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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(Mark One)

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



For the quarterly period ended September 30, 2004



or



| ̈ | 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



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TELEGLOBE INTERNATIONAL HOLDINGS LTD

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Bermuda                                                        |  | 98-0417192                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification 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)



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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 ̈



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
November 1, 2004, there were 38,985,663 shares of Common Stock, par value $.01 per share, outstanding.



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##### Table of Contents

TELEGLOBE INTERNATIONAL HOLDINGS LTD



INDEX



|                              |  |                                                                                                                                                                                                                                     |  |   
|----------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --
|                              |  | Page                                                                                                                                                                                                                               
|Part I. Financial Information |  |                                                                                                                                                                                                                                    
|                              |  |                                                                                                                                                                                                                                    
|Item 1.                       |  | Financial Statements                                                                                                                                                                                                                |  |   
|                              |  |                                                                                                                                                                                                                                    
|                              |  | Consolidated Balance Sheet (Successor) as of September 30, 2004 and December 31, 2003 (Unaudited)                                                                                                                                   |  | 1 
|                              |  |                                                                                                                                                                                                                                    
|                              |  | Consolidated Statement of Operations (Successor) for the Three Months Ended September 30, 2004 and Three Months Ended September 30, 2003 (Unaudited)                                                                                |  | 2 
|                              |  |                                                                                                                                                                                                                                    
|                              |  | Consolidated Statement of Operations (Successor) / Combined Statement of Operations (Predecessor) for the Nine Months Ended September 30, 2004, Four Months Ended September 30, 2003 and Five Months Ended May 30, 2003
(Unaudited) |  | 3 
|                              |  |                                                                                                                                                                                                                                    
|                              |  | Consolidated Statement of Cash Flows (Successor) / Combined Statement of Cash Flows (Predecessor) for the Nine Months Ended September 30, 2004, Four Months Ended September 30, 2003 and Five Months Ended May 30, 2003
(Unaudited) |  | 4 
|                              |  |                                                                                                                                                                                                                                    
|                              |  | Consolidated Statement of Stockholders Equity (Successor) (Unaudited)                                                                                                                                                              |  | 5 
|                              |  |                                                                                                                                                                                                                                    
|                              |  | 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                                                                                                                                               |  | 17
|                              |  |                                                                                                                                                                                                                                    
|Item 3.                       |  | Quantitative and Qualitative Disclosure About Market Risk                                                                                                                                                                           |  | 28
|                              |  |                                                                                                                                                                                                                                    
|Item 4.                       |  | Controls and Procedures                                                                                                                                                                                                             |  | 28
|                              | 
|Part II. Other Information    |  |                                                                                                                                                                                                                                    
|                              |  |                                                                                                                                                                                                                                    
|Item 1.                       |  | Legal Proceedings                                                                                                                                                                                                                   |  | 30
|                              |  |                                                                                                                                                                                                                                    
|Item 5.                       |  | Other Information                                                                                                                                                                                                                   |  | 30
|                              |  |                                                                                                                                                                                                                                    
|Item 6.                       |  | Exhibits                                                                                                                                                                                                                            |  | 31
|                              | 
|Signatures                    |  | 34                                                                                                                                                                                                                                 



i



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##### Table of Contents

PART I - Financial Information



Item 1. Financial Statements



TELEGLOBE INTERNATIONAL HOLDINGS LTD



Consolidated Balance Sheet (Successor)

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

(Unaudited)



|                                                                                                                                                                                                                                                        |  |                   |         |   |                  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                                                                                                                                        |  | September 30,2004 |         |   | December 31,2003 |  
|Cash and cash equivalents                                                                                                                                                                                                                               |  | $                 | 21,465  |   |                  | $ | 35,279  |  
|Marketable securities                                                                                                                                                                                                                                   |  |                   | 3,342   |   |                  |   |        |  
|Accounts receivable, (net of allowance for doubtful accounts of $34,122 at September 30, 2004 and $34,295 at December 31,
2003)                                                                                                                         |  |                   | 207,519 |   |                  |   | 163,804 |  
|Prepaid assets                                                                                                                                                                                                                                          |  |                   | 5,086   |   |                  |   | 4,689   |  
|Other current assets                                                                                                                                                                                                                                    |  |                   | 6,457   |   |                  |   | 3,702   |  
|Restricted cash                                                                                                                                                                                                                                         |  |                   | 6,719   |   |                  |   |        |  
|                                                                                                                                                                                                                                                        |  |                   |         |   |                  |   |         |  
|Total current assets                                                                                                                                                                                                                                    |  |                   | 250,588 |   |                  |   | 207,474 |  
|                                                                                                                                                                                                                                                        |  |                  
|Property and equipment, (net of accumulated depreciation of $20,487 at September 30, 2004 and $6,743 at December 31, 2003)                                                                                                                              |  |                   | 145,355 |   |                  |   | 121,839 |  
|Prepaid pension asset                                                                                                                                                                                                                                   |  |                   | 19,072  |   |                  |   | 19,838  |  
|Other long-term assets                                                                                                                                                                                                                                  |  |                   | 4,344   |   |                  |   | 4,254   |  
|Intangible assets, (net of accumulated amortization of $5,411 at September 30, 2004 and $1,072 at December 31, 2003)                                                                                                                                    |  |                   | 32,810  |   |                  |   | 10,352  |  
|Goodwill                                                                                                                                                                                                                                                |  |                   | 97,947  |   |                  |   |        |  
|                                                                                                                                                                                                                                                        |  |                   |         |   |                  |   |         |  
|Total assets                                                                                                                                                                                                                                            |  | $                 | 550,116 |   |                  | $ | 363,757 |  
|                                                                                                                                                                                                                                                        |  |                   |         |   |                  |   |         |  
|Accounts payable and accrued liabilities                                                                                                                                                                                                                |  | $                 | 248,918 |   |                  | $ | 234,340 |  
|Employee related payables                                                                                                                                                                                                                               |  |                   | 13,362  |   |                  |   | 10,425  |  
|Current portion of capital lease obligations                                                                                                                                                                                                            |  |                   | 730     |   |                  |   |        |  
|Current portion of deferred revenue                                                                                                                                                                                                                     |  |                   | 4,199   |   |                  |   | 3,214   |  
|                                                                                                                                                                                                                                                        |  |                   |         |   |                  |   |         |  
|Total current liabilities                                                                                                                                                                                                                               |  |                   | 267,209 |   |                  |   | 247,979 |  
|                                                                                                                                                                                                                                                        |  |                  
|Deferred revenue                                                                                                                                                                                                                                        |  |                   | 9,047   |   |                  |   | 10,298  |  
|Deferred income tax liability                                                                                                                                                                                                                           |  |                   | 439     |   |                  |   | 766     |  
|Long-term portion of capital lease obligations                                                                                                                                                                                                          |  |                   | 221     |   |                  |   |        |  
|Other long-term liabilities                                                                                                                                                                                                                             |  |                   | 2,776   |   |                  |   | 2,456   |  
|Senior notes payable                                                                                                                                                                                                                                    |  |                   | 100,000 |   |                  |   |        |  
|                                                                                                                                                                                                                                                        |  |                   |         |   |                  |   |         |  
|Total non-current liabilities                                                                                                                                                                                                                           |  |                   | 112,483 |   |                  |   | 13,520  |  
|                                                                                                                                                                                                                                                        |  |                  
|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  |  
|Common stock (38,985,663 shares at September 30, 2004 and 28,106,757 shares at December 31, 2003 issued and outstanding and 400,000,000 shares
authorized at September 30, 2004 and 28,106,757 shares authorized at December 31, 2003, par value $0.01) |  |                   | 390     |   |                  |   | 281     |  
|Additional paid-in capital                                                                                                                                                                                                                              |  |                   | 191,653 |   |                  |   | 12,194  |  
|Deferred compensation expense                                                                                                                                                                                                                           |  |                   | (57     | ) |                  |   |        |  
|Accumulated other comprehensive loss                                                                                                                                                                                                                    |  |                   | (60     | ) |                  |   |        |  
|Accumulated deficit                                                                                                                                                                                                                                     |  |                   | (21,502 | ) |                  |   | (5,217  | )
|                                                                                                                                                                                                                                                        |  |                   |         |   |                  |   |         |  
|Total stockholders equity                                                                                                                                                                                                                              |  |                   | 170,424 |   |                  |   | 7,258   |  
|                                                                                                                                                                                                                                                        |  |                  
|Total liabilities and stockholders equity                                                                                                                                                                                                              |  | $                 | 550,116 |   |                  | $ | 363,757 |  
|                                                                                                                                                                                                                                                        |  |                   |         |   |                  |   |         |  



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



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##### Table of Contents

TELEGLOBE INTERNATIONAL HOLDINGS LTD



Consolidated Statement of Operations (Successor)

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

(Unaudited)



|                                                                                                                                                |  |                                       |            |   |                                       |   |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------- | ---------- | - | ------------------------------------- | - | ---------- | -
|                                                                                                                                                |  | Three Months Ended September 30, 2004 |            |   | Three Months Ended September 30, 2003 |  
|Telecommunication revenues                                                                                                                      |  | $                                     | 276,789    |   |                                       | $ | 212,265    |  
|                                                                                                                                                |  |                                      
|Operating expenses                                                                                                                              |  |                                       |            |   |                                       |   |            |  
|Telecommunication                                                                                                                               |  |                                       | 208,322    |   |                                       |   | 146,304    |  
|Network, exclusive of amortization and depreciation shown below                                                                                 |  |                                       | 23,379     |   |                                       |   | 26,872     |  
|Selling, general and administrative, exclusive of stock based compensation expense, bad debt expense, depreciation and amortization shown
below |  |                                       | 39,992     |   |                                       |   | 23,092     |  
|Stock based compensation expense                                                                                                                |  |                                       | 15         |   |                                       |   | 7,475      |  
|Bad debt expense                                                                                                                                |  |                                       | 620        |   |                                       |   | 515        |  
|Depreciation                                                                                                                                    |  |                                       | 7,947      |   |                                       |   | 4,630      |  
|Amortization of intangible assets                                                                                                               |  |                                       | 1,981      |   |                                       |   | 467        |  
|Foreign exchange (gain) loss                                                                                                                    |  |                                       | (233       | ) |                                       |   | 2,573      |  
|                                                                                                                                                |  |                                       |            |   |                                       |   |            |  
|Total operating expenses                                                                                                                        |  |                                       | 282,023    |   |                                       |   | 211,928    |  
|Interest expense                                                                                                                                |  |                                       | 6,391      |   |                                       |   | 518        |  
|Interest income, other income and other expense                                                                                                 |  |                                       | (429       | ) |                                       |   | (302       | )
|                                                                                                                                                |  |                                       |            |   |                                       |   |            |  
|Total expenses                                                                                                                                  |  |                                       | 287,985    |   |                                       |   | 212,144    |  
|                                                                                                                                                |  |                                       |            |   |                                       |   |            |  
|(Loss) income before income taxes                                                                                                               |  |                                       | (11,196    | ) |                                       |   | 121        |  
|Income tax recovery                                                                                                                             |  |                                       | (165       | ) |                                       |   | (16        | )
|                                                                                                                                                |  |                                       |            |   |                                       |   |            |  
|Net (loss) income                                                                                                                               |  | $                                     | (11,031    | ) |                                       | $ | 137        |  
|                                                                                                                                                |  |                                      
|Preferred stock dividends                                                                                                                       |  |                                       |           |   |                                       |   | (2,375     | )
|                                                                                                                                                |  |                                       |            |   |                                       |   |            |  
|Net loss attributable to common stockholders                                                                                                    |  | $                                     | (11,031    | ) |                                       | $ | (2,238     | )
|                                                                                                                                                |  |                                       |            |   |                                       |   |            |  
|Basic loss per share                                                                                                                            |  | $                                     | (0.28      | ) |                                       | $ | (0.08      | )
|                                                                                                                                                |  |                                       |            |   |                                       |   |            |  
|Weighted average common shares used in computation of basic loss per share                                                                      |  |                                       | 38,985,663 |   |                                       |   | 28,106,757 |  



