and ato ~~scheduled~~an ~~decrease~~overall decline in ~~volume~~rates experienced ~~and~~in ~~price adjustment under~~ the ~~Bell~~telecommunication ~~Contract~~industry.

~~During~~In the second quarter ~~ended~~of ~~June 30~~2005, ~~2004,~~voice ~~the~~transport ~~average voice~~ revenue ~~per~~includes ~~minute~~the ~~was~~impact ~~approximately~~of ~~$0.075~~major ~~per~~favorable ~~minute,~~settlement asagreements ~~compared~~ with ~~$0.085~~certain ~~per~~carriers ~~minute~~for ~~during~~approximately ~~the~~$1.5 ~~quarter~~million. ~~ended~~In ~~June 30~~addition, ~~2003.~~the ~~The~~second ~~year~~quarter ~~over~~of ~~year~~2005 ~~average~~ voice transport revenue ~~per~~includes ~~minute~~an ~~decreased~~amount inof ~~the current period to~~ $01.~~077 for the six months ended~~2 ~~June~~million ~~30,~~resulting ~~2004~~ from ~~$0.089~~a ~~for~~non-recurring ~~the~~favorable ~~six~~settlement ~~months ended June 30, 2003. The decrease in average revenue per minute is primarily attributable to changes in our route destination mix, repricing~~ of ~~Bell~~a ~~services~~dispute ~~and~~with toa ~~an overall decline in rates experienced in telecommunications over the past year~~customer.

Data service revenue ~~decreased~~ in the second quarter of 2005 was lower by approximately $51.62 million or 174.76% ~~in the three months ended June 30, 2004~~ as compared to the ~~three~~second ~~months~~quarter ~~ended~~of ~~June 30, 2003~~2004. OnData ~~a yearly basis, data~~ service revenue decreased by $~~15.~~3.4 million or 216.93% for the six months ~~ended June~~ ~~30, 2004 versus the six months~~ ended June 30, ~~2003.~~2005 ~~The~~as ~~decline~~compared isto inthe ~~large~~same ~~part~~prior ayear ~~result~~period of ~~cancellation~~2004. ofThe ~~customer~~Company ~~contracts~~experienced ~~due~~growth toin ~~uncertainty~~new ~~with~~customers ~~Old~~and ~~Teleglobe’s~~in ~~asset~~traffic ~~sale~~volume asin ~~well as~~ the ~~repricing~~three ofand ~~contracts~~six ~~upon~~months ~~renewal~~ended asJune a30, ~~result~~2005, ~~of ongoing~~however, ~~price~~these ~~competition.~~benefits ~~These declines~~ were ~~partially~~ offset by ~~increased~~price ~~traffic volumes billed to retained customers~~erosion. ~~During Old Teleglobe’s bankruptcy~~In addition, ~~the~~Data ~~Predecessor~~service ~~experienced~~revenue ~~difficulty~~includes inthe ~~signing~~impact upof ~~new~~a ~~data~~major ~~customers,~~favorable ~~which~~settlement ~~led~~agreement to with a ~~decline~~carrier infor ~~data~~approximately ~~revenues~~$0.3 asmillion ~~existing~~in ~~contracts~~the ~~terminated~~three ~~during~~and ~~the~~six ~~five~~ months ended ~~May~~ June 30, ~~2003~~2005.

Revenue generated from value -added services increased by $02.94 million or 4 10.29% in the current quarter ~~from~~compared to the ~~second~~same quarter of ~~2003~~2004 and by $05.60 million or 111.49% for the year-to-date period ended June 30, ~~2004~~2005 as compared to the ~~comparable~~same period ofin ~~2003~~2004. WeThe company experienced increases in signaling services inand ~~the current periods, offset by~~ a volume ~~decline~~increase in ~~other~~our ~~value~~international ~~added~~toll ~~services~~free ~~primarily~~service ~~from operations~~(ITFS) ~~that~~in ~~were~~both ~~eliminated~~periods ~~during~~as ~~the~~compared ~~restructuring~~to of the ~~Predecessor~~same ~~and~~periods byin ~~price erosion resulting from competition by new entrants into the mobile global roaming services market~~2004.

2523

Operating Expenses

The following table outlines operating costs as a percentage of revenue for the periods indicated. The results of ITXC are included from June 1, 2004.

	Three Months Ended June 30, 2004		Three Months Ended June 30, 2003		Six Months Ended June 30, 2004		Six Months Ended June 30, 2003
	Three Months Ended June 30, 2005		Three Months Ended June 30, 2004		Six Months Ended June 30, 2005		Six Months Ended June 30, 2004
	(Successor)		(Predecessor/ Successor)		(Successor)		(Predecessor/ Successor)
Total operating revenues	100.0	%	100.0	%	100.0	%	100.0	%
Operating expenses
Telecommunication	7370.49	%	6873.54	%	72.76	%	6972.67	%
Network, exclusive of depreciation (shown below)	10.4	%	15.0	%	10.7	%	15.0	%
Network, exclusive of depreciation and amortization (shown below)	9.5	%	10.4	%	9.2	%	10.7	%
Selling, general and administrative exclusive of, bad debt expense, depreciation, amortization and restructuring charges (shown below)	14.0	%	10.8	%	13.0	%	11.3	%
Selling, general and administrative exclusive of, bad debt expense (recovery), stock based compensation expense, depreciation, amortization and restructuring charges (shown below)	15.7	%	14.0	%	15.2	%	13.0	%
Bad debt (recovery) expense	0.2	%	0.4	%	(0.1	)%	0.9	%
Stock based compensation expense	0.0	%	0.0	%	0.0	%	0.0	%
Depreciation	2.5	%	3.7	%	2.3	%	3.8	%
Bad debt expense (recovery)	0.9	%	0.2	%	(0.1	)%	(0.1	)%
Amortization of intangible assets	0.6	%	0.1	%	0.5	%	—
Depreciation	2.4	%	2.2	%	2.4	%	2.1	%
Restructuring charges	—		—		0.2	%	—
Amortization of intangible assets	1.1	%	0.9	%	1.0	%	0.7	%
Foreign exchange loss (gain)	(0.1	)%	(3.7	)%	0.1	%	(2.4	)%
Restructuring charges	—	%	—	%	—	%	0.2	%
Total operating expenses as a percentage of revenues	101.0	%	94.8	%	99.4	%	98.2	%
Foreign exchange loss (gain)	0.7	%	(0.1	)%	0.7	%	0.1	%
Total operating expenses as a percentage of revenues	101.2	%	101.0	%	101.0	%	99.4	%

Telecommunication expense

Telecommunication expense during the three and six months ended June 30, ~~2004~~2005 increased by approximately $310.92 million or 180.81% and by $2335.95 million or ~~7.4~~11% respectively, ~~from~~as compared to the same periods in ~~2003~~2004. ~~primarily~~This asis aprimarily ~~result~~explained ofby the inclusion of ITXC’s ~~telecommunication~~results ~~expenses~~from ~~for the month of~~ June 1, 2004. The increase was partially offset by ~~the termination of our mobile global roaming joint venture agreement with Comfone and~~ lower voice termination costs reflecting benefits from price deflation. AtIn ~~the time of the Acquisition~~addition, ~~management had decided to terminate~~ the ~~Comfone~~second ~~agreement~~quarter ~~and recorded its best estimate~~ of ~~the~~2005 ~~fair~~and ~~value of~~ the ~~termination~~year-to-date ~~payment~~results asinclude anfavorable ~~unfavorable~~settlements ~~contract~~with incertain ~~the~~carriers ~~purchase~~for ~~price~~approximately ~~allocation~~$2.7 ~~Accretion~~million and of$5.7 ~~the~~million ~~liability to reflect the amounts payable are recorded as interest expense~~respectively. As a percentage of revenue, telecommunication expense ~~increased~~decreased ~~during~~for the three and six months ended June 30, ~~2004~~2005 as compared to ~~the~~ prior year periods mainly due to ana ~~unfavorable~~favorable mix of voice transport destinations with ~~lower~~ lower average margin per minute and the unification of networks with ITXC.

