IDT keeps international phone calls cheap, whether you're calling Argentina or Zambia. The holding company makes most of its money through IDT Telecom, which provides prepaid and rechargeable calling cards and other payment services to customers in the US and 30 other countries. As a pioneer in international callback technology (sometimes known as call reorigination), IDT Telecom also offers wholesale termination services to reroute international calls through less expensive US exchanges. In addition, the company offers local and long distance services in 11 states under the IDT America brand.
About 45% of IDT's revenue flows from its retail communications business, with its wholesale operations providing a bit less than 40%, and the payment business bringing in 15%.
The US is IDT Telecom's largest market, representing about 30% of revenue. Its largest international market, the UK, accounts for about a fourth. Other international markets include the Netherlands, Spain, Germany, Belgium, Ireland, Italy, Luxembourg, Sweden, Finland, Switzerland, Denmark, Norway, Portugal, Austria and Greece.
IDT places voice and data technology around the world to support its international network. It operates voice switches and points of presence in the US, Europe, South America, Asia, and Australia. The company's network includes data centers in the US, the UK, and Hong Kong, which serve its voice and payment services. IDT also has placed some of its application infrastructure on a leading cloud computing provider.
Sales and Marketing
IDT Telecom markets its prepaid calling cards to ethnic and immigrant communities who frequently make international phone calls. The company offers more than 1,000 different calling cards in the US and more than 800 cards internationally. It sells the cards to major retailers in the US and through a network of several hundred distributors. Its International Mobile Top Up (IMTU) business allows customers to purchase minutes for a prepaid mobile phone in another country, and its BOSS Revolution service offers pay-as-you-go international calling without a PIN. It also offers phone apps for iOS and Android.
IDT's revenue in 2016 (ended July) fell about 6% to $1.5 billion. Revenue from its Boss Revolution international calling service, the most significant offering its its retail business, fell about 3% in with a drop in minutes of use and from US calls to Mexico. In its wholesale carrier business, revenue fell 6% in 2016 because the call traffic mix shifted to lower revenue-per-minute destinations and some exchange rate driven arbitrage-pricing opportunities in Latin America declined.
Net income tumbled some 72% to $23.5 million in 2016 from $84.5 million in 2015. The 2016 bottom line was affected by comparison to 2015 when it received more revenue from the sale of some assets. Cash flow from operations was $49 million in 2016, up from $30 million in 2015.
Although the Boss Revolution payment platform has paid off in previous years, it ran into trouble in 2016, mainly due to regulatory changes that led to more competition.The cost of terminating international calls in Mexico dropped after the regulatory changes. IDT competitors, including large mobile carriers from the US, offered unlimited Mexico calling, taking a big bite out of IDT's minutes of use and revenue. IDT responded by cutting its rates, which cut even more into its revenue.
The company's further response has been to reduce the cost of operating its network and streamline operations. It also is expanding its national network of more than 35,000 Boss Revolution retailers, instituting direct-to-consumer marketing, promotions, and rewards programs and adding more communications and payment services to the Boss Revolution platform and mobile app to create new sources of revenue.
IDT has made a practice of divesting non-core businesses and that continued in 2015 and 2016. In 2015 the company embarked on a plan to reorganize into three separate entities by spinning off two business units to stockholders. It spun off Zedge in 2016 with other reorganization plans in the works. In 2014 IDT sold its interest in Fabrix to Ericsson.
As the normalization of relations between the US and Cuba continued, IDT offered services to Cuba through with a Cuba Plus calling card on the Boss Revolution platform. In 2015 IDT was the first US carrier to carry international voice calls directly to Cuba's national telecom provider.
Mergers and Acquisitions
In 2017, IDT's Net2phone subsidiary acquired LiveNinja, bringing more live chart capabilities to the PicuP communications service for small and medium-sized businesses.