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



2



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##### Table of Contents

TELEGLOBE INTERNATIONAL HOLDINGS LTD



Consolidated Statement 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                    | 
|                                                                                                                                                                       |  | Nine Months Ended September 30, 2004 |            |   | Four Months Ended September 30, 2003 |   |            | Five Months Ended May 30, 2003 | 
|Operating revenues                                                                                                                                                     |  |                                      |            |   |                                      |   |            |                                |  |   |         |  
|Telecommunication                                                                                                                                                      |  | $                                    | 721,984    |   |                                      | $ | 281,525    |                                |  | $ | 256,263 |  
|Telecommunication revenues from related parties                                                                                                                        |  |                                      |           |   |                                      |   |           |                                |  |   | 105,105 |  
|                                                                                                                                                                       |  |                                      |            |   |                                      |   |            |                                |  |   |         |  
|Total operating revenues                                                                                                                                               |  | $                                    | 721,984    |   |                                      | $ | 281,525    |                                |  | $ | 361,368 |  
|                                                                                                                                                                       |  |                                      |           
|Operating expenses                                                                                                                                                     |  |                                      |            |   |                                      |   |            |                                |  |   |         |  
|Telecommunication                                                                                                                                                      |  |                                      | 532,048    |   |                                      |   | 194,644    |                                |  |   | 245,207 |  
|Telecommunication-paid to related party                                                                                                                                |  |                                      |           |   |                                      |   |           |                                |  |   | 6,238   |  
|Network, exclusive of amortization and depreciation shown below                                                                                                        |  |                                      | 71,181     |   |                                      |   | 36,513     |                                |  |   | 55,096  |  
|Selling, general and administrative, exclusive of stock based compensation expense, bad debt expense, depreciation, amortization and
restructuring charges shown below |  |                                      | 97,803     |   |                                      |   | 30,857     |                                |  |   | 40,948  |  
|Stock based compensation expense                                                                                                                                       |  |                                      | 20         |   |                                      |   | 7,475      |                                |  |   |        |  
|Bad debt expense                                                                                                                                                       |  |                                      | 30         |   |                                      |   | 687        |                                |  |   | 3,656   |  
|Depreciation                                                                                                                                                           |  |                                      | 18,188     |   |                                      |   | 6,123      |                                |  |   | 15,037  |  
|Amortization of intangible assets                                                                                                                                      |  |                                      | 4,340      |   |                                      |   | 623        |                                |  |   |        |  
|Restructuring charges                                                                                                                                                  |  |                                      | 893        |   |                                      |   |           |                                |  |   |        |  
|Foreign exchange loss (gain)                                                                                                                                           |  |                                      | 73         |   |                                      |   | 1,657      |                                |  |   | (9,478  | )
|                                                                                                                                                                       |  |                                      |            |   |                                      |   |            |                                |  |   |         |  
|Total operating expenses                                                                                                                                               |  |                                      | 724,576    |   |                                      |   | 278,579    |                                |  |   | 356,704 |  
|Interest expense                                                                                                                                                       |  |                                      | 12,810     |   |                                      |   | 730        |                                |  |   | 501     |  
|Interest income, other income and other expense                                                                                                                        |  |                                      | (713       | ) |                                      |   | (215       | )                              |  |   |        |  
|                                                                                                                                                                       |  |                                      |            |   |                                      |   |            |                                |  |   |         |  
|Total expenses                                                                                                                                                         |  |                                      | 736,673    |   |                                      |   | 279,094    |                                |  |   | 357,205 |  
|                                                                                                                                                                       |  |                                      |            |   |                                      |   |            |                                |  |   |         |  
|(Loss) income before reorganization items and income taxes                                                                                                             |  |                                      | (14,689    | ) |                                      |   | 2,431      |                                |  |   | 4,163   |  
|Reorganization items, net                                                                                                                                              |  |                                      |           |   |                                      |   |           |                                |  |   | 34,155  |  
|                                                                                                                                                                       |  |                                      |            |   |                                      |   |            |                                |  |   |         |  
|(Loss) income before income taxes                                                                                                                                      |  |                                      | (14,689    | ) |                                      |   | 2,431      |                                |  |   | (29,992 | )
|Income tax recovery                                                                                                                                                    |  |                                      | (2,362     | ) |                                      |   |           |                                |  |   |        |  
|                                                                                                                                                                       |  |                                      |            |   |                                      |   |            |                                |  |   |         |  
|Net (loss) income                                                                                                                                                      |  | $                                    | (12,327    | ) |                                      | $ | 2,431      |                                |  | $ | (29,992 | )
|                                                                                                                                                                       |  |                                      |           
|Preferred stock dividends                                                                                                                                              |  |                                      | (3,958     | ) |                                      |   | (3,167     | )                              |  |   |         |  
|                                                                                                                                                                       |  |                                      |            |   |                                      |   |            |                                |  |   |         |  
|Net loss attributable to common stockholders                                                                                                                           |  | $                                    | (16,285    | ) |                                      | $ | (736       | )                              |  |   |         |  
|                                                                                                                                                                       |  |                                      |            |   |                                      |   |            |                                |  |   |         |  
|Basic loss per share                                                                                                                                                   |  | $                                    | (0.49      | ) |                                      | $ | (0.03      | )                              |  |   |         |  
|                                                                                                                                                                       |  |                                      |            |   |                                      |   |            |                                |  |   |         |  
|Weighted average common shares used in computation of basic loss per share                                                                                             |  |                                      | 32,941,710 |   |                                      |   | 28,106,757 |                                |  |   |         |  



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



3



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##### Table of Contents

TELEGLOBE INTERNATIONAL HOLDINGS LTD



Consolidated Statement of Cash Flows (Successor) /

Combined Statement of Cash Flows (Predecessor)

(amounts in thousands of United States Dollars)

(Unaudited)



|                                                                                                                                  |  |                                      |         |   |                                      |   |         |                                |  |   |          |  
|--------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------ | ------- | - | ------------------------------------ | - | ------- | ------------------------------ |  | - | -------- | -
|                                                                                                                                  |  | Successor                            |         |   | Successor                            |   |         | Predecessor                    | 
|                                                                                                                                  |  | Nine Months Ended September 30, 2004 |         |   | Four Months ended September 30, 2003 |   |         | Five Months Ended May 30, 2003 | 
|Cash flows from operating activities                                                                                              |  |                                      |         |   |                                      |   |         |                                |  |   |          |  
|Net (loss) income                                                                                                                 |  | $                                    | (12,327 | ) |                                      | $ | 2,431   |                                |  | $ | (29,992  | )
|Adjustments to reconcile net (loss) income to net cash flows from operating activities:                                           |  |                                      |         |   |                                      |   |         |                                |  |   |          |  
|Depreciation and amortization                                                                                                     |  |                                      | 22,528  |   |                                      |   | 6,746   |                                |  |   | 15,037   |  
|Bad debt expense                                                                                                                  |  |                                      | 30      |   |                                      |   | 687     |                                |  |   | 3,656    |  
|Stock based compensation expense                                                                                                  |  |                                      | 20      |   |                                      |   | 7,475   |                                |  |   |         |  
|Deferred income taxes                                                                                                             |  |                                      | (327    | ) |                                      |   | (1,524  | )                              |  |   |         |  
|Reorganization items, net                                                                                                         |  |                                      |        |   |                                      |   |        |                                |  |   | 34,155   |  
|Other items                                                                                                                       |  |                                      | (3,819  | ) |                                      |   | (1,052  | )                              |  |   | (15,778  | )
|Changes in operating assets and liabilities net of effects of acquisitions and disposals:                                         |  |                                      |         |   |                                      |   |         |                                |  |   |          |  
|Accounts receivable                                                                                                               |  |                                      | (4,933  | ) |                                      |   | 14,164  |                                |  |   | (186,257 | )
|Prepaid assets                                                                                                                    |  |                                      | 2,331   |   |                                      |   | 2,518   |                                |  |   | (297     | )
|Other current assets                                                                                                              |  |                                      | (3,419  | ) |                                      |   | (1,918  | )                              |  |   | 13,254   |  
|Accounts payable and accrued liabilities                                                                                          |  |                                      | (18,690 | ) |                                      |   | (16,913 | )                              |  |   | 265,061  |  
|Deferred revenue                                                                                                                  |  |                                      | (266    | ) |                                      |   | 126     |                                |  |   | (5,082   | )
|Other liabilities                                                                                                                 |  |                                      | 320     |   |                                      |   | (114    | )                              |  |   | (108     | )
|                                                                                                                                  |  |                                      |         |   |                                      |   |         |                                |  |   |          |  
|Net cash flows from operating activities before reorganization items                                                              |  |                                      | (18,552 | ) |                                      |   | 12,626  |                                |  |   | 93,649   |  
|Reorganization items                                                                                                              |  |                                      |         |   |                                      |   |         |                                |  |   |          |  
|Professional fees related to reorganization                                                                                       |  |                                      |        |   |                                      |   |        |                                |  |   | (8,707   | )
|Interest income related to reorganization                                                                                         |  |                                      |        |   |                                      |   |        |                                |  |   | 530      |  
|Foreign exchange loss on pre-petition debt                                                                                        |  |                                      |        |   |                                      |   |        |                                |  |   | (34,000  | )
|                                                                                                                                  |  |                                      |         |   |                                      |   |         |                                |  |   |          |  
|Net cash flows from operating activities                                                                                          |  |                                      | (18,552 | ) |                                      |   | 12,626  |                                |  |   | 51,472   |  
|                                                                                                                                  |  |                                      |         |   |                                      |   |         |                                |  |   |          |  
|Cash flows from investing activities                                                                                              |  |                                      |         |   |                                      |   |         |                                |  |   |          |  
|Purchase of property and equipment                                                                                                |  |                                      | (18,937 | ) |                                      |   | (5,843  | )                              |  |   | (4,016   | )
|Sale of marketable securities                                                                                                     |  |                                      | 23,946  |   |                                      |   |        |                                |  |   |         |  
|Restricted cash                                                                                                                   |  |                                      | (401    | ) |                                      |   |        |                                |  |   |         |  
|Acquisition, net of cash acquired                                                                                                 |  |                                      |        |   |                                      |   | (74,284 | )                              |  |   |         |  
|Cash acquired from merger with ITXC, net of acquisition costs paid                                                                |  |                                      | 4,854   |   |                                      |   |        |                                |  |   |         |  
|Proceeds on sale of liquidated subsidiaries, net                                                                                  |  |                                      |        |   |                                      |   |        |                                |  |   | 3,500    |  
|                                                                                                                                  |  |                                      |         |   |                                      |   |         |                                |  |   |          |  
|Net cash flows from investing activities                                                                                          |  |                                      | 9,462   |   |                                      |   | (80,127 | )                              |  |   | (516     | )
|                                                                                                                                  |  |                                      |         |   |                                      |   |         |                                |  |   |          |  
|Cash flows from financing activities                                                                                              |  |                                      |         |   |                                      |   |         |                                |  |   |          |  
|Retirement of preferred stock  parent company                                                                                    |  |                                      | (95,000 | ) |                                      |   |        |                                |  |   |         |  
|Dividend payment to parent company                                                                                                |  |                                      | (9,448  | ) |                                      |   |        |                                |  |   |         |  
|Issuance of senior notes to affiliate company                                                                                     |  |                                      | 100,000 |   |                                      |   |        |                                |  |   |         |  
|Capital lease repayment                                                                                                           |  |                                      | (276    | ) |                                      |   |        |                                |  |   |         |  
|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                                                                                          |  |                                      | (4,724  | ) |                                      |   | 100,000 |                                |  |   | 1,674    |  
|                                                                                                                                  |  |                                      |         |   |                                      |   |         |                                |  |   |          |  
|Net (decrease) increase in cash and cash equivalents                                                                              |  |                                      | (13,814 | ) |                                      |   | 32,499  |                                |  |   | 52,630   |  
|Cash and cash equivalents at beginning of period                                                                                  |  |                                      | 35,279  |   |                                      |   |        |                                |  |   | 26,796   |  
|                                                                                                                                  |  |                                      |         |   |                                      |   |         |                                |  |   |          |  
|Cash and cash equivalents at end of period                                                                                        |  | $                                    | 21,465  |   |                                      | $ | 32,499  |                                |  | $ | 79,426   |  
|                                                                                                                                  |  |                                      |         |   |                                      |   |         |                                |  |   |          |  