Network expense

Network expense decreased by approximately $6.1.3 million or 255.46% in the second quarter of ~~2004~~2005 compared to the second quarter of ~~2003~~2004. For the six months ended June 30, ~~2004~~2005, network expense decreased by $162.93 million or ~~35.~~4.8% from the comparable period in ~~2003~~2004. The decrease is mainly due to the ~~cancellation~~ongoing ofcontract ~~access circuits~~renegotiations nowith ~~longer~~our ~~required~~suppliers asand acancellations ~~result~~ of ~~the~~unprofitable ~~terminated~~circuits ~~contracts~~ and by the ~~rejection~~impact of ~~network~~a ~~contracts~~major ~~determined~~favorable tosettlement beagreement ~~unprofitable.~~with ~~Further~~a ~~decreases~~carrier ~~resulted~~for ~~from~~approximately ~~ongoing~~$0.9 ~~contract renegotiations with our suppliers~~million. The ~~decreases~~decrease ~~were partially~~was partially offset by the inclusion of ITXC’s network expenses ~~for~~from ~~the month of~~ June 1, 2004.

Network expense as a percentage of revenue decreased in the current quarter asand ~~compared to the same quarter~~ in ~~2003 and for~~ the ~~six~~year-to-date ~~months~~period ~~ended June 30, 2004~~ as compared to ~~the~~prior ~~six~~year ~~months ended June 30, 2003~~periods. The percentage decrease is a function of the decrease in ~~expenses~~network expenses while revenues increased for the same comparative periods.

2624

Selling, General and Administrative expenses

Selling, general and administrative (SG&A) expense has increased by approximately $~~10.~~5.2 million or 3216.70% in the second quarter of ~~2004~~2005 compared to the ~~second~~same quarter of ~~2003 and by $9~~2004.1 ~~million~~For ~~or 15.7% in~~ the six months ended June ~~2004~~30, as2005, ~~compared~~SG&A toexpenses ~~the~~increased ~~six~~by ~~months~~$17.5 ~~ended~~million ~~June~~or 30~~, 2003~~.2% ~~The~~compared ~~increase is mainly due~~ to ~~professional~~the ~~services~~same ~~related~~period toin ~~ITXC~~2004. ~~integration and~~The ~~public~~increases ~~company~~are ~~requirements,~~mainly ~~other~~due ~~ITXC~~to ~~integration costs and~~ the inclusion of ITXC’s SG&A expense ~~for~~from ~~the month of~~ June 1, 2004. Furthermore, SG&A expense was adversely affected by the decline in value of the US dollar as compared to the Canadian dollar from the ~~2003~~2004 periods compared to the ~~2004~~2005 periods, resulting in an increase in our SG&A ~~Canadian dollar~~ expenses. The ~~overall~~three ~~increase~~and insix ~~SG&A~~months ~~expenses~~ended inJune ~~2004~~30, is2005 ~~partially~~includes ~~offset~~$1.1 bymillion of professional fees incurred in connection with the ~~inclusion~~Amalgamation Agreement of ~~costs~~the inCompany with VSNL. In addition, the ~~five~~six months ended ~~May~~ June 30, ~~2003~~2005 ~~relating~~include to$1.3 million ~~certain~~of ~~operations~~ITXC ofintegration costs and also include professional fees incurred in connection with the ~~Predecessor~~Foreign ~~that~~Corrupt ~~were~~Practices ~~not~~Act ~~acquired~~investigation byin the ~~Successor~~amount of $0.7 million. The integration of ITXC is ~~currently~~completed ~~underway~~ and ~~once complete~~ is expected to provide significant synergies resulting in a decreased cost base. See update on ITXC integration in “ITXC Integration Plan” included herein.

Bad debt ~~expense~~recovery

~~The~~Bad ~~bad~~ debt recovery offor the six months ended June 30, 2005 amounted to $0.6 million versus a similar amount for the ~~six~~corresponding ~~months~~period ~~ended~~of ~~June~~2004. ~~30,~~During ~~2004~~the isfirst ~~due~~six tomonths ~~ongoing~~of 2004, the Company’s collection efforts toresulted ~~collect~~in the collection of accounts, which were previously identified as doubtful accounts. ~~Our~~Since ~~current~~then, the Company has gained insight in the collectibility of accounts and implemented more stringent credit review practices. ~~are~~The ~~contributing~~recovery toin the ~~Company’s~~first ~~ability~~six tomonths ~~decrease~~of ~~bad~~2005 ~~debt~~reflects ~~expense.~~the ~~The~~revision ~~bad~~of ~~debt expense~~certain ofestimates ~~$3.8~~resulting ~~million~~in ~~recorded~~a reduction in the ~~six~~allowance ~~months~~for ~~ended~~doubtful ~~June~~accounts ~~30,~~of ~~2003~~approximately ~~reflects~~$0.8 ~~the~~million. ~~inability~~This ofamount, which ~~the~~is ~~Predecessor~~not related to ~~effectively~~the ~~collect~~collection ~~outstanding~~of previously identified doubtful accounts, inincreased ~~its~~operating ~~liquidating~~income ~~international~~in ~~entities~~the ~~resulting~~six ~~from~~months ~~Old~~ended ~~Teleglobe’s~~June ~~bankruptcy proceedings~~30, 2005.

~~Similarly,~~Depreciation ~~bad debt expense in the second quarter of 2004 decreased by $0.4 million from the same quarter in 2003.~~

~~Foreign~~Depreciation ~~Exchange~~expense ~~Gain~~increased ~~(Loss)~~by $0.7 million or 12.8% in the current quarter versus the comparable quarter in 2004 mainly due to the inclusion of ITXC’s depreciation from June 1, 2004. Similarly, for the six months ended June 30, 2005, depreciation expense increased by $2.8 million or 30.0% compared to the same period in 2004.

~~The~~Amortization ~~foreign exchange loss~~ of ~~$0.3~~intangible million for the six months ended June 30, 2004 and the foreign exchange gain of $0.2 million for the three months ended June 30, 2004 are a function of the effect of fluctuations in the Canadian dollar, Euro, British Pound and other currencies versus US Dollar on the assets and liabilities of the Company and of a $1.7 million translation gain related to prior periods. The Company’s reporting currency is the US dollar, however, the Company transacts business in several different currencies.

~~The~~Amortization ~~foreign~~of ~~exchange~~intangible ~~gains recorded~~assets expense in the ~~2003~~current ~~periods~~quarter ~~presented~~increased ~~are~~by ~~primarily~~$0.7 ~~due~~million toor approximately by 35.1% from the ~~increase~~same quarter in ~~value~~2004. of For the ~~Canadian~~six ~~dollar~~months ~~and~~ended ~~Euro-denominated~~June ~~accounts~~30, ~~receivable~~2005, ~~and~~amortization ~~cash~~expense ~~balances~~increased by $1.7 million or 51.7% as compared to the six months ended June 30, 2004. The increase is mostly due to intangible assets recorded in connection with the merger with ITXC.

Restructuring ~~expense~~charges

During the six months ended June 30, 2004, the Company reduced its workforce by 15 people. Asand aas consequence, ~~the Company~~ incurred restructuring costs in the amount of $893,000. ~~consisting~~See ofNote ~~severance~~12 to the unaudited interim Consolidated Financial Statements included herein for more details.

~~Amortization~~The ~~expense~~retention bonuses that are being paid to ITXC employees upon their departure are being amortized over such employees agreed-upon service period and are included in SG&A expenses. See Note 8 to the unaudited interim Consolidated Financial Statements included herein for more details.

~~Amortization~~Foreign ~~expense~~exchange inloss the current quarter increased by $1.2 million or 88.3% from the same quarter in 2003. For the six months ended June 30, 2004, amortization expense increased by $2.2 million or 93.4% as compared to the six months ended June 30, 2003. The increase is due to intangible assets recorded in connection with the Acquisition and the merger with ITXC Corp. The Predecessor did not have any intangible assets recorded at May 30, 2003.

