Note: Net2Phone CEO Stephen Greenberg will host a conference call at 4:30 p.m. EST today. The call can be accessed at http://www.net2phone.com/corporate/ir or by dialing (800) 446-1671. A replay of the conference call will be available by dialing (888) 843-8996, passcode: 5186115#.

NEWARK, NJ -December 17, 2001 - Net2Phone Inc. (Nasdaq: NTOP), the leading provider of voice services over IP networks, today announced results for the first quarter of fiscal 2002 ended October 31, 2001.

Net2Phone's quarter highlights include the following year-over-year growth:

• 39% growth in revenues to $42.9 million
• 61% increase in customers to 2.9 million
• 138% increase in minutes to 341 million

FIRST QUARTER FISCAL 2002:
Consolidated revenues from continuing operations for the first quarter totaled $42.9 million, a 39% increase year-over-year and 3% decrease from last quarter, reflecting the company's focus on quality of revenues and profitability targets. Of total consolidated revenues, majority-owned subsidiary ADIR Technologies contributed revenues of $2.2 million, or approximately 5% of consolidated revenues.

Consolidated gross margins for the first quarter increased strongly to 44%, primarily due to a margin contribution from ADIR. Excluding the impact of ADIR, Net2Phone's core business' gross margin stood at 41%, a slight improvement over corresponding gross margin of 40% in the prior quarter.

"This quarter reflects our focus on quality of revenues, minutes and services. While we continue to grow our business, we are taking a very focused approach to improving our bottom line numbers. This is already starting to take hold as we've seen through our continued improvement in gross profits," said Stephen Greenberg, CEO of Net2Phone.

EBITDA (earnings before interest, taxes, depreciation & amortization) loss from continuing operations (excluding restructuring charges of $5.9 million, acquired in-process research and development from NetSpeak of $13.9 million, and non-cash compensation charges of $4.9 million) for the quarter stood at ($19.3) million (footnote 2). Excluding ADIR's EBITDA loss of ($4.0) million, Net2Phone's EBITDA loss was ($15.3) million. Excluding ADIR's net loss of ($4.0) million and minority interest benefit of $7.4 million, Net2Phone's net loss stood at ($20.3) million with a corresponding net earnings per share loss of ($0.35).

OTHER METRICS:
Paid minutes of use for the quarter grew to 341 million minutes, a 138% increase year over year and a 10% sequential increase. As of October 31, the company had 2.9 million active users, a 61% increase over same quarter year ago.

CASH AND CAPITAL EXPENDITURES:
Capital expenditures for the first quarter were $13.9 million as compared to $10.7 million in the fourth quarter. Cash, cash equivalents, marketable securities and related investments as of October 31, 2001 were approximately $175 million versus $254 million in the prior quarter.

Cash utilization for the quarter was comprised of 1) pay-down of non-recurring payables and other current liabilities of ($23.0) million, 2) NetSpeak acquisition net cash cost of ($13.8) million, 3) capital expenditures of ($13.9) million, 4) EBITDA loss of ($19.3) million, 5) changes in the value of publicly traded instruments of ($6.7) million, 6) working capital needs of ($4.7) million, and 7) interest income of $1.9 million. The company expects to have approximately $100 million in cash upon reaching EBITDA breakeven.

The company reported a change in control during Q1. An LLC comprising IDT Corporation (NYSE: IDT), Liberty Media (NYSE: LMC.A and LMC.B) and AT&T (NYSE: T) gained ownership of approximately 50% (64% of the voting power) of Net2Phone, resulting in significant economic stakes in Net2Phone for all three parties.

Liberty Media is committed to working with the company to deliver cable telephony over IP networks. With over 20 million international cable subscribers through ownership of multiple cable properties, the company believes Liberty is well positioned to deliver telephony services globally utilizing Net2Phone's award winning technology and services.

The company has also recruited Mark Dzuban to help manage Net2Phone's strategy for cable telephony. Dzuban brings more than 30 years of cable industry and networking experience coupled with a unique understanding of carrier-class customer requirements. As former Senior Vice President of Telephony Engineering and Technical Operations at AT&T Broadband, he was responsible for AT&T Broadband telephony service implementation in the merged TCI/Media One Systems, and also represented AT&T at Cable Labs. The project started with technology development, trials and the implementation of over 500,000 subscribers.

"We have been speaking regularly with the MSOs and we know what they want. Mark is one of the cable industry's top executives with a very broad technical knowledge base, and we are confident in his ability to help deliver a voice solution to the cable industry," said Greenberg.

ABOUT NET2PHONE:
Founded in 1995, Net2Phone is a leading provider of voice services over IP networks to consumers, businesses and carriers worldwide. With millions of users around the world, Net2Phone enables toll-quality calls between computers, telephones, and broadband devices utilizing IP networks. Recognized as the first company to bridge the Internet with the public switched telephone network, Net2Phone has routed billions of minutes of traffic over its award-winning network. Traded on the NASDAQ under the symbol NTOP, Net2Phone's strategic partners and investors include Liberty Media, AT&T, America Online, and IDT. For more information about Net2Phone's products and services, please visit www.net2phone.com.

ABOUT ADIR TECHNOLOGIES:
ADIR Technologies, Inc. offers proven, carrier-scale VoIP management software and complete VoIP solutions for telecommunications, Internet, wireless, broadband and next generation service providers and enterprises worldwide. ADIR is a majority-owned subsidiary of Net2Phone, the leading provider of Internet telephony services, with minority investments from Cisco Systems Inc., the world's leading maker of networking equipment, and additional strategic and financial partners. ADIR's technology is based on the proven, industry-leading VoIP network that Net2Phone has been operating since 1995, a network that currently handles millions of VoIP calls per day. In August of 2001, ADIR expanded its set of exceptional VoIP offerings when it acquired NetSpeak Corporation of Boca Raton, Florida. Today, ADIR prides itself on creating a company that offers one-stop shopping to services providers seeking the building blocks to build reliable, scalable, manageable, and always-available VoIP networks. More information about ADIR can be found at www.adirtech.com.

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward- looking statements involve risks and uncertainties and actual results could differ materially from those discussed in the forward-looking statements. For this purpose, any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Factors which may affect the Company's results include, but are not limited to, the Company's ability to expand its customer base, the Company's ability to develop additional and leverage its existing distribution channels for its products and solutions, dependence on strategic and channel partners including their ability to distribute the Company's products and meet or renew their financial commitments, the Company's ability to address international markets, the effectiveness of the Company's sales and marketing activities, the acceptance of the Company's products in the marketplace, the timing and scope of deployments of the Company's products by customers, fluctuations in customer sales cycles, customers' ability to obtain additional funding, technical difficulties with respect to the Company's products or products in development, the need for ongoing product development in an environment of rapid technological change, the emergence of new competitors in the marketplace, the Company's ability to compete successfully against established competitors with greater resources, the uncertainty of future governmental regulation, the Company's ability to manage growth, obtain patent protection, and obtain additional funds, general economic conditions and other risks discussed in this Report and in the Company's other filings with the Securities and Exchange Commission. All forward-looking statements and risk factors included in this document are made as of the date hereof, based on information available to the Company as of the date thereof, and the Company assumes no obligation to update any forward-looking statement or risk factors.