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



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TELEGLOBE INTERNATIONAL HOLDINGS LTD



Consolidated Statement of Stockholders Equity (Successor)

(amounts in thousands of United States Dollars)

(Unaudited)



|                                                                                       |  |             |     |                          |   |                    |  |   |                             |   |  |                                            |     |   |                          |   |     |   |  |   |         |  
|-------------------------------------------------------------------------------------- |  | ----------- | --- | ------------------------ | - | ------------------ |  | - | --------------------------- | - |  | ------------------------------------------ | --- | - | ------------------------ | - | --- | - |  | - | ------- | -
|Nine Months ended September 30, 2004                                                   |  | CommonStock |     | AdditionalPaid-inCapital |   | AccumulatedDeficit |  |   | DeferredCompensationExpense |   |  | AccumulatedOtherComprehensiveIncome (loss) |     |   | TotalStockholdersEquity |  
|December 31, 2003                                                                      |  | $           | 281 |                          | $ | 12,194             |  | $ | (5,217                      | ) |  | $                                          |    |   |                          | $ |    |   |  | $ | 7,258   |  
|Issuance of common stock                                                               |  |             | 109 |                          |   | 157,218            |  |   |                            |   |  |                                            |    |   |                          |   |    |   |  |   | 157,327 |  
|Issuance of stock options, net of amortization of deferred compensation expense of $20 |  |             |    |                          |   | 19,453             |  |   |                            |   |  |                                            | (57 | ) |                          |   |    |   |  |   | 19,396  |  
|Issuance of warrants                                                                   |  |             |    |                          |   | 2,788              |  |   |                            |   |  |                                            |    |   |                          |   |    |   |  |   | 2,788   |  
|Unrealized holding losses                                                              |  |             |    |                          |   |                   |  |   |                            |   |  |                                            |    |   |                          |   | (60 | ) |  |   | (60     | )
|Net loss                                                                               |  |             |    |                          |   |                   |  |   | (12,327                     | ) |  |                                            |    |   |                          |   |    |   |  |   | (12,327 | )
|Preferred stock dividends                                                              |  |             |    |                          |   |                   |  |   | (3,958                      | ) |  |                                            |    |   |                          |   |    |   |  |   | (3,958  | )
|                                                                                       |  |             |     |                          |   |                    |  |   |                             |   |  |                                            |     |   |                          |   |     |   |  |   |         |  
|September 30, 2004                                                                     |  | $           | 390 |                          | $ | 191,653            |  | $ | (21,502                     | ) |  | $                                          | (57 | ) |                          | $ | (60 | ) |  | $ | 170,424 |  
|                                                                                       |  |             |     |                          |   |                    |  |   |                             |   |  |                                            |     |   |                          |   |     |   |  |   |         |  



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



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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. In addition, the assets,
liabilities and results of ITXC Corp. (ITXC) are included in the Successor financial statements as of June 1, 2004.



The September 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 nine months ended September 30, 2004 and for the three and four months ended September 30, 2003 and the Predecessor for the 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 nine months ended
September 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 were recorded during the second quarter of 2004, 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 was 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.:



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.



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TELEGLOBE INTERNATIONAL HOLDINGS LTD



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)(Continued)

(Unaudited)



Comprehensive Income (Loss)



The components of accumulated other comprehensive income (loss) 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 4 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
merger with ITXC was completed. 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.



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 is preliminary pending the finalization of the valuation of receivables, certain
liabilities and income taxes. The final allocation of the purchase price may result in a different allocation and goodwill amount. The final allocation will be finalized by December 2004. 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.



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TELEGLOBE INTERNATIONAL HOLDINGS LTD



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)(Continued)

(Unaudited)



The preliminary allocation of the purchase consideration
to the estimated fair value of the net assets acquired is as follows:



|                                                |  |             |         |  
|----------------------------------------------- |  | ----------- | ------- | -
|                                                |  | 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 |  
|                                                |  |             |         |  



As at May 31, 2004,
ITXC has a federal and state net operating loss (NOL) carryforward of approximately $197 million. The federal NOL carryforwards expire from 2012 to 2023. The state NOL carryforwards expire from 2004 to 2010. The Company has not performed a detailed
analysis to determine whether an ownership change under Section 382 of the Internal Revenue Code occurred in respect to 1) ITXCs initial public offering on October 1, 1999; 2) ITXCs acquisition of eFusion, Inc. on October 12, 2000 and 3)
ITXCs merger with Teleglobe on May 31, 2004, but believes that it is likely that such a change occurred. The effect of an ownership change would be the imposition of an annual limitation on the use of NOL carryforwards attributable to periods
before the change. The Company has not yet determined the amount of the potential limitation. The limitation may significantly reduce the NOL carryforward amounts.



ITXCs net deferred tax assets related to temporary differences and loss carry forwards as at May 31, 2004 total
approximately $79 million and have been fully reduced by a valuation allowance as the Company believes that it is more likely than not that the related tax benefits will not be materialized.



If and when the tax benefits for those items are recognized in the financial
statements after the acquisition date, the amounts recognized shall be applied (a) first to reduce to zero any goodwill related to the acquisition, (b) second to reduce to zero other noncurrent intangible assets related to the acquisition, and (c)
third to reduce income tax expense.



The goodwill recognized is
not tax deductible for corporate income tax purposes.



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



(b) On May 30, 2003, the Company acquired 100% of the shares of companies formed by Old Teleglobe prior to closing to hold certain core assets and
liabilities of the Predecessor for a total cash consideration of $125 million plus acquisition costs of $9.6 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 date. The excess 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.



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TELEGLOBE INTERNATIONAL HOLDINGS LTD



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)(Continued)

(Unaudited)



The allocation of the purchase price was finalized during
the second quarter of 2004. The previous allocation was revised based on the availability of more current information concerning certain assumed liabilities. As a result, current liabilities decreased by $10.8 million, other current assets decreased
by $3.7 million, property and equipment decreased by $6.3 million, intangible assets decreased by $0.6 million and other assets decreased by $0.2 million. The adjustments to depreciation and amortization expenses are being applied prospectively.



The final 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  |  
|                       |  |       |          |  



(c) The following
reflects the unaudited pro-forma results of operations for the three months and nine months ended September 30, 2003 giving effect to the ITXC merger and the Acquisition as if they had taken place on January 1, 2003, and for the nine months ended
September 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 Months EndedSeptember 30, 2003 |         |   | Nine Months EndedSeptember 30, 2004 |   |         | Nine Months EndedSeptember 30, 2003 | 
|Operating revenues                               |  | $                                    | 284,195 |   |                                     | $ | 867,614 |                                     |  | $ | 871,364 |  
|Net loss before income taxes                     |  |                                      | (12,042 | ) |                                     |   | (33,016 | )                                   |  |   | (34,651 | )
|Net loss                                         |  |                                      | (11,997 | ) |                                     |   | (30,878 | )                                   |  |   | (34,975 | )
|Net loss per common share                        |  | $                                    | (0.31   | ) |                                     | $ | (0.79   | )                                   |  | $ | (0.90   | )



3. Restricted Cash



In conjunction with its letters of credit for its leased premises, the
Company has $2.2 million in restricted cash as of September 30, 2004 that represents the collateral supporting the letters of credit. The majority of this amount relates to a letter of credit for the leased premises in Princeton, New Jersey. The
letters of credit expire through July 2005. The remaining amount of $4.5 million in restricted cash at September 30, 2004 relates to collateral provided for various commercial letters of credit expiring through March 2005.