~~Depreciation~~The ~~expense~~foreign exchange loss of $1.6 million for the three months ended June 30, 2005 and $3.5 million for the six months ended June 30, 2005 compared to a foreign exchange gain of $0.2 million and a foreign exchange loss of $0.3 million for the three and six months ended June 30, 2004 respectively are explained by the effect of

~~Depreciation~~25 ~~expense decreased by $1.8 million or 30.9% in the current quarter versus the comparable quarter in 2003 mainly due to the lower carrying value basis in the assets of the Successor resulting from the~~

~~application~~fluctuations ofin ~~purchase~~the ~~accounting.~~Euro, ~~The~~Canadian ~~decrease~~dollar, ~~was~~British ~~partially~~Pound ~~offset~~and byother ~~the~~currencies ~~inclusion~~versus ofUS ~~ITXC’s~~Dollar ~~depreciation~~on ~~expense~~certain ~~for~~assets ~~the~~and ~~month~~liabilities of ~~June~~the ~~2004~~Company. The ~~Similarly,~~Company’s ~~for~~reporting ~~the~~currency ~~six~~is ~~months~~the ~~ended~~US ~~June 30~~dollar, ~~2004~~however, ~~depreciation~~the ~~expense~~Company ~~decreased~~transacts bybusiness ~~$6.3~~in ~~million~~several ordifferent 61currencies.4% ~~from the six months ended June 30, 2003.~~

Other expenses

Interest expense

Interest expense, innet ~~the~~of ~~current~~interest ~~quarter~~income ~~increased~~for ~~by approximately $3.2 million from~~ the ~~second~~current quarter of ~~2003.~~2005 ~~The~~decreased ~~increase~~by ~~is mainly due to~~ $21.87 million ~~accretion~~or ofby ~~the~~45.0% ~~Comfone~~as ~~liability~~compared to the ~~amounts~~second ~~expected~~quarter toof be2004 ~~paid.~~and ~~The~~for ~~joint venture~~the ~~agreement,~~six ~~acquired~~months asended ~~part~~June of30, ~~the~~2005, ~~acquisition~~interest ~~of the Predecessor~~expense, ~~was~~net ~~terminated~~of ~~January~~interest ~~2003~~income, decreased ~~requiring~~by ~~the Company to pay Comfone A~~$0.G.2 ~~its~~million ~~share of any cash derived~~ from the ~~mobile~~six ~~global~~months ~~roaming~~ended ~~business~~June ~~until~~30, ~~the end of fiscal~~ 2004. ~~At the~~The ~~time~~decrease ofis ~~the~~mainly ~~Acquisition,~~due ~~management~~to ~~recorded~~a ~~its~~reduction ~~best estimate~~ of the ~~fair~~accretion ~~value of the termination payment as an unfavorable contract in the purchase price allocation. The remainder of the increase is due to the interest expense~~ related to the ~~senior~~ ~~notes~~Comfone ~~issued~~AG ~~in connection with the ITXC merger~~liability. ~~Similarly,~~During ~~for~~ the ~~six~~three months ended June 30, ~~2004~~2005, a recovery of interest expense ~~increased~~of by $50.5 million ~~from~~was recorded to reflect the ~~six~~final ~~months~~negotiated ~~ended~~agreement ~~June~~with ~~30,~~Comfone ~~2003~~AG.

Income taxes

~~The~~Income tax recovery ofin ~~$2.2 million for~~ the three and six months ended June 30, ~~2004~~2005 isamounted ~~due~~ to ~~current tax recoveries of~~ $10.83 million ~~plus~~ ~~deferred~~and ~~tax recovery of~~ $0.46 million. ~~The~~respectively ~~current~~and ~~tax~~consists ~~recovery~~ of $10.82 million isand ~~primarily due to a~~ $20.13 million ~~tax receivable resulting from the carry back~~ of ~~losses~~current ~~incurred~~income bytax ~~the US entity in the six months ended June 30~~expense, ~~2004~~due to ~~offset taxable~~US ~~income~~state ~~reported~~taxes inand ~~2003,~~current ~~offset~~income ~~mainly~~tax ~~by $0.2 million~~ for ~~taxes~~a infew ~~the~~foreign ~~Netherlands.~~entities, ~~The~~offset by deferred income tax ~~recovery~~recoveries of $0.45 million isand ~~the result of recording~~ $7.0 ~~million in deferred income tax assets of which $1~~.39 million ~~relates~~due mostly to a ~~prior period,~~reduction ~~and to net operating losses and other temporary differences~~ in ~~recognizing~~deferred ~~assets~~tax ~~and~~ liabilities ~~for~~caused ~~financial~~by ~~reporting~~unrealized ~~and~~foreign ~~tax~~exchange ~~purposes,~~losses ~~offset~~incurred by a ~~valuation~~Luxembourg ~~allowance~~entity ~~reserve~~for ~~of $6.6 million in respect to~~ the ~~deferred~~three ~~income~~and ~~tax~~six ~~assets resulting~~months ~~both~~ended ~~from~~June ~~net~~30, ~~operating losses and other temporary differences~~2005 respectively.

~~Due~~Income totax recovery for the ~~different~~six-month ~~corporate~~period ended ~~structure~~June 30, 2004 of ~~the~~$2.2 ~~Predecessor~~million ~~and~~consisted ~~the~~of ~~Predecessor’s~~current ~~bankruptcy~~income ~~proceeding,~~taxes noof ~~meaningful~~$1.8 ~~comparison~~million ~~can~~due bemostly ~~made~~to a recorded taxes receivable related to the ~~2003~~carry ~~periods~~back ~~presented~~of losses, plus $0.4 million of deferred tax recoveries.

Liquidity and capital resources

Cash flow from operations

~~The~~For ~~Successor~~the ~~generated~~six ~~negative~~months ended June 30, 2005, the Company’s cash ~~flow~~flows from operating activities ~~for~~amounted ~~the six~~to ~~months~~$2.0 ~~ended~~million ~~June~~made-up ~~30,~~of ~~2004~~a net loss of $128.18 million., ~~This~~reduced ~~cash~~by ~~flow~~adjustments ~~includes~~of ~~cash outflows totaling~~ $214.24 million tofor ~~settle pre~~non-~~Acquisition~~cash ~~obligations~~items ~~that~~and ~~were~~increased ~~assumed~~ by ~~the~~$3.6 ~~Successor~~million ~~pursuant~~related to ~~acquired~~changes ~~contracts,~~in ~~annual~~operating ~~bonus~~assets ~~payments~~and liabilities. The majority of ~~$6.4~~the ~~million~~non-cash ~~and~~items ~~payments~~relate ~~for~~to ~~professional~~depreciation ~~services~~and inamortization and to the ~~approximate~~net ~~amount~~gain on sale of $property ~~9.2~~and ~~million~~equipment. AThe ~~significant~~changes ~~portion~~in ofoperating ~~the~~assets ~~payment~~and ofliabilities ~~professional~~stem ~~services~~mostly ~~was~~from inprepaids, ~~connection~~other ~~with~~current ~~the~~assets ~~acquisition~~and ofaccounts ~~ITXC~~payable and accrued liabilities.

Investing Activities

~~The~~Cash ~~purchases~~flows used in investing activities of $9.3 million in the six months ended June 30, 2005 are mostly a result of capital expenditures and an increase in investments. These are partially offset by the proceeds received in the disposal of property and equipment and by changes in restricted cash. The purchase of property and equipment in the amount of $9.9 million for the six months ended June 30, ~~2004~~2005, ~~consist~~consists mostly of ~~network~~information technology upgrades, ~~interconnection capacity~~and ~~needs~~network ~~and~~equipment. ~~ITXC~~The ~~related~~addition of intangible assets of $4.7 million relates to software purchases. WeThe ~~currently~~$1.6 million ~~estimate~~increase ~~that~~in ~~our~~investments ~~capital~~is ~~expenditures~~for ~~will~~the bepurchase ~~approximately~~of ~~$40~~shares in Wmode Inc.0 ~~million~~as discussed in ~~fiscal~~Note ~~2004~~4 ~~including~~of ~~expenditures~~the ~~related~~unaudited interim Consolidated Financial Statements included herein. Together with its equity investment in Wmode Inc., the Company will have exclusive distribution rights to ~~ITXC~~Wmode Inc’s proprietary technology, assuming revenue targets are attained. This will contribute to the Company’s plan to increase value-added service revenues. Cash flows for investing activities were provided by the decrease in a commercial letter of credit affecting restricted cash and the sale of marketable securities.

Financing Activities

The ~~negative~~cash ~~$4.5~~flows ~~million~~used in financing activities ~~relates to the retirement~~ of ~~the~~$1.7 ~~preferred~~million ~~shares~~relates ~~and~~mostly ~~the related dividend payment offset by the issuance of senior notes, all related~~ to the ~~consummation~~repayment of ~~the~~capital ~~merger~~lease ~~with ITXC~~obligations.

2826

Liquidity

We believe that our current liquidity and anticipated future cash flows from operations will be sufficient to fund our operations in the next twelve months and to fund the first principal repayment of $25 million, under our senior notes, due in the second quarter of 2006. Our expenditures for the remaining quarters in ~~2004~~ 2005 will be primarily attributable to operating expenses, capital expenditures, ~~integration costs associated with the ITXC merger~~ and interest payments. We cannot be certain, however, that additional cash will not be required, particularly if we make significant ~~acquisitions~~capital expenditures or other investments. The Company exchanged its $95 million preferred shares for $100 million senior notes. The Company is required to make principal repayments of $25 million no later than the second anniversary, $25 million no later than the third anniversary and $50 million no later than May 31, 2008.

Our working capital at June 30, ~~2004~~2005 is in a negative position of $360.0 3 million versus a negative position of $4026.59 million at December 31, ~~2003~~2004. The ~~improvement~~change in working capital is mostly ~~related~~due to the inclusion in current liabilities of ~~ITXC’s~~the ~~cash~~first principal repayment of $25 million, under our senior notes, which is due ~~marketable~~within ~~securities~~one year and ~~restricted~~by ~~cash~~an ~~balances~~increase asin aaccounts ~~result~~payables and accrued liabilities mostly due to timing of ~~the~~PTT ~~merger~~settlements. The settlement process in bilateral operating agreements has permitted the Company to operate successfully with negative working capital. We cannot be certain that these conditions will not change in future periods.

~~Current~~The ~~economic conditions~~following ofsummarizes the ~~telecommunications~~Company’s ~~and~~contractual ~~information~~obligations ~~services~~as ~~industry,~~of ~~combined~~June ~~with~~30, ~~our~~2005, ~~financial position~~ and ~~liquidity,~~the ~~have~~effect ~~created~~such ~~potential~~obligations ~~opportunities~~are ~~for~~expected ~~our company~~ to ~~acquire~~have ~~companies~~on ~~or portions of companies at attractive prices. In addition to~~ the ~~ITXC~~Company’s ~~merger,~~liquidity ~~we continuously evaluate these opportunities~~ and ~~could~~cash ~~make~~flow ~~additional acquisitions~~ in ~~the~~future ~~near term~~periods.

The following summarizes TIH’s contractual obligations as of June 30, 2004, and the effect such obligations are expected to have on the Company’s liquidity and cash flow in future periods.


Payments due	Operating Lease Obligations		Purchase Obligations		Capital Lease Obligations		Senior Note Obligations		Other Long-term Obligations		Investment in Wmode Inc.		Total
Remainder of 2005	$	12,332	$	4,710	$	1,419	$	—	$	114	$	1,654	$	20,229
2006		14,947		3,001		2,283		25,000		217		—		45,448
2007		13,133		58		760		25,000		214		—		39,165
2008		12,518		—		146		50,000		211		—		62,875
2009		12,327		—		—		—		218		—		12,545
Thereafter		69,099		—		—		—		2,282		—		71,381

Total	$	134,356	$	7,769	$	4,608	$	100,000	$	3,256	$	1,654	$	251,643

	Payments Due by Period (amounts in thousands of dollars)
Other Commercial Commitments	Total AmountsCommitted		Less than1 Year
Contractual Obligations	Total		Less than 1 Year		1 – 3 years		4 – 5 years		After 5 years
Standby letters of credit	$	2,139	$	2,139
Operating lease obligations	$	158,325	$	22,202	$	57,613	$	22,785	$	55,725
Total commercial commitments	$	2,139	$	2,139
Purchase obligations	$	8,199	$	8,199	$	—	$	—	$	—
Capital lease obligations	$	1,208	$	421	$	787	$	—	$	—
Senior note obligations	$	100,000	$	—	$	50,000	$	50,000	$	—
Other long-term liabilities	$	2,293	$	240	$	480	$	449	$	1,124
Total contractual cash obligations	$	270,025	$	31,062	$	108,880	$	73,234	$	56,849
Other Commercial Commitments	Total Amounts Committed		Less than 1 Year		1 – 3 years		4 – 5 years		Over 5 years
Standby letters of credit	$	7,419	$	5,250	$	2,169	$	—	$	—
Total commercial commitments	$	7,419	$	5,250	$	2,169	$	—	$	—

WeSection ~~have~~404 ~~the obligation to repay principal on the $100 million senior notes entered into simultaneous with the closing~~ of the ~~ITXC acquisition. Principal payments of $25 million will be due no later than May 31, 2006, $25 million no later than May 31, 2007 and $50 million~~Sarbanes-Oxley noAct ~~later than May 31, 2008 in addition to interest expense relating to this loan at 10% per annum plus 1%~~ of ~~the~~2002 ~~outstanding balance at the end of the first year and 2% of the outstanding balance at the end of the second year.~~

The SEC announced on March 2, 2005, a one-year extension for compliance with Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), for Non-Accelerated Filers and Foreign Private Issuers. The compliance dates have been extended from the first fiscal year ending on or after July 15, 2005 to the first fiscal year ending on or after July 15, 2006. Management has assessed that the Company satisfies the conditions to be a Non-Accelerated Filer, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, and is therefore eligible for the Section 404 extension. Teleglobe must therefore be compliant to Section 404 beginning in its fiscal year ending December 31, 2006.

Item 3.

Quantitative and Qualitative Disclosure About Market Risk

~~Teleglobe~~The ~~International~~Company ~~Holdings Ltd~~ and its subsidiaries operate internationally and therefore our major market risk exposure is related to foreign currency fluctuations. Due to low levels of floating rate debt, we do not have material market risk exposures related to changes in interest rates. However, the Company is exposed to interest rate risk on its ~~new~~senior ~~debt~~notes in that it is fixed and accordingly the fair value of the ~~new~~ debt may fluctuate if the interest rate is not commensurate with ~~the~~ market rates. To mitigate foreign currency risks, we may use derivative financial instruments such as forward foreign exchange contracts, foreign currency swap contracts and foreign currency denominated options. The derivative financial instruments are subject to standard credit terms and conditions, financial control management and risk monitoring procedures. However, no such instruments were entered into during the six months ended June 30, 2005.

2927

foreign currency denominated options. The derivative financial instruments are subject to standard credit terms and conditions, financial control management and risk monitoring procedures. However, no such instruments were entered into during the three and six month period ended June 30, 2004.

Item 4.

Controls and Procedures

On(a) ~~August~~Disclosure ~~12,~~Controls ~~2004,~~and ~~the~~Procedures. ~~Company~~Our ~~announced~~management, ~~that~~with itthe ~~had~~participation ~~identified~~of ~~two~~our ~~issues~~Chief ~~that~~Executive ~~had~~Officer ~~occurred~~and inChief ~~the~~Financial ~~seven~~Officer, ~~months~~has ~~ended~~evaluated the ~~December~~effectiveness ~~31,~~of ~~2003~~our indisclosure ~~connection~~controls ~~with~~and ~~its~~procedures ~~financial~~pursuant ~~statements.~~to ~~The~~Rule ~~issues~~13a-15(b) ~~arose out~~ of the ~~repayment~~Securities ofand ~~certain intercompany~~Exchange ~~loans~~Act inof ~~connection~~1934, ~~with~~as ~~the~~amended ~~refinancing~~as of ~~such loans concurrently with~~ the ~~acquisition~~end of ~~ITXC~~the ~~Corp.~~period oncovered ~~May~~by ~~28,~~this ~~2004~~report. ~~and~~Our ~~the~~disclosure ~~translation~~controls ~~of accounts receivable~~ and ~~accounts~~procedures ~~payable~~are indesigned ~~foreign~~to provide ~~currency~~reasonable ~~into~~assurance ~~U.S.~~that ~~dollars.~~information ~~The~~is ~~Company has~~recorded, ~~determined that~~processed, ~~although~~summarized ~~that~~and noreported ~~restatement~~accurately ofand ~~its~~on ~~financial~~a ~~results~~timely isbasis. ~~necessary~~Based ason athat ~~result~~evaluation, ofthe ~~these~~Chief ~~issues,~~Executive ~~the~~Officer ~~Company~~and ~~required~~Chief aFinancial ~~review~~Officer ofhave ~~certain~~concluded ~~internal~~that these disclosure controls and procedures are effective.