4. Marketable Securities



The Companys available for sale investments, including amounts in cash
equivalents ($9.8 million and $22.2 million at September 30, 2004 and December 31, 2003, respectively) and marketable securities, are as follows:



|                                  |  |                   |        |                  |   |       
|--------------------------------- |  | ----------------- | ------ | ---------------- | - | ------
|(amounts in thousands)            |  | September 30,2004 |        | December 31,2003
|Money market funds and equivalent |  | $                 | 9,788  |                  | $ | 22,199
|Corporate bonds                   |  |                   | 1,224  |                  |   |      
|Asset-backed securities           |  |                   | 2,118  |                  |   |      
|                                  |  |                   |        |                  |   |       
|Total                             |  | $                 | 13,130 |                  | $ | 22,199
|                                  |  |                   |        |                  |   |       



Gross realized losses
for the three months ended September 30, 2004 is approximately $74,000. Gross realized gains for the nine months ended September 30, 2004 is approximately $19,000 and nil for the three months and four months ended September 30, 2003 and five months
ended May 30, 2003.



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TELEGLOBE INTERNATIONAL HOLDINGS LTD



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)(Continued)

(Unaudited)

The Companys available for sale securities have the following maturities at September 30, 2004:



|                                      |  |      |       |        |   |      
|------------------------------------- |  | ---- | ----- | ------ | - | -----
|                                      |  | Cost |       | Market
|Due in one year or less               |  | $    | 3,048 |        | $ | 2,996
|Due after one year through five years |  |      | 354   |        |   | 346  
|                                      |  |      |       |        |   |      
|                                      |  | $    | 3,402 |        | $ | 3,342
|                                      |  |      |       |        |   |      



5. Intangible Assets and Goodwill



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



|                                                                |  |                     |        |                         |   |        |     |  |                     |        |                         |   |        |     |   |        |   |  |   |       
|--------------------------------------------------------------- |  | ------------------- | ------ | ----------------------- | - | ------ | --- |  | ------------------- | ------ | ----------------------- | - | ------ | --- | - | ------ | - |  | - | ------
|                                                                |  | September 30, 2004  |        | December 31, 2003      
|(amounts in thousands)                                          |  | GrossCarryingAmount |        | AccumulatedAmortization |   |        | Net |  | GrossCarryingAmount |        | AccumulatedAmortization |   |        | Net
|Customer relationships                                          |  | $                   | 8,700  |                         | $ | (2,409 | )   |  | $                   | 6,291  |                         | $ | 9,184  |     | $ | (1,072 | ) |  | $ | 8,112 
|Other intangibles                                               |  |                     | 2,121  |                         |   | (1,612 | )   |  |                     | 509    |                         |   | 2,240  |     |   |       |   |  |   | 2,240 
|Tradenames                                                      |  |                     | 700    |                         |   | (33    | )   |  |                     | 667    |                         |   |       |     |   |       |   |  |   |      
|Patents                                                         |  |                     | 6,500  |                         |   | (310   | )   |  |                     | 6,190  |                         |   |       |     |   |       |   |  |   |      
|Technology                                                      |  |                     | 16,400 |                         |   | (781   | )   |  |                     | 15,619 |                         |   |       |     |   |       |   |  |   |      
|Origination and termination contracts and related relationships |  |                     | 1,500  |                         |   | (75    | )   |  |                     | 1,425  |                         |   |       |     |   |       |   |  |   |      
|Internally developed software relating to technology            |  |                     | 2,300  |                         |   | (191   | )   |  |                     | 2,109  |                         |   |       |     |   |       |   |  |   |      
|                                                                |  |                     |        |                         |   |        |     |  |                     |        |                         |   |        |     |   |        |   |  |   |       
|Total intangible assets                                         |  | $                   | 38,221 |                         | $ | (5,411 | )   |  | $                   | 32,810 |                         | $ | 11,424 |     | $ | (1,072 | ) |  | $ | 10,352
|                                                                |  |                     |        |                         |   |        |     |  |                     |        |                         |   |        |     |   |        |   |  |   |       



The tradenames,
patents, technology and internally developed software relating to the technology were acquired 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 4 years. Intangible assets also include $1.5 million of origination and termination contracts and related relationships acquired as a result of the merger with
ITXC. These contracts and relationships are being amortized over 5 years. The weighted average amortization period for acquired Intangibles equals approximately 6.6 years.



Amortization expense for intangible assets totaled approximately $2.0 million for the three months ended September 30, 2004,
$4.3 million for the nine months ended September 30, 2004, $0.5 million for the three months ended September 30, 2003, $0.6 million for the four months ended September 30, 2003 and nil for the five months ended May 30, 2003. Aggregate amortization
expense for intangible assets is estimated to be:



|                                      |  |   |            
|------------------------------------- |  | - | -----------
|Three months ending December 31, 2004 |  | $ | 2.0 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



As a result of the
merger with ITXC, the Company recorded the excess of the purchase consideration over the fair value of net identifiable assets acquired as goodwill. See Note 2 for further information regarding the recorded amount of $97.9 million for goodwill.



6. Senior Notes and Preferred Shares



In connection with the ITXC merger on May 31, 2004, the Company retired its
outstanding $95 million of stated value of preferred shares and paid the accrued dividends on those shares. Concurrent with the retirement, senior notes of $100 million were issued to an affiliate of the Companys ultimate parent. The senior
notes have a maturity period of 4 years and the annual interest rate is 10%, payable quarterly. The holder of the notes is entitled to receive a fee equal to 1% of the outstanding balance at the end of the first year and 2% of the outstanding
balance at the end of the second year. The estimated $3 million aggregate fee will be expensed



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TELEGLOBE INTERNATIONAL HOLDINGS LTD



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)(Continued)

(Unaudited)



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, $25 million no later than the third anniversary and $50 million on May 31, 2008.



The Company may, at its option, prepay all or any portion of the senior notes, in a minimum principal amount of $5 million
or integral multiples of $5 million in excess thereof, at a purchase price in cash equal to 100% of the face amount of the notes plus all accrued and unpaid interest 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.



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



7. Comprehensive
Income (Loss)



The components of comprehensive income
(loss) for the periods indicated are as follows:



|                            |  |                                      |         |   |                                      |   |                                     |  |   |                                     |   |                                |   |       |  |   |         |  
|--------------------------- |  | ------------------------------------ | ------- | - | ------------------------------------ | - | ----------------------------------- |  | - | ----------------------------------- | - | ------------------------------ | - | ----- |  | - | ------- | -
|                            |  | Successor                            |         |   | Successor                            |   | Successor                           |  |   | Successor                           |   | Predecessor                    |  
|                            |  | Three Months EndedSeptember 30, 2004 |         |   | Three Months EndedSeptember 30, 2003 |   | Nine Months EndedSeptember 30, 2004 |  |   | Four Months EndedSeptember 30, 2003 |   | Five Months Ended May 30, 2003 |  
|Net (loss) income           |  | $                                    | (11,031 | ) |                                      | $ | 137                                 |  | $ | (12,327                             | ) |                                | $ | 2,431 |  | $ | (29,992 | )
|Unrealized holding losses   |  |                                      | (42     | ) |                                      |   |                                    |  |   | (60                                 | ) |                                |   |      |  |   |        |  
|                            |  |                                      |         |   |                                      |   |                                     |  |   |                                     |   |                                |   |       |  |   |         |  
|Comprehensive (loss) income |  | $                                    | (11,073 | ) |                                      | $ | 137                                 |  | $ | (12,387                             | ) |                                | $ | 2,431 |  | $ | (29,992 | )
|                            |  |                                      |         |   |                                      |   |                                     |  |   |                                     |   |                                |   |       |  |   |         |  



8. Stock-Based Compensation Plans



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 of these stock options were issued immediately
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.



As a result of the merger with
ITXC on May 31, 2004, the Company issued 1,595,323 stock options to ITXC employees, pursuant 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:



|                                       |  |                                     |  |                                 |      
|-------------------------------------- |  | ----------------------------------- |  | ------------------------------- | -----
|                                       |  | Nine Months endedSeptember 30, 2004
|                                       |  | Number ofShares                     |  | Weighted - AverageExercisePrice
|Options outstanding, beginning of year |  |                                    |  | $                               |     
|Options granted                        |  | 2,514,323                           |  |                                 | 15.29
|Options exercised                      |  | 1,750                               |  |                                 | 4.64 
|Options cancelled                      |  | 96,865                              |  |                                 | 18.22
|                                       |  |                                     |  |                                 |      
|Options outstanding, end of period     |  | 2,415,708                           |  | $                               | 15.19
|                                       |  |                                     |  |                                 |      



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TELEGLOBE INTERNATIONAL HOLDINGS LTD



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)(Continued)

(Unaudited)



Fair Value Assumptions



The Company has adopted the disclosure-only provisions of SFAS No. 123,
Accounting for Stock-Based Compensation.



The
weighted-average fair value of options granted on June 9, 2004 and May 31, 2004 was $8.83 per stock option and $12.19 per stock option, respectively. The fair value for these options was estimated using the Black-Scholes model with the following
weighted average 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 following table
summarizes information about fixed price stock options outstanding at September 30, 2004:



|                        |  |                 |  |                                            |  |                                 |       |                                       |           |                                 |   |      
|----------------------- |  | --------------- |  | ------------------------------------------ |  | ------------------------------- | ----- | ------------------------------------- | --------- | ------------------------------- | - | -----
|                        |  |                 |  | Outstanding                                |  | Exercisable                    
|Range of ExercisePrices |  | Number ofShares |  | Weighted - AverageRemainingContractualLife |  | Weighted - AverageExercisePrice |       | NumberExercisable atSeptember 30,2004 |           | Weighted - AverageExercisePrice
|$0.00$5.00             |  | 330,797         |  | 1.6                                        |  | $                               | 1.82  |                                       | 330,797   |                                 | $ | 1.82 
|5.0110.00              |  | 99,221          |  | 4.5                                        |  |                                 | 7.10  |                                       | 68,442    |                                 |   | 6.66 
|10.0115.00             |  | 1,151,366       |  | 6.4                                        |  |                                 | 10.59 |                                       | 140,772   |                                 |   | 10.60
|15.0125.00             |  | 290,404         |  | 4.4                                        |  |                                 | 18.80 |                                       | 220,866   |                                 |   | 17.99
|25.01430.00            |  | 543,920         |  | 3.1                                        |  |                                 | 32.59 |                                       | 459,514   |                                 |   | 33.27
|                        |  |                 |  |                                            |  |                                 |       |                                       |           |                                 |   |      
|$0.00$430.00           |  | 2,415,708       |  | 4.7                                        |  | $                               | 15.19 |                                       | 1,220,391 |                                 | $ | 17.87
|                        |  |                 |  |                                            |  |                                 |       |                                       |           |                                 |   |      



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 No. 123 had been applied for
the periods indicated:



|                                                                                                |  |                                      |         |   |                                      |   |        |                                     |  |   |                                     |   |  |                                |        |   |  |   |         |  
|----------------------------------------------------------------------------------------------- |  | ------------------------------------ | ------- | - | ------------------------------------ | - | ------ | ----------------------------------- |  | - | ----------------------------------- | - |  | ------------------------------ | ------ | - |  | - | ------- | -
|                                                                                                |  | Successor                            |         |   | Successor                            |   |        | Successor                           |  |   | Successor                           |   |  | Predecessor                    |       
|(amounts in thousands)                                                                          |  | Three Months EndedSeptember 30, 2004 |         |   | Three Months EndedSeptember 30, 2003 |   |        | Nine Months EndedSeptember 30, 2004 |  |   | Four Months EndedSeptember 30, 2003 |   |  | Five Months Ended May 30, 2003 |       
|Net loss attributable to common stockholders                                                    |  | $                                    | (11,031 | ) |                                      | $ | (2,238 | )                                   |  | $ | (16,285                             | ) |  | $                              | (736   | ) |  | $ | (29,992 | )
|Add: stock-based compensation, as reported pursuant to APB 25                                   |  |                                      | 15      |   |                                      |   | 7,475  |                                     |  |   | 20                                  |   |  |                                | 7,475  |   |  |   |        |  
|Deduct: total stock-based compensation determined under fair value based methods for all awards |  |                                      | (2,165  | ) |                                      |   | (7,501 | )                                   |  |   | (3,379                              | ) |  |                                | (7,501 | ) |  |   |        |  
|                                                                                                |  |                                      |         |   |                                      |   |        |                                     |  |   |                                     |   |  |                                |        |   |  |   |         |  
|Adjusted net loss, fair value method for all stock-based awards                                 |  |                                      | (13,181 | ) |                                      |   | (2,264 | )                                   |  |   | (19,644                             | ) |  |                                | (762   | ) |  |   | (29,992 | )
|Basic and diluted net loss per share, as reported                                               |  | $                                    | (0.28   | ) |                                      | $ | (0.08  | )                                   |  | $ | (0.49                               | ) |  | $                              | (0.03  | ) |  | $ |        |  
|                                                                                                |  |                                      |         |   |                                      |   |        |                                     |  |   |                                     |   |  |                                |        |   |  |   |         |  
|Basic and diluted net loss per share, SFAS 123 adjusted                                         |  | $                                    | (0.34   | ) |                                      | $ | (0.08  | )                                   |  | $ | (0.60                               | ) |  | $                              | (0.03  | ) |  | $ |        |  
|                                                                                                |  |                                      |         |   |                                      |   |        |                                     |  |   |                                     |   |  |                                |        |   |  |   |         |  



9. Common Stock and Earnings per
Share- Successor



On January 14, 2004, the Board of
Directors 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 common shares from 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



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##### Table of Contents

TELEGLOBE INTERNATIONAL HOLDINGS LTD



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)(Continued)

(Unaudited)



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. In addition, authorized shares of the Company were increased to 400 million.



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



Diluted earnings per share is
determined in the same manner as basic earnings 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
earnings per share because the Company had a net loss and the impact of the assumed exercise of the stock options and warrants is not dilutive.



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



|                                             |  |                                      |            |   |                                      |   |            |                                     |  |   |                                     |   |  |   |            |  
|-------------------------------------------- |  | ------------------------------------ | ---------- | - | ------------------------------------ | - | ---------- | ----------------------------------- |  | - | ----------------------------------- | - |  | - | ---------- | -
|                                             |  | Three Months EndedSeptember 30, 2004 |            |   | Three Months EndedSeptember 30, 2003 |   |            | Nine Months EndedSeptember 30, 2004 |  |   | Four Months EndedSeptember 30, 2003 |  
|Net loss attributable to common stockholders |  | $                                    | (11,031    | ) |                                      | $ | (2,238     | )                                   |  | $ | (16,285                             | ) |  | $ | (736       | )
|Basic earnings per share:                    |  | $                                    | (0.28      | ) |                                      | $ | (0.08      | )                                   |  | $ | (0.49                               | ) |  | $ | (0.03      | )
|Weighted Average Shares                      |  |                                      | 38,985,663 |   |                                      |   | 28,106,757 |                                     |  |   | 32,941,710                          |   |  |   | 28,106,757 |  



10. Restructuring Charges



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



11. Reorganization Items



Reorganization items included in the 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)                                       |  | Five Months Ended May 30, 2003 |       
|Professional fees directly related to the bankruptcy filings |  | $                              | 8,707  |  
|Foreign exchange loss on pre-petition debt                   |  |                                | 34,000 |  
|Settlement gains on supplier contracts                       |  |                                | (7,201 | )
|Other                                                        |  |                                | (1,351 | )
|                                                             |  |                                |        |  
|Total                                                        |  | $                              | 34,155 |  
|                                                             |  |                                |        |  



12. Employee Benefit Plans



The following table presents the components of net
periodic benefit cost for pension benefits:



|                                |  |                                       |        |   |                                       |   |        |                                      |  |   |                                      |   |  |                                |        |   |  |   |        |  
|------------------------------- |  | ------------------------------------- | ------ | - | ------------------------------------- | - | ------ | ------------------------------------ |  | - | ------------------------------------ | - |  | ------------------------------ | ------ | - |  | - | ------ | -
|                                |  | Successor                             |        |   | Successor                             |   |        | Successor                            |  |   | Successor                            |   |  | Predecessor                    |       
|(amounts in thousands)          |  | Three Months Ended September 30, 2004 |        |   | Three Months Ended September 30, 2003 |   |        | Nine Months Ended September 30, 2004 |  |   | Four Months Ended September 30, 2003 |   |  | Five Months Ended May 30, 2003 |       
|Service cost                    |  | $                                     | 586    |   |                                       | $ | 520    |                                      |  | $ | 1,757                                |   |  | $                              | 753    |   |  | $ | 860    |  
|Interest cost                   |  |                                       | 1,685  |   |                                       |   | 1,476  |                                      |  |   | 5,055                                |   |  |                                | 2,139  |   |  |   | 2,416  |  
|Expected return on plan assets  |  |                                       | (2,016 | ) |                                       |   | (2,035 | )                                    |  |   | (6,047                               | ) |  |                                | (2,562 | ) |  |   | (3,558 | )
|Amortization of net loss (gain) |  |                                       |       |   |                                       |   | 223    |                                      |  |   |                                     |   |  |                                |       |   |  |   | 956    |  
|                                |  |                                       |        |   |                                       |   |        |                                      |  |   |                                      |   |  |                                |        |   |  |   |        |  
|Net periodic benefit cost       |  | $                                     | 255    |   |                                       | $ | 184    |                                      |  | $ | 765                                  |   |  | $                              | 330    |   |  | $ | 674    |  
|                                |  |                                       |        |   |                                       |   |        |                                      |  |   |                                      |   |  |                                |        |   |  |   |        |  



The Company did not
contribute to its pension plans during the three and nine months ended September 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.



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##### Table of Contents

TELEGLOBE INTERNATIONAL HOLDINGS LTD



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)(Continued)

(Unaudited)



13. Interest Expense



Interest expense includes an amount of $3.4 million for the three months
ended September 30, 2004, $8.3 million for the nine months ended September 30, 2004 and nil for the three and four months ended September 30, 2003 and five months ended May 30, 2003, representing the accretion of certain liabilities recognized at
the date of Acquisition, to the amounts currently payable.



The
three and nine months ended September 30, 2004 include $2.8 million and $3.8 million respectively, of interest expense relating to the senior notes issued in the second quarter of 2004.



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 $95.0 million. The preferred shares pay dividends at a rate of 10%. On May 31, 2004, the Company redeemed the preferred shares of $95.0 million including accrued dividends of $9.5 million
and issued senior notes totaling $100.0 million to an affiliate of the Companys ultimate parent. The senior notes have a maturity period of 4 years and the annual interest rate is 10%, payable quarterly. The holder of the notes is entitled to
receive a fee equal to 1% of the outstanding balance at the end of the first year and 2% of the outstanding balance at the end of the second year.



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.



BCE Inc. and its affiliates transferred all of the outstanding and issued common and preferred shares of Teleglobe Inc., to the court appointed monitor;
accordingly, transactions with BCE Inc. and its affiliates subsequent to December 31, 2002 and prior to May 30, 2003 continue to be included in the following disclosures.



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



|                                             |  |                                                                  |                                     |           |       |                                     |           |   |                                    |           |  |                                    |           |   |                               |             |       |   |  |   |        
|-------------------------------------------- |  | ---------------------------------------------------------------- | ----------------------------------- | --------- | ----- | ----------------------------------- | --------- | - | ---------------------------------- | --------- |  | ---------------------------------- | --------- | - | ----------------------------- | ----------- | ----- | - |  | - | -------
|(amounts in thousands)                       |  | Classification in theCompanys consolidated financial statements |                                     | Successor |       |                                     | Successor |   |                                    | Successor |  |                                    | Successor |   |                               | Predecessor
|Nature of transaction with the related
party |  |                                                                  | Three MonthsEndedSeptember 30, 2004 |           |       | Three MonthsEndedSeptember 30, 2003 |           |   | Nine MonthsEndedSeptember 30, 2004 |           |  | Four MonthsEndedSeptember 30, 2003 |           |   | Five MonthsEnded May 30, 2003
|BCE and its affiliates                       |  |                                                                  |                                     |           |       |                                     |           |   |                                    |           |  |                                    |           |   |                               |             |       |   |  |   |        
|Sales of services                            |  | Operating revenues                                               |                                     |           | N/A   | *                                   |           |   | N/A                                | *         |  |                                    | N/A       | * |                               |             | N/A   | * |  | $ | 105,105
|Acquisition of services                      |  | Operating expenses                                               |                                     |           | N/A   | *                                   |           |   | N/A                                | *         |  |                                    | N/A       | * |                               |             | N/A   | * |  | $ | 6,238  
|Administrative services**                    |  | Selling, general and administrative                              |                                     |           | N/A   | *                                   |           |   | N/A                                | *         |  |                                    | N/A       | * |                               |             | N/A   | * |  | $ | 671    
|Network                                      |  | Network expenses                                                 |                                     |           | N/A   | *                                   |           |   | N/A                                | *         |  |                                    | N/A       | * |                               |             | N/A   | * |  | $ | 5,145  
|Cerberus and affiliates                      |  |                                                                  |                                     |           |       |                                     |           |   |                                    |           |  |                                    |           |   |                               |             |       |   |  |   |        
|Financing                                    |  | Interest expense                                                 |                                     | $         | 2,786 |                                     |           |   | N/A                                |           |  | $                                  | 3,807     |   |                               | $           | 292   |   |  |   | N/A    
|Debtor-in-Possession financing               |  | Interest expense                                                 |                                     |           | N/A   |                                     |           |   | N/A                                |           |  |                                    | N/A       |   |                               |             | N/A   |   |  | $ | 126    
|Preferred stock dividend                     |  |                                                                  |                                     |           | N/A   |                                     |           | $ | 2,375                              |           |  | $                                  | 3,958     |   |                               | $           | 3,167 |   |  |   | N/A    
|Management agreement                         |  | Selling, general and administrative                              |                                     |           | N/A   |                                     |           |   | N/A                                |           |  |                                    | N/A       |   |                               |             | N/A   |   |  | $ | 1,110  

---

|* | As a result of the acquisition on May 31, 2003, BCE Inc. is not considered a related party subsequent to May 30, 2003.
|- | ----------------------------------------------------------------------------------------------------------------------

|** | Management fees paid to BCE were based on direct costs for providing these services by BCE.
|-- | -------------------------------------------------------------------------------------------



14



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##### Table of Contents

TELEGLOBE INTERNATIONAL HOLDINGS LTD



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)(Continued)

(Unaudited)



Amounts payable to related parties at September 30, 2004
total $100.3 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 September 30, 2004.