In(b) ~~repaying~~Changes ~~the~~to ~~intercompany~~Internal Control ~~loans~~over onFinancial ~~May~~Reporting. ~~28,~~There ~~2004,~~have been no significant changes in the Company’s ~~determined~~ internal control over financial reporting that itoccurred ~~had~~during ~~failed~~the Company’s last fiscal quarter to ~~identify~~which athis ~~change~~report inrelates ~~currency~~that ~~from~~have USmaterially affected, ~~Dollars~~or are reasonably likely to ~~Euros~~materially affect, the Company’s internal control over financial reporting.

In28 ~~order to further strengthen its internal controls, the Company has determined to require implementation of the following formal policy in connection with agreements:~~

1. Any agreements and their amendments not made in the ordinary course, including all agreements between related companies, should be endorsed for review by the Controller and Tax departments prior to execution by the officers. A contract review sheet should be utilized upon which the endorsers will indicate who should get an “Action Copy” of the agreement after execution.

2. An “Action Copy” of all such agreements and their amendments shall be distributed to all parties who need to take action, including Controller, Treasurer, Legal, and any other relevant group as soon as the agreements are executed.

3. The Company’s legal department should keep all agreements and all amendments logging them into a database with the date of receipt of each document. Users of these agreements should have access to this database.

Because the Company’s implementation of enhanced software system tools to strengthen the automation of its translation adjustment processes led to the discovery of the issue relating to foreign currencies translation, the Company’s management determined that no additional procedures were needed other than the use of the new system tool.

The Company will continue to evaluate the effectiveness of its controls and procedures on an ongoing basis and will implement further actions as necessary in its continuing efforts to strengthen the control process.

Evaluation of Disclosure Controls and Procedures.

The Company has established and maintains disclosure controls and procedures which are designed to provide reasonable assurance that material information relating to us, including our consolidated subsidiaries, is made known to senior managers responsible for disclosure by others within those entities, particularly during the period in which this quarterly report is being prepared. We have established a Disclosure Committee which is made up of several key management employees and reports directly to the Chief Executive Officer and Chief Financial Officer, to monitor and evaluate these disclosure controls and procedures. The Audit Committee of the Board also has reviewed the report of the Disclosure Committee. As of the end of the Company’s most recently completed fiscal quarter covered by this report, the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. The Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s

disclosure controls and procedures were not effective as of the end of the second quarter of 2004 as a result of the failure to identify the change in currency on certain intercompany loans. Based on that evaluation, the Company has adopted the additional procedures described above. The Chief Executive Officer and Chief Financial Officer believe that, with the additional procedures in place, the Company’s disclosure controls and procedures are and will be effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Changes to Internal Control over Financial Reporting.

Other than as described above, there have been no significant changes in the Company’s internal controls over financial reporting that occurred during the Company’s last fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—Other Information

Item 1.

Legal Proceedings

In The legal proceedings and claims described under the ~~normal~~heading ~~course~~captioned “Contingencies” in Note 16 of ~~operations,~~the Notes to the ~~Company~~unaudited ~~may~~interim Consolidated ~~become~~Financial ~~involved~~Statements set forth in ~~various~~Part ~~claims~~I, ~~and~~Item ~~litigation~~1 of this Quarterly Report are hereby incorporated by reference.

OnItem August 16, 2004, Teleglobe announced that after the merger with ITXC was consummated, as part of its normal ongoing review of ITXC’s operations in connection with the post-merger integration of the Company and ITXC, the Company had identified and was investigating potential instances of noncompliance with the United States Foreign Corrupt Practices Act (“FCPA”) relating to ITXC’s operations in certain African countries4. ~~The~~Submission ~~Company voluntarily notified the Securities and Exchange Commission (the “SEC”) and the U.S. Department~~ of ~~Justice~~Matters ~~(the “DOJ”) of the matter. The Company’s Audit Committee subsequently engaged an outside law firm, Debevoise & Plimpton LLP (“Debevoise”),~~ to ~~investigate the FCPA-related matters. As~~ a ~~result~~Vote of ~~the~~Security investigation, the following individuals are no longer employed by the Company: the Company’s Vice President, Sales-Wireless, formerly the Executive Vice President, Global Sales for ITXC; the Company’s Regional Buyer for Africa, formerly ITXC’s Regional Director for Africa; and Theodore M. Weitz, the Company’s Executive Vice President and General Counsel, formerly Vice President, General Counsel and Secretary of ITXC prior to its merger with Teleglobe. Holders

~~Debevoise~~On ~~has~~June ~~reported~~2, to2005, the Audit Committee that it has completed its investigation with respect to ITXC’s agency agreements and has issued an executive summary report concerning the results thereof to the Audit Committee and the Company’s ~~auditors.~~held ~~The Debevoise report states that~~ its ~~investigation~~Annual ~~revealed~~General ~~that~~Meeting ~~employees~~ of ~~ITXC~~Shareholders ~~do appear to have violated the FCPA and to have committed commercial bribery~~ in ~~connection~~New ~~with certain telecommunications contracts in Africa. Based upon this report~~York, noNew ~~additional resignations or terminations of officers are expected~~York. ~~Although~~In ~~Debevoise~~addition isto ~~not~~the ~~aware~~election of ~~any~~three ~~evidence~~directors to ~~suggest~~ ~~any~~serve ~~FCPA~~three-year ~~violations~~terms, orthe ~~commercial~~shareholders ~~bribery~~approved ~~in any of~~ the ~~activities~~appointment of ~~Teleglobe,~~PricewaterhouseCoopers ~~other~~LLP ~~than~~as the ~~instances of noncompliance relating to ITXC~~Company’s ~~operations~~independent inauditors ~~certain~~for ~~African~~2005 ~~countries,~~and ~~Debevoise~~authorized ~~will~~the ~~subsequently~~Audit ~~conduct~~Committee anof ~~investigation into~~ the ~~agency~~ ~~agreements~~Board ~~entered~~of ~~into~~Directors ~~by Teleglobe in order~~ to ~~confirm~~set ~~that~~the ~~no similar issues exist with respect to Teleglobe~~auditors’s ~~compliance with the FCPA~~remuneration.

The ~~Company~~following ~~has~~votes ~~been~~were ~~cooperating~~cast ~~fully~~for ~~with~~each ~~the SEC and the DOJ regarding the matters that have been the subject~~ of ~~Debevoise’s investigation and has periodically briefed representatives of~~ the ~~SEC and DOJ concerning the progress of the investigation. The SEC has advised the Company that it is conducting an informal inquiry into the matter and has requested that Teleglobe provide certain~~following ~~documents~~nominees tofor itdirector ~~on a voluntary basis. The Company intends to fully cooperate with the SEC and the DOJ concerning these matters. The Company intends to resolve any potential claims that the SEC~~ or ~~the~~were ~~DOJ~~withheld ~~may have~~ with respect to ~~these matters as promptly as practicable, but there can be no assurance that a satisfactory resolution of any~~ such ~~claims~~nominees: would be reached. At this time, Teleglobe cannot predict the extent to which the SEC, the DOJ or any other governmental authorities will pursue administrative, civil injunctive or criminal proceedings, the imposition of fines or penalties or other remedies or sanctions. However, based upon the report from Debevoise, the Company has not identified, and does not believe it is likely that, any material adjustment to its financial statements is or will be required in connection with the results of this investigation, although it is possible that a monetary penalty, if any, may be material to the Company’s results of operations in the quarter in which it is imposed.