15. Contingencies



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 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.



On April 14, 2004, Acceris Communications Technologies, Inc. commenced a patent infringement suit in the United States District Court of the District of
New 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 Implementing 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 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 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.



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 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, 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.



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



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##### Table of Contents

TELEGLOBE INTERNATIONAL HOLDINGS LTD



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) /

AND COMBINED FINANCIAL STATEMENTS (PREDECESSOR)(Continued)

(Unaudited)



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.



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##### Table of Contents

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 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.



Actual results could differ materially from those projected in the Companys forward-looking statements due to numerous known and unknown risks and uncertainties, including, among other things, (i) uncertainties
inherent in the merger with ITXC, including but not limited to, the integration effort and retention of key employees, customers and suppliers through the merger process; the inability to capture anticipated synergies; the existence of undisclosed
or unanticipated contingent liabilities; and the risk that the Company may not be able to effectively execute its business plan and (ii) other risks, including the volatile and competitive environment for telecommunications; changes in domestic and
foreign economic, market and regulatory conditions; the inherent uncertainty of financial 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 and relationship with our customers; the Companys debt level and the inherent lack of flexibility resulting therefrom; future transactions; risks inherent in being subject to significant regulation;
and other considerations described as Risk Factors in the Registration Statement. All such 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 reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.



Presentation



The historical financial information and the unaudited financial statements to which the following discussion relates for the three and nine months ended
September 30, 2004 and for the three and four months ended September 30, 2003, which we refer to as the Successor Financial Statements, are the consolidated financial statements of Teleglobe International Holdings Ltd for such period.
The Successor Financial Statements reflect the assets, liabilities and businesses acquired from Old Teleglobe on May 30, 2003, as discussed in detail in the Registration Statement.



The financial information for the five months ended May 30, 2003, which we refer to as the Predecessor Financial
Statements, are derived from the books and records of Old Teleglobe, from which we purchased certain assets, liabilities and businesses. The Predecessor represents the Telecommunications Group of Old Teleglobe that consisted solely
of the voice, data, Internet and wireless roaming services businesses and includes the portions of such businesses not acquired.



The results of operations contained in the unaudited financial statements for the five months ended May 30, 2003 for the Predecessor and the unaudited
financial statements for the three and nine months ended September 30, 2004 and three and four months ended September 30, 2003 for the 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.



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##### Table of Contents

Overview



We are a global telecommunications company providing a range of international and domestic telecommunications services on a wholesale basis. We categorize
our products and services into three primary groups: voice, data and value-added services. The following table summarizes our key service offerings:



|                                                    
|----------------------------------------------------
|Voice  Transport Services                          
|International Switched Transit                      
|Virtual Transit                                     
|Premium Virtual Transit                             
|VoIP services                                       
|Data  Transport Services                           
|IP Transit (Local and International Internet Access)
|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 Drivers



Our revenues are impacted by the following factors:



| |  | with respect to our voice transport revenues, complete dependence upon voice traffic volume;
| | - | --------------------------------------------------------------------------------------------



| |  | with respect to our data transport revenues in the third quarter of 2004, approximately 15% of data transport revenue is dependent on data traffic volume with the remainder of such
revenues subject to fixed pricing arrangements;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the rate and terms of contractual renewals;
| | - | -------------------------------------------



| |  | our ability to satisfy or exceed service level agreements in customer contracts;
| | - | --------------------------------------------------------------------------------



| |  | the rate of usage of our global roaming, ITFS (international toll free services) and inbound collect services;
| | - | --------------------------------------------------------------------------------------------------------------



| |  | 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, merger expenditures and
benefits 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;
| | - | ------------------------------------------------------------------------------------------------------



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| |  | choice of equipment suppliers and terms of agreement with vendors
| | - | -----------------------------------------------------------------



| |  | network redesign and efficiency planning conducted in order to maximize profitability and optimize quality of service; and
| | - | --------------------------------------------------------------------------------------------------------------------------



| |  | expansion or reduction of POPs for interconnection with customers and suppliers.
| | - | --------------------------------------------------------------------------------



Selling, General and Administrative Expenses



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



| |  | variations in headcount;
| | - | ------------------------



| |  | increases in average wages and inflation;
| | - | -----------------------------------------



| |  | changes in the number of POPs; and
| | - | ----------------------------------



| |  | fluctuations in the US dollar-Canadian dollar exchange rate.
| | - | ------------------------------------------------------------



Merger Expenditures and Benefits



The Companys ITXC merger integration plan to achieve annual post-merger cost savings of approximately $25 to $30 million is expected to be completed
by the end of the first quarter 2005. To date, the Company has realized approximately one third of the estimated cost savings, with the remainder expected to occur increasingly in the fourth and first quarters. The integration plan centers around
facility and headcount reductions, termination cost savings and consolidation of the Teleglobe and ITXC networks. Integration costs of approximately $3.2 million are included in the results of operations for the three months ended September 30, 2004
and approximately $8.8 million are included in the results of operations for the nine months ended September 30, 2004. Capitalized costs related to the integration total approximately $6.0 million on the Balance Sheet as at September 30,
2004.



ITXC access to Teleglobe IP network and Teleglobe connectivity:



The combination of Teleglobe and ITXC provided opportunities
to lower the operating expenses of our network, resulting in a decrease in network expenses. IP access charges are a significant example. ITXC on a stand-alone basis purchased IP access services from Teleglobe as well as other competitive wholesale
IP service carriers. We have cancelled many of these third-party services, replacing access via Teleglobes network. The marginal cost of doing so is very low, yielding operating expense reductions.



We have also realized network savings in the short-term by migrating some
common customers from two interconnects to one, improving utilization rates. This allows us growth capacity with lower investment requirements for a period of time. 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 approximately 80% of its integration goal related to network consolidation. The benefits of our completed network consolidation are reflected in our network expenses in the current quarter and once the remaining integration is
finalized, we expect further decreases to network costs.



Facilities and
headcount reductions:



To date the Company has achieved
approximately 80% of its integration goal related to closures of overlapping facilities and approximately one third of its integration goal related to headcount reductions. The third quarter SG&A costs have not been significantly impacted by
these reductions mainly because the results include estimated retention bonuses and severance costs to be paid in the near term. However, SG&A for the fourth quarter and onwards is expected to reflect more significant benefits from these
reductions.



Termination cost savings:



In the future, due to the nature of the international wholesale voice
industry, the increase in volume from the merger will result in substantial termination cost savings for the combined company with other carriers. The planned integration of the combined company least cost routing capabilities will allow the
combined company to route traffic using the lowest cost available in any of the combined companys routes. The amount reflects estimated savings based on current combined volumes and termination rates. While our benefits to date are limited, we
anticipate the synergies to occur after we have completed integrated routing towards the end of the first quarter of 2005.



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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 September 30, 2004, approximately 65% and 35% 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 with at least as favorable pricing available to any customer receiving similar services, known as
a most favored service purchaser 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. While Teleglobes revenues generated from Bell Canada are expected to continue to decline as a result of the amended agreement, access to the Canadian market has resulted in increased volumes from
other major telecommunication companies in that market.



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##### Table of Contents

Critical Accounting Policies and Estimates



The discussion and analysis of Teleglobes 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 five 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 September 30, 2004 and
2003 and the Nine Months Ended September 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 nine months ended September 30, 2004 and for three months and four months ended September 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 consisting of all businesses owned by Old Teleglobe. For purpose of comparing periods, the results for the four months ended September 30, 2003 of the Successor have been grouped with the Predecessor financial statements for the five
months ended May 30, 2003 by mathematically adding the relevant periods without making any adjustments. The results of operations for the nine months ended September 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.



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##### Table of Contents

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 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.



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.



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



|                                                                                          |  |                                 |         |   |                                 |   |       |           |  |   |                       |   |  |   |         |  
|----------------------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------- | - | ----- | --------- |  | - | --------------------- | - |  | - | ------- | -
|                                                                                          |  | Three months endedSeptember 30, |         |   | Nine months ended September 30, |  
|(amounts in thousands)                                                                    |  | 2004                            |         |   | 2003                            |   |       | 2004      |  |   | 2003                  |  
|                                                                                          |  | Successor                       |         |   | Successor                       |   |       | Successor |  |   | Successor/Predecessor |  
|Net (loss) income                                                                         |  | $                               | (11,031 | ) |                                 | $ | 137   |           |  | $ | (12,327               | ) |  | $ | (27,561 | )
|Add:                                                                                      |  |                                 |         |   |                                 |   |       |           |  |   |                       |   |  |   |         |  
|Interest, net                                                                             |  |                                 | 6,271   |   |                                 |   | 303   |           |  |   | 12,481                |   |  |   | 1,016   |  
|Income taxes                                                                              |  |                                 | (165    | ) |                                 |   | (16   | )         |  |   | (2,362                | ) |  |   |        |  
|Depreciation                                                                              |  |                                 | 7,947   |   |                                 |   | 4,630 |           |  |   | 18,188                |   |  |   | 21,160  |  
|Amortization expense                                                                      |  |                                 | 1,981   |   |                                 |   | 467   |           |  |   | 4,340                 |   |  |   | 623     |  
|                                                                                          |  |                                 |         |   |                                 |   |       |           |  |   |                       |   |  |   |         |  
|EBITDA                                                                                    |  | $                               | 5,003   |   |                                 | $ | 5,521 |           |  | $ | 20,320                |   |  | $ | (4,762  | )
|Add:                                                                                      |  |                                 |         |   |                                 |   |       |           |  |   |                       |   |  |   |         |  
|Professional fees incurred in connection with Foreign Corrupt Practices Act investigation |  |                                 | 1,360   |   |                                 |   |      |           |  |   | 1,360                 |   |  |   |        |  
|Reorganization charges                                                                    |  |                                 |        |   |                                 |   |      |           |  |   |                      |   |  |   | 34,155  |  
|                                                                                          |  |                                 |         |   |                                 |   |       |           |  |   |                       |   |  |   |         |  
|ADJUSTED EBITDA                                                                           |  | $                               | 6,363   |   |                                 | $ | 5,521 |           |  | $ | 21,680                |   |  | $ | 29,393  |  



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 as of June 1, 2004.



|                                                            |  |                                      |       |   |                                      |   |       |                                     |  |   |                                     |   |  |   |       |  
|----------------------------------------------------------- |  | ------------------------------------ | ----- | - | ------------------------------------ | - | ----- | ----------------------------------- |  | - | ----------------------------------- | - |  | - | ----- | -
|                                                            |  | Three Months EndedSeptember 30, 2004 |       |   | Three Months EndedSeptember 30, 2003 |   |       | Nine Months EndedSeptember 30, 2004 |  |   | Nine Months EndedSeptember 30, 2003 |  
|                                                            |  | Successor                            |       |   | Successor                            |   |       | Successor                           |  |   | Successor/Predecessor               |  
|Revenues per line of business (in millions of U.S. dollars) |  |                                      |       |   |                                      |   |       |                                     |  |   |                                     |   |  |   |       |  
|Voice  transport                                           |  | $                                    | 226   |   |                                      | $ | 162   |                                     |  | $ | 575                                 |   |  | $ | 482   |  
|Data  transport                                            |  |                                      | 26    |   |                                      |   | 27    |                                     |  |   | 80                                  |   |  |   | 97    |  
|Value - added services                                      |  |                                      | 25    |   |                                      |   | 23    |                                     |  |   | 67                                  |   |  |   | 64    |  
|                                                            |  |                                      |       |   |                                      |   |       |                                     |  |   |                                     |   |  |   |       |  
|Total                                                       |  | $                                    | 277   |   |                                      | $ | 212   |                                     |  | $ | 722                                 |   |  | $ | 643   |  
|                                                            |  |                                      |       |  
|Total revenues excluding BCE revenues                       |  | $                                    | 251   |   |                                      | $ | 177   |                                     |  | $ | 680                                 |   |  | $ | 487   |  
|                                                            |  |                                      |       |  
|Minutes of traffic (in millions)                            |  |                                      |       |   |                                      |   |       |                                     |  |   |                                     |   |  |   |       |  
|Voice  transport                                           |  |                                      | 3,297 |   |                                      |   | 1,843 |                                     |  |   | 7,833                               |   |  |   | 5,453 |  
|Other                                                       |  |                                      | 61    |   |                                      |   | 53    |                                     |  |   | 163                                 |   |  |   | 174   |  
|                                                            |  |                                      |       |   |                                      |   |       |                                     |  |   |                                     |   |  |   |       |  
|Total                                                       |  |                                      | 3,358 |   |                                      |   | 1,896 |                                     |  |   | 7,996                               |   |  |   | 5,627 |  
|                                                            |  |                                      |       |  
|Average voice revenue per minute                            |  | $                                    | 0.069 |   |                                      | $ | 0.088 |                                     |  | $ | 0.073                               |   |  | $ | 0.088 |  
|Percentage of revenues from BCE                             |  |                                      | 9.3   | % |                                      |   | 16.5  | %                                   |  |   | 5.9                                 | % |  |   | 24.2  | %
|Number of customers at period-end                           |  |                                      | 1,346 |   |                                      |   | 1,026 |                                     |  |   | 1,346                               |   |  |   | 1,026 |  
|                                                            |  |                                      |       |  
|Geographic distribution of revenues                         |  |                                      |       |   |                                      |   |       |                                     |  |   |                                     |   |  |   |       |  
|Asia                                                        |  |                                      | 8     | % |                                      |   | 10    | %                                   |  |   | 9                                   | % |  |   | 10    | %
|Canada                                                      |  |                                      | 13    | % |                                      |   | 17    | %                                   |  |   | 12                                  | % |  |   | 24    | %
|Europe                                                      |  |                                      | 29    | % |                                      |   | 26    | %                                   |  |   | 29                                  | % |  |   | 24    | %
|USA                                                         |  |                                      | 33    | % |                                      |   | 36    | %                                   |  |   | 34                                  | % |  |   | 31    | %
|Latin America                                               |  |                                      | 4     | % |                                      |   | 5     | %                                   |  |   | 4                                   | % |  |   | 5     | %
|Other                                                       |  |                                      | 13    | % |                                      |   | 6     | %                                   |  |   | 12                                  | % |  |   | 6     | %
|                                                            |  |                                      |       |   |                                      |   |       |                                     |  |   |                                     |   |  |   |       |  
|Total                                                       |  |                                      | 100   | % |                                      |   | 100   | %                                   |  |   | 100                                 | % |  |   | 100   | %

---

|1 | BCE (Bell Canada Enterprises) is Canadas largest telecommunications company.
|- | -----------------------------------------------------------------------------



Predecessor revenue includes portions of the Predecessor business not acquired by Successor and may not be directly
comparable. Total revenues, excluding revenues from Bell Canada, increased by $74.0 million or 41.8% in the current quarter as compared to the third quarter of 2003. For the nine months ended September 30, 2004, total revenues, excluding revenues
from Bell Canada, increased by $193.0 million or 39.6% from the nine months ended September 30, 2003. The revenues generated from Bell



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##### Table of Contents

Canada decreased due to the renegotiated volume and pricing arrangements as discussed above. The increase in revenues,
excluding the Bell revenue, mainly results from the inclusion of ITXC revenue as of June 1, 2004. The number of customers at current quarter-end represents an increase of 320, including customers obtained through the merger with ITXC, as compared to
the comparable period in 2003.



Revenue generated from voice
transport services increased by approximately $63.0 million or 38.7% during the quarter ended September 30, 2004 as compared to the three months ended September 30, 2003. During the nine months ended September 30, 2004, voice transport revenue
increased by $92.3 million or 19.1% from the nine months ended September 30, 2003. The increase is mainly due to the inclusion of ITXC revenue as of June 1, 2004 and from an increase in minutes of traffic carried. Minutes of traffic carried
increased mainly due to a network expansion in Europe and additional market penetration in the USA with the signing of new contracts and customers. Minutes of traffic carried in the current quarter versus the same quarter in 2003 increased by 77.1%
and by 42.1% in the nine months ended September 30, 2004 versus the nine months ended September 30, 2003. The increase is mainly due to the inclusion of ITXC related minutes as of June 1, 2004 while excluding such amounts in 2003. The increase in
revenue was partially offset by the current competitive pricing trends in the telecommunication industry and a scheduled decrease in volume and price adjustment under the Bell Contract. Although Teleglobes revenues generated from Bell Canada
are expected to continue to decline as a result of the amended agreement, access to the Canadian market has resulted in increased volumes from other major telecommunication companies in that market.



During the quarter ended September 30, 2004, the average voice revenue per
minute was approximately $0.069 per minute, as compared with $0.088 per minute during the quarter ended September 30, 2003. The year over year average voice revenue per minute decreased to $0.073 for the nine months ended September 30, 2004 from
$0.088 for the nine months ended September 30, 2003. The decrease in average revenue per minute is primarily attributable to changes in our route destination mix, repricing of Bell services and to an overall decline in rates experienced in
telecommunications over the past year.



Data service revenue
decreased by approximately $1.1 million or 4.3% in the three months ended September 30, 2004 as compared to the three months ended September 30, 2003, mostly due to price erosion. On a yearly basis, data service revenue decreased by $16.4 million or
17.0% for the nine months ended September 30, 2004 versus the nine months ended September 30, 2003. The decline is in large part a result of cancellation of customer contracts due to uncertainty with Old Teleglobes asset sale as well as the
repricing of contracts upon renewal as a result of ongoing price competition. These declines were partially offset by increased traffic volumes billed to retained customers and new customers. During Old Teleglobes bankruptcy, the Predecessor
experienced difficulty in signing up new data customers, which led to a decline in data revenues as existing contracts terminated during the five months ended May 30, 2003.



Revenue generated from value added services increased by $2.7 million or 11.8% in the current quarter from the third quarter
of 2003 and by $3.2 million or 5.1% for the year-to-date period ended September 30, 2004 as compared to the comparable period of 2003. We experienced increases in signaling services in the current periods, offset by a volume decline in other value
added services primarily from operations that were eliminated during the restructuring of the Predecessor and by price erosion resulting from competition by new entrants into the mobile global roaming services market.



Operating Expenses



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



|                                                                                                                                                                         |  |                                      |    |  |                                      |   |  |                                     |   |  |                                     |   
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------ | -- |  | ------------------------------------ | - |  | ----------------------------------- | - |  | ----------------------------------- | --
|                                                                                                                                                                         |  | Three Months EndedSeptember 30, 2004 |    |  | Three Months EndedSeptember 30, 2003 |   |  | Nine Months EndedSeptember 30, 2004 |   |  | Nine Months EndedSeptember 30, 2003 |   
|                                                                                                                                                                         |  | (Successor)                          |    |  | (Successor)                          |   |  | (Successor)                         |   |  | (Predecessor/Successor)             |   
|Total operating revenues                                                                                                                                                 |  | 100.0                                | %  |  | 100.0                                | % |  | 100.0                               | % |  | 100.0                               | % 
|Operating expenses                                                                                                                                                       |  |                                      |    |  |                                      |   |  |                                     |   |  |                                     |   
|Telecommunication                                                                                                                                                        |  | 75.3                                 | %  |  | 68.9                                 | % |  | 73.7                                | % |  | 69.4                                | % 
|Network, exclusive of depreciation (shown below)                                                                                                                         |  | 8.4                                  | %  |  | 12.7                                 | % |  | 9.9                                 | % |  | 14.2                                | % 
|Selling, general and administrative exclusive of, bad debt expense, stock based compensation expense, depreciation, amortization and
restructuring charges (shown below) |  | 14.4                                 | %  |  | 10.9                                 | % |  | 13.5                                | % |  | 11.2                                | % 
|Stock based compensation                                                                                                                                                 |  |                                     |    |  | 3.5                                  | % |  |                                    |   |  | 1.2                                 | % 
|Bad debt expense                                                                                                                                                         |  | 0.2                                  | %  |  | 0.2                                  | % |  |                                    |   |  | 0.7                                 | % 
|Depreciation                                                                                                                                                             |  | 2.9                                  | %  |  | 2.2                                  | % |  | 2.5                                 | % |  | 3.3                                 | % 
|Amortization of intangible assets                                                                                                                                        |  | 0.7                                  | %  |  | 0.2                                  | % |  | 0.6                                 | % |  | 0.1                                 | % 
|Restructuring charges                                                                                                                                                    |  |                                     |    |  |                                     |   |  | 0.1                                 | % |  |                                    |   
|Foreign exchange loss (gain)                                                                                                                                             |  | (0.1                                 | )% |  | 1.2                                  | % |  |                                    |   |  | (1.2                                | )%
|                                                                                                                                                                         |  |                                      |    |  |                                      |   |  |                                     |   |  |                                     |   
|Total operating expenses as a percentage of revenues                                                                                                                     |  | 101.8                                | %  |  | 99.8                                 | % |  | 100.3                               | % |  | 98.9                                | % 
|                                                                                                                                                                         |  |                                      |    |  |                                      |   |  |                                     |   |  |                                     |   