Name	For	Withheld
Thomas S. Rogers	33,880,144	210,797
Anthony J. Cassara	33,829,718	261,223
Timothy F. Price	33,829,769	261,172

OnThe ~~April~~following ~~14, 2004, Acceris Communications Technologies, Inc. commenced a~~votes ~~patent~~were ~~infringement~~cast ~~suit~~for in the ~~United~~proposal ~~States~~to ~~District~~approve ~~Court of~~ the ~~District~~appointment of ~~New~~PricewaterhouseCoopers ~~Jersey,~~LLP ~~against~~as ~~ITXC~~the ~~Corp., alleging that ITXC~~Company’s ~~VoIP~~independent ~~services~~auditors ~~and systems infringe Acceris’ U.S. Patent No. 6,243,373, entitled “Method and Apparatus~~ for ~~Implementing~~2005 ~~a Computer Network/Internet Telephone System.” A responsive pleading has been filed~~ and ~~discovery~~authorize ~~commenced.~~the OnAudit ~~May~~Committee ~~7, 2004, ITXC filed a lawsuit against Acceris for infringement~~ of athe ~~number~~Board of ~~ITXC’s~~Directors ~~VoIP patents. The suit alleged infringement of five of ITXC’s United States Patents, numbers 5,889,774, 6,026,087, 6,404,864, 6,628,760 and 6,661,878, directed generally~~ to ~~the~~set ~~transmission of telephone calls over~~ the ~~Internet~~auditors’ ~~and~~remuneration: ~~the completion of telephone calls by switching them off the Internet and onto a public switched~~


For		34,054,739
Against		31,466
Abstain		4,736

~~Table~~Item of6. ~~Contents~~Exhibits

telephone network (PSTN). On July 6, 2004, the Court rejected Acceris’ initial motion to dismiss ITXC’s case based upon alleged failure to conduct an adequate precomplaint investigation. The Company intends to vigorously defend against the allegations of infringement in that case and believes it has substantial defenses to them. However, an adverse result in this litigation could either result in injunctive relief precluding all or a portion of ITXC’s VoIP activity or materially impact ITXC’s revenue and profitability. Litigation of such matters may require significant management and financial resources of the Company and adverse outcomes in such lawsuits could materially adversely affect our financial condition or operating results.

A complaint was filed on February 24, 2004 as a class action suit in New Jersey Superior Court naming ITXC Corp. and directors Tom Evslin, Edward Jordan, Frank Gill and Fred Wilson as defendants, which has now been settled and which settlement has now been approved by the Court in its October 14, 2004 Final Order and Judgement (the “Final Order and Judgement”). Two claims had been asserted against the individual defendants, one for breach of fiduciary duty and the other for breach of the duty of candor. Although ITXC was identified as a defendant, no cause of action was asserted against ITXC. The action sought to enjoin the stockholders’ meeting to approve ITXC’s proposed merger with Teleglobe until certain alleged deficiencies in the proxy statement had been cured and sought to permanently enjoin the consummation of the merger. No motion for a preliminary injunction was ever filed and the stockholders’ meeting was held and the merger completed. On June 22, 2004, the defendants entered into a stipulation of settlement with plaintiff’s counsel. On July 26, 2004, the Court ordered that notice of the settlement be provided to all putative class members who were record holders as of March 31, 2004, and that a final settlement hearing be held on October 14, 2004, which has now been conducted. At that hearing the Court gave final approval of the settlement. Under the settlement stipulation, the defendants expressly deny and do not admit liability or any improper conduct of any kind. Consistent with the parties’ agreement, the Court has granted plaintiffs’ counsel’s request for $145,000 in attorneys’ fees for the plaintiff’s counsel. No other payment is required from ITXC, the Company or any of the individual defendants except the costs of printing and mailing the notice to shareholders. Management has accrued its best estimate in its accrued liabilities.

On May 23, 2000, Connectel, LLC, had filed suit against ITXC in the United States District Court for the Eastern District of Pennsylvania. Connectel alleged in its complaint that ITXC infringed on the claims of a patent owned by Connectel by, acting alone or with others, assembling, offering to sell, selling or using communications networks or switching systems within the United States and for export worldwide without license from Connectel. Connectel also sought unspecified damages. On June 9, 2004, the Court entered an Order dismissing Connectel’s complaint in its entirety with prejudice. No compensation was paid. Thereafter, only ITXC’s counterclaim seeking a declaration that Connectel’s patent was invalid, as well as certain other relief, remained in the lawsuit. On June 18, 2004, the Court entered an Order dismissing the remainder of the case pursuant to a settlement reached between the parties. The Order is now final.

ITXC and certain of its officers/directors were named as defendants in several purported shareholder class action lawsuits commenced in 2001. The lawsuits allege, among other things, that, in connection with ITXC’s public offerings of securities, its Prospectus did not disclose certain alleged practices involving its underwriters and their customers. These actions seek compensatory and other damages, and costs and expenses associated with the litigation. No discovery has taken place with respect to ITXC and the other issuer defendants. ITXC is one of hundreds of companies named in substantially identical lawsuits. Management believes that ITXC and its officers/directors did not engage in any improper or illegal conduct. All of these cases have been consolidated for pretrial purposes before Judge Scheindlin in the Southern District of New York, who refused to dismiss the cases in an opinion issued in February 2003. All of the individual defendants who had been named as defendants in the Company’s case have now been dismissed from the proceeding without prejudice, pursuant to a stipulation with the plaintiffs. Neither the individual defendants nor the Company nor its insurers paid any consideration for these dismissals. The issuer defendants, their insurance carriers and the plaintiffs have negotiated a settlement pursuant to which the insurance carriers would fund any monetary consideration, and it is anticipated that this proposed settlement will be submitted to the Court for approval in the near future. If approved by the court, under the terms

of the proposed settlement, ITXC would be dismissed from the litigation with prejudice and should neither have future liability to plaintiffs nor incur any significant expenses in connection with the litigation, except for a limited obligation to cooperate in discovery in the plaintiffs’ continuing cases against the underwriters.

We are not party to any other legal proceeding, the adverse outcome of which is expected to have a material adverse effect on our business, financial condition, operating results or future prospects.

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

On April 26, 2004, the Company adopted a share option plan for up to 2,334,125 common shares for key employees and directors. The plan was approved by the shareholders on April 27, 2004. On June 9, 2004, the Board of Directors authorized 1,889,000 stock options of which 919,000 were granted to key employees and directors which vest at a rate of one third per year, subject to earlier vesting in certain circumstances. The options terminate no later than seven years after the grant date. The exercise price for these options is equal to $10.49 per share being the closing price on June 9, 2004.

On May 27, 2004, the Company adopted a conversion equity incentive plan with respect to 1,595,323 common shares in connection with the conversion of outstanding stock options of ITXC that were assumed in the ITXC merger. The plan was approved by the Company’s shareholders on May 27, 2004 by unanimous written consent, prior to the consummation of the ITXC merger.

Item 3. Defaults Upon Senior Securities.

Not Applicable.

Item 4. Submission of Matters to a Vote of Security Holders.

On April 26,2004, the Company adopted a share option plan for up to 2,334,125 common shares for key employees and directors. The plan was approved by the Company’s shareholders on April 27, 2004 by unanimous written consent, prior to the consummation of the ITXC merger.

Item 5. Other Information.

On August 11, 2004, the Board of Directors elected Tom Rogers to fill a vacancy as a Class I director, whose term will expire at the annual meeting of shareholders to be held in 2005.

On October 8, 2004, Tom I. Evslin resigned as non-executive Chairman and director of the Company.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

2.1		Agreement and Plan of Merger, dated as of November 4, 2003, among Teleglobe International Holdings Ltd, VEX Merger Subsidiary Corp. and ITXC Corp. (Incorporated by reference to Exhibit 2.1 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.1		Agreement and Plan of Amalgamation, dated as of July 25, 2005, by and among Videsh Sanchar Nigam Limited, VSNL Telecommunications (Bermuda) Ltd. and Teleglobe International Holdings Ltd. (Incorporated by reference to Exhibit 2.1 of the registrant’s Form 8-K filed on July 25, 2005).
2.2		Form of Joinder Agreement (Incorporated by reference to Exhibit 2.2 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
31.1*		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
2.3		Amendment No. 1 to the Agreement and Plan of Merger, dated as of February 6, 2004 among Teleglobe International Holdings Ltd, VEX Merger Subsidiary Corp. and ITXC Corp. (Incorporated by reference to Exhibit 2.3 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
31.2*		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
2.4		Subscription Agreement dated as of February 4, 2004, between Teleglobe International Holdings Ltd and Teleglobe Bermuda Holdings Ltd (Incorporated by reference to Exhibit 2.4 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
32.1*		Certification of the Chief Executive Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
3.1		Memorandum of Association of Teleglobe Bermuda Holdings Ltd (Incorporated by reference to Exhibit 3.1 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
32.2*		Certification of the Chief Financial Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
3.2		Bye-laws of Teleglobe Bermuda Holdings Ltd (Incorporated by reference to Exhibit 3.2 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.1		Contingent Waiver of Rights under the Third Amended and Restated Registration Rights Agreement dated November 4, 2003 between the holders therein and ITXC Corp. (Incorporated by reference to Exhibit 4.1 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.2		Teleglobe Shareholders Agreement dated October 1, 2003 among Teleglobe, TLGB and certain directors and officers party thereto, as amended (Incorporated by reference to Exhibit 4.2 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.3		Amendment No. 1 to Teleglobe’s Shareholders Agreement, dated March 26, 2004, among Teleglobe, TLGB and certain directors and officers party thereto, as amended (Incorporated by reference to Exhibit 4.3 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.4		Repurchase Agreement, dated March 26, 2004, among Teleglobe and certain directors and officers party thereto (Incorporated by reference to Exhibit 4.4 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.5		Form of Note Purchase Agreement between Madeleine L.L.C. and Teleglobe Bermuda Holdings Ltd (Incorporated by reference to Exhibit 4.5 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.6		Form of Note due May 31, 2008. (Incorporated by reference to Exhibit 4.6 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.7		Repurchase Agreement dated as of March 26, 2004 among Teleglobe and Gemini Trust. (Incorporated by reference to Exhibit 4.7 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.8		Teleglobe International Holdings Ltd 2004 Equity Incentive Plan (Incorporated by reference to Exhibit 10.3 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.9		Teleglobe International Holdings Ltd Conversion Equity Incentive Plan (Incorporated by reference to Exhibit 4.9 of the registrant’s Form 10-Q for the three months ended March 31, 2004)
4.10		Securities Exchange Agreement, dated as of May 27, 2004, among Teleglobe International Holdings Ltd, Teleglobe Bermuda Holdings Ltd and the holders of common shares of Teleglobe Bermuda Holdings Ltd specified therein. (Incorporated by reference to Exhibit 4.10 of the registrant’s Form 10-Q for the three months ended March 31, 2004)

4.11		Novation Agreement, dated as of May 27, 2004, among Teleglobe Bermuda Holdings Ltd, Teleglobe International Holdings Ltd and TLGB Acquisition Ltd. (as successor to TLGB Acquisition LLC). (Incorporated by reference to Exhibit 4.11 of the registrant’s Form 10-Q for the three months ended March 31, 2004)
10.1		Master Wholesale Pricing and Services Coordinating Agreement dated as of January 1, 2001 among Bell Canada Enterprises and Teleglobe Inc. together with Amendment No. 1 dated June 12, 2003 and Amendment No. 2 dated January 9, 2004 to the Master Wholesale Pricing and Services Coordinating Agreement among Bell Canada Enterprises and Teleglobe Canada ULC (Incorporated by reference to Exhibit 10.1 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.2		Commitment Letter dated February 6, 2004, from Cerberus Capital Management, L.P. as agreed and accepted by Teleglobe International Holdings Ltd (Incorporated by reference to Exhibit 10.2 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.3		Central Fiber Optic Network Agreement dated as of January 1, 1998 between Teleglobe Canada ULC and Stentor Resource Centre Inc. (Incorporated by reference to Exhibit 10.4 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.4		Eastern Ring Fiber Optic Agreement dated as of January 1, 1998 between Teleglobe Canada ULC and Stentor Resource Centre Inc. (Incorporated by reference to Exhibit 10.5 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.5		Construction and Maintenance Agreement dated as of December 11, 1997 between Teleglobe America Inc. and China-US Cable Network (Incorporated by reference to Exhibit 10.6 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.6		Construction and Maintenance Agreement dated as of July 31, 1998 between Teleglobe America Inc. and Japan-US Cable Network (Incorporated by reference to Exhibit 10.7 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.7		CANTAT-3 Submarine Cable System Construction and Maintenance Agreement among the parties listed therein. (Incorporated by reference to Exhibit 10.8 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.8		Asia Pacific Cable Network 2, Part 1, Construction and Maintenance Agreement dated as of April 19, 2000 among the parties listed therein (Incorporated by reference to Exhibit 10.9 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.9		Asia Pacific Cable Network 2, Part 2, Construction and Maintenance Agreement dated as of April 19, 2000 among the parties listed therein (Incorporated by reference to Exhibit 10.10 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.10		Intelsat Novation Agreement dated as of July 18, 2001 among INTELSAT, Intelsat U.K., Ltd. and Teleglobe Inc. (Incorporated by reference to Exhibit 10.11 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.11		Capacity Purchase Agreement dated as of March 31, 2001 between Williams Communications, Inc. and Teleglobe USA Inc. together with Amendment No.1 dated May 2, 2001 and Amendment No. 2 dated October 25, 2001. (Incorporated by reference to Exhibit 10.12 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.12		Master Wholesale Agreement, dated as of August 15, 2002 among Teleglobe Inc., Teleglobe USA Inc. and BCE Nexxia Inc. (Incorporated by reference to Exhibit 10.13 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.13		Order for Capacity Lease Agreement dated as of July 23, 2002 between Teleglobe Inc. and Tyco Global Networks AG together with amendments dated April 4, 2003 and January 1, 2004. (Incorporated by reference to Exhibit 10.14 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))

10.14		Amended and Restated Employment Agreement, dated as of March 26, 2004 by and between Teleglobe Canada ULC and Gerald Porter Strong (Incorporated by reference to Exhibit 10.14 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.15		Employment Agreement, dated as of March 26, 2004 by and between Teleglobe Bermuda Holdings Ltd and Gerald Porter Strong (Incorporated by reference to Exhibit 10.16 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.16		Amended and Restated Employment Agreement, dated as of March 26, 2004 by and between Teleglobe Canada ULC and Richard Willett (Incorporated by reference to Exhibit 10.17 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.17		Employment Agreement, dated as of March 26, 2004 by and between Teleglobe Bermuda Holdings Ltd and Richard Willett (Incorporated by reference to Exhibit 10.18 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.18		Letter Agreement, dated November 21, 2003, from Teleglobe to Brian Fitzpatrick, as accepted (Incorporated by reference to Exhibit 10.19 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.19		Letter Agreement, dated May 28, 2004, from Teleglobe International Holdings Ltd to Theodore Weitz, as accepted. (Incorporated by reference to Exhibit 10.19 of the registrant’s Form 10-Q for the three months ended March 31, 2004)
10.20		Letter Agreement, dated May 28, 2004, from Teleglobe America Inc. to Theodore Weitz, as accepted (Incorporated by reference to Exhibit 10.20 of the registrant’s Form 10-Q for the three months ended March 31, 2004)
31.1	*	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	*	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	*	Certification of the Chief Executive Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	*	Certification of the Chief Financial Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	Filed Herewith

~~(b)~~29 ~~The registrant submitted two Current Reports on Form 8-K during the quarter ended June 30, 2004. Information regarding the items reported on is as follows:~~

Date		Matter Reported on
June 1, 2004		Disseminated a press release dated June 1, 2004 related to the merger between TIH and ITXC Corp. (disclosure under item 2 and 7)
June 17, 2004		Disseminated a press release and conference call material dated June 15, 2004 related to first quarter 2004 results of operations (disclosure under item 12)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

TELEGLOBE ~~INTERNATIONAL~~INTERNATIONALHOLDINGS ~~HOLDINGS~~ LTD By: /s/ PIERRE DUHAMEL Pierre Duhamel Chief Financial Officer and Executive Vice President (principal financial officer and duly authorized officer)

ByDated: ~~/s/~~August ~~RICHARD~~10, ~~WILLETT Richard Willett Chief Financial Officer and Executive Vice President (principal financial officer and duly authorized officer)~~2005

~~Dated:~~30 ~~October 15, 2004~~

EXHIBIT INDEX

2.1		Agreement and Plan of Merger, dated as of November 4, 2003, among Teleglobe International Holdings Ltd, VEX Merger Subsidiary Corp. and ITXC Corp. (Incorporated by reference to Exhibit 2.1 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.1		Agreement and Plan of Amalgamation, dated as of July 25, 2005, by and among Videsh Sanchar Nigam Limited, VSNL Telecommunications (Bermuda) Ltd. and Teleglobe International Holdings Ltd. (Incorporated by reference to Exhibit 2.1 of the registrant’s Form 8-K filed on July 25, 2005).
2.2		Form of Joinder Agreement (Incorporated by reference to Exhibit 2.2 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
31.1*		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
2.3		Amendment No. 1 to the Agreement and Plan of Merger, dated as of February 6, 2004 among Teleglobe International Holdings Ltd, VEX Merger Subsidiary Corp. and ITXC Corp. (Incorporated by reference to Exhibit 2.3 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
31.2*		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
2.4		Subscription Agreement dated as of February 4, 2004, between Teleglobe International Holdings Ltd and Teleglobe Bermuda Holdings Ltd (Incorporated by reference to Exhibit 2.4 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
32.1*		Certification of the Chief Executive Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
3.1		Memorandum of Association of Teleglobe Bermuda Holdings Ltd (Incorporated by reference to Exhibit 3.1 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
32.2*		Certification of the Chief Financial Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
3.2		Bye-laws of Teleglobe Bermuda Holdings Ltd (Incorporated by reference to Exhibit 3.2 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.1		Contingent Waiver of Rights under the Third Amended and Restated Registration Rights Agreement dated November 4, 2003 between the holders therein and ITXC Corp. (Incorporated by reference to Exhibit 4.1 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.2		Teleglobe Shareholders Agreement dated October 1, 2003 among Teleglobe, TLGB and certain directors and officers party thereto, as amended (Incorporated by reference to Exhibit 4.2 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.3		Amendment No. 1 to Teleglobe’s Shareholders Agreement, dated March 26, 2004, among Teleglobe, TLGB and certain directors and officers party thereto, as amended (Incorporated by reference to Exhibit 4.3 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.4		Repurchase Agreement, dated March 26, 2004, among Teleglobe and certain directors and officers party thereto (Incorporated by reference to Exhibit 4.4 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.5		Form of Note Purchase Agreement between Madeleine L.L.C. and Teleglobe Bermuda Holdings Ltd (Incorporated by reference to Exhibit 4.5 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.6		Form of Note due May 31, 2008. (Incorporated by reference to Exhibit 4.6 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.7		Repurchase Agreement dated as of March 26, 2004 among Teleglobe and Gemini Trust. (Incorporated by reference to Exhibit 4.7 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.8		Teleglobe International Holdings Ltd 2004 Equity Incentive Plan (Incorporated by reference to Exhibit 10.3 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
4.9		Teleglobe International Holdings Ltd Conversion Equity Incentive Plan (Incorporated by reference to Exhibit 4.9 of the registrant’s Form 10-Q for the three months ended March 31, 2004)
4.10		Securities Exchange Agreement, dated as of May 27, 2004, among Teleglobe International Holdings Ltd, Teleglobe Bermuda Holdings Ltd and the holders of common shares of Teleglobe Bermuda Holdings Ltd specified therein. (Incorporated by reference to Exhibit 4.10 of the registrant’s Form 10-Q for the three months ended March 31, 2004)

4.11		Novation Agreement, dated as of May 27, 2004, among Teleglobe Bermuda Holdings Ltd, Teleglobe International Holdings Ltd and TLGB Acquisition Ltd. (as successor to TLGB Acquisition LLC). (Incorporated by reference to Exhibit 4.11 of the registrant’s Form 10-Q for the three months ended March 31, 2004)
10.1		Master Wholesale Pricing and Services Coordinating Agreement dated as of January 1, 2001 among Bell Canada Enterprises and Teleglobe Inc. together with Amendment No. 1 dated June 12, 2003 and Amendment No. 2 dated January 9, 2004 to the Master Wholesale Pricing and Services Coordinating Agreement among Bell Canada Enterprises and Teleglobe Canada ULC (Incorporated by reference to Exhibit 10.1 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.2		Commitment Letter dated February 6, 2004, from Cerberus Capital Management, L.P. as agreed and accepted by Teleglobe International Holdings Ltd (Incorporated by reference to Exhibit 10.2 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.3		Central Fiber Optic Network Agreement dated as of January 1, 1998 between Teleglobe Canada ULC and Stentor Resource Centre Inc. (Incorporated by reference to Exhibit 10.4 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.4		Eastern Ring Fiber Optic Agreement dated as of January 1, 1998 between Teleglobe Canada ULC and Stentor Resource Centre Inc. (Incorporated by reference to Exhibit 10.5 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.5		Construction and Maintenance Agreement dated as of December 11, 1997 between Teleglobe America Inc. and China-US Cable Network (Incorporated by reference to Exhibit 10.6 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.6		Construction and Maintenance Agreement dated as of July 31, 1998 between Teleglobe America Inc. and Japan-US Cable Network (Incorporated by reference to Exhibit 10.7 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.7		CANTAT-3 Submarine Cable System Construction and Maintenance Agreement among the parties listed therein. (Incorporated by reference to Exhibit 10.8 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.8		Asia Pacific Cable Network 2, Part 1, Construction and Maintenance Agreement dated as of April 19, 2000 among the parties listed therein (Incorporated by reference to Exhibit 10.9 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.9		Asia Pacific Cable Network 2, Part 2, Construction and Maintenance Agreement dated as of April 19, 2000 among the parties listed therein (Incorporated by reference to Exhibit 10.10 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.10		Intelsat Novation Agreement dated as of July 18, 2001 among INTELSAT, Intelsat U.K., Ltd. and Teleglobe Inc. (Incorporated by reference to Exhibit 10.11 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.11		Capacity Purchase Agreement dated as of March 31, 2001 between Williams Communications, Inc. and Teleglobe USA Inc. together with Amendment No.1 dated May 2, 2001 and Amendment No. 2 dated October 25, 2001. (Incorporated by reference to Exhibit 10.12 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.12		Master Wholesale Agreement, dated as of August 15, 2002 among Teleglobe Inc., Teleglobe USA Inc. and BCE Nexxia Inc. (Incorporated by reference to Exhibit 10.13 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.13		Order for Capacity Lease Agreement dated as of July 23, 2002 between Teleglobe Inc. and Tyco Global Networks AG together with amendments dated April 4, 2003 and January 1, 2004. (Incorporated by reference to Exhibit 10.14 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))

10.14		Amended and Restated Employment Agreement, dated as of March 26, 2004 by and between Teleglobe Canada ULC and Gerald Porter Strong (Incorporated by reference to Exhibit 10.14 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.15		Employment Agreement, dated as of March 26, 2004 by and between Teleglobe Bermuda Holdings Ltd and Gerald Porter Strong (Incorporated by reference to Exhibit 10.16 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.16		Amended and Restated Employment Agreement, dated as of March 26, 2004 by and between Teleglobe Canada ULC and Richard Willett (Incorporated by reference to Exhibit 10.17 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.17		Employment Agreement, dated as of March 26, 2004 by and between Teleglobe Bermuda Holdings Ltd and Richard Willett (Incorporated by reference to Exhibit 10.18 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.18		Letter Agreement, dated November 21, 2003, from Teleglobe to Brian Fitzpatrick, as accepted (Incorporated by reference to Exhibit 10.19 of the registrant’s Registration Statement on Form S-4 (No. 333-112608))
10.19		Letter Agreement, dated May 28, 2004, from Teleglobe International Holdings Ltd to Theodore Weitz, as accepted. (Incorporated by reference to Exhibit 10.19 of the registrant’s Form 10-Q for the three months ended March 31, 2004)
10.20		Letter Agreement, dated May 28, 2004, from Teleglobe America Inc. to Theodore Weitz, as accepted (Incorporated by reference to Exhibit 10.20 of the registrant’s Form 10-Q for the three months ended March 31, 2004)
31.1*		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of the Chief Executive Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of the Chief Financial Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	Filed Herewith

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