24



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##### Table of Contents

Telecommunication expense



Telecommunication expense during the three and nine months ended September 30, 2004 increased by approximately $62.0 million
or 42.4% and $86.0 million or 19.3% respectively, from the same periods in 2003 primarily as a result of the increase in revenues due to the inclusion of ITXCs results as of June 1, 2004. The year-to-date increase was partially offset by the
termination of our mobile global roaming joint venture agreement with Comfone AG and lower voice termination costs reflecting benefits from price deflation. At the time of the Acquisition, management had decided to terminate the Comfone agreement
and recorded its best estimate of the fair value of the termination payment as an unfavorable contract in the purchase price allocation. Accretion of the liability to reflect the amounts payable are recorded as interest expense. The quarter-to-date
results were also affected by lower voice termination costs reflecting benefits from price deflation. As a percentage of revenue, telecommunication expense increased during the three and nine months ended September 30, 2004 as compared to the prior
year periods mainly due to an unfavorable mix of voice transport destinations with lower average margin per minute.



Network expense



Network expense decreased by approximately $3.5 million or 13.0% in the third quarter of 2004 compared to the third quarter of 2003. For the nine months
ended September 30, 2004, network expense decreased by $20.4 million or 22.3% from the comparable period in 2003. The decrease is mainly due to the cancellation of access circuits no longer required as a result of the terminated contracts and the
rejection of network contracts determined to be unprofitable. Further decreases resulted from ongoing contract renegotiations with our suppliers. The decreases were partially offset by the inclusion of ITXCs network expenses as of June 1,
2004.



Network expense as a percentage of revenue decreased in
the current quarter as compared to the same quarter in 2003 and for the nine months ended September 30, 2004 as compared to the nine months ended September 30, 2003. The percentage decrease is a function of the decrease in expenses while revenues
increased for the same comparative periods.



Selling, General and
Administrative expenses



Selling, general and
administrative (SG&A) expense has increased by approximately $16.9 million or 73.2% in the third quarter of 2004 compared to the third quarter of 2003 and by $26.0 million or 36.2% in the nine months ended September 30, 2004 as compared to the
nine months ended September 30, 2003. The increase is mainly due to professional services related to ITXC integration and public company requirements, other ITXC integration costs and the inclusion of ITXCs SG&A expense as 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 periods to the 2004 periods, resulting in an increase in our Canadian dollar expenses. The three months
ended September 30, 2004 also includes professional fees incurred in connection with the Foreign Corrupt Practices Act investigation in the amount of $1.4 million. The overall increase in SG&A expenses in 2004, is partially offset by the
inclusion of costs in the five months ended May 30, 2003 relating to certain operations of the Predecessor that were not acquired by the Successor. The integration of ITXC is currently underway and once completed is expected to provide significant
synergies resulting in a decreased cost base. See Merger Benefits and Expenditures in the Overview section for an update on the ITXC integration.



Stock based compensation expense



A non-cash charge was recorded in the three and nine month period ended September 30, 2003 as a result of the purchase of common shares from TLGB by key
executives at the price paid for such shares by TLGB as of the closing of the Acquisition. The charge is calculated based on the difference between the purchase price of such shares paid by the executives and the estimated value of such shares as of
the date on which both the executives were committed to buy the shares and TLGB committed to sell such shares. The change in the value of all of the outstanding common shares in the aggregate was determined to be an increase of $230.0 million from
$5.0 million as of May 31, 2003 to $235.0 million as of July 10, 2003. An aggregate amount of 3.25% of common shares was deemed to have been committed to be purchased by Teleglobe management and sold by TLGB as of July 10, 2003 and, as a result, the
Company recorded a compensation expense of approximately $7.5 million.



Bad
debt expense



Bad debt expense for the third quarter of
2004 remained fairly stable versus the third quarter of 2003. The bad debt expense of $4.3 million recorded in the nine months ended September 30, 2003 reflects the inability of the Predecessor to effectively collect outstanding accounts in its
liquidating international entities resulting from Old Teleglobes bankruptcy proceedings.



25



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##### Table of Contents

Foreign exchange gain (loss)



The foreign exchange loss of $0.1 million for the nine months ended September 30, 2004 and the foreign exchange gain of $0.2
million for the three months ended September 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. The nine months ended
September 30, 2004 includes 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 foreign exchange loss of $2.6 million recorded in the third quarter of
2003 and the foreign exchange gain of $7.8 million recorded in the nine months ended September 30, 2003 are primarily due to the fluctuations in value of the Canadian dollar and Euro-denominated assets and liabilities.



Restructuring expense



During the nine months ended September 30, 2004, the Company reduced its workforce by 15 people. As a consequence, the
Company incurred restructuring costs in the amount of $893,000 consisting of severance.



The severance and stay bonuses that will be paid to ITXC employees upon their departure are being amortized over such employees agreed upon service period and are included in SG&A expenses.



Amortization expense



Amortization expense in the current quarter increased by $1.5 million or approximately 324% from the same quarter in 2003.
For the nine months ended September 30, 2004, amortization expense increased by $3.7 million or approximately 600% as compared to the nine months ended September 30, 2003. The increase is due to intangible assets recorded in connection with the
Acquisition and the merger with ITXC. The Predecessor did not have any intangible assets recorded at May 30, 2003.



Depreciation expense



Depreciation expense increased by $3.3 million or 71.6% in the current quarter versus the comparable quarter in 2003 mainly due to the inclusion of
ITXCs depreciation. For the nine months ended September 30, 2004, depreciation decreased by $3.0 million due to the lower carrying value basis in the assets of the Successor resulting from the application of purchase accounting. The decrease
was partially offset by the inclusion of ITXCs depreciation expense as of June 1, 2004.



Other expenses



Interest
expense



Interest expense in the current quarter increased
by approximately $5.9 million from the third quarter of 2003. The increase is mainly due to $3.4 million accretion of the Comfone liability to the amounts expected to be paid. The joint venture agreement, acquired as part of the acquisition of the
Predecessor, was terminated January 2003, requiring the Company to pay Comfone A.G. its share of any cash derived from the mobile global roaming business until the end of fiscal 2004. At the time of the Acquisition, management recorded its best
estimate of the fair 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 issued in connection with the ITXC merger.
Similarly, for the nine months ended September 30, 2004, interest expense increased by $11.6 million from the nine months ended September 30, 2003. The accretion related to Comfone for the nine months ended September 30, 2004 is $8.3 million.



Income taxes



The tax recovery of $2.4 million for the nine months ended September 30,
2004 is due to current tax recoveries of $2.1 million plus deferred tax recovery of $0.3 million. The current tax recovery of $2.1 million is primarily due to a $1.9 million tax receivable resulting from the carry back of losses incurred by the US
entity in the nine months ended September 30, 2004 to offset taxable income filed in 2003, plus $0.2 million in net taxes recoverable mainly due to taxes payable by offshore countries, withholding taxes paid and an adjustment pursuant to the filing
of the US tax return. The deferred tax recovery of $0.3 million is the result of recording deferred income tax assets that include $1.3 million related to a prior period, and to net operating losses and other temporary differences in recognizing
assets and liabilities for financial reporting and tax purposes, offset by a 100% valuation allowance reserve in respect to the deferred income tax assets resulting both from net operating losses and other temporary differences.



26



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##### Table of Contents

Due to the different corporate structure of the Predecessor and the Predecessors bankruptcy
proceeding, no meaningful comparison can be made to the 2003 periods presented.



Liquidity and capital resources



Cash flow from operations



The Successor generated negative cash flow from operating
activities for the nine months ended September 30, 2004 of $18.6 million. This cash flow includes cash outflows totaling $2.2 million to settle pre-Acquisition obligations that were assumed by the Successor pursuant to acquired contracts, annual
bonus payments of $6.4 million and payments for professional services in the approximate amount of $9.7 million. A significant portion of the payment of professional services was in connection with the acquisition of ITXC. The remainder of the cash
outflows mainly relates to various ITXC integration related payments.



Investing Activities



The purchases of
property and equipment in the nine months ended September 30, 2004, consist of network upgrades, interconnection capacity needs and ITXC related purchases. The ITXC integration related items total approximately $4.1 million. We currently estimate
that our capital expenditures, on a cash basis, will be approximately $35.0 million in fiscal 2004 including expenditures related to ITXC integration activities.



Cashflows from investing activities was mostly derived from the sale of marketable securities acquired through the merger
with ITXC.



Financing Activities



The negative $4.7 million in financing activities relates mostly to the
retirement of the preferred shares and the related dividend payment offset by the issuance of senior notes, all related to the consummation of the merger with ITXC.



Liquidity



We believe that our current liquidity and anticipated future cash flows from operations will be sufficient to fund our operations. Our expenditures in
2004 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 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 September 30, 2004 is in a negative position of $16.6 million versus a negative position of $40.5 million at December 31, 2003. The improvement is mostly related to the inclusion of ITXCs
cash, marketable securities and restricted cash balances as a result of the merger. 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
economic conditions of the telecommunications and information services industry, combined with our financial position and liquidity, have created potential opportunities for our company to acquire companies or portions of companies. In addition to
the ITXC merger, we continuously evaluate these opportunities and could make additional acquisitions in the near term.



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##### Table of Contents

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



|                                   |  |                                                          |         |                 |   |             |  |             |         |               |   |        |  |   |       
|---------------------------------- |  | -------------------------------------------------------- | ------- | --------------- | - | ----------- |  | ----------- | ------- | ------------- | - | ------ |  | - | ------
|                                   |  | Payments Due by Period (amounts in thousands of dollars)
|Contractual Obligations            |  | Total                                                    |         | Less than1 Year |   | 1  3 years |  | 4  5 years |         | After 5 years
|Operating lease obligations        |  | $                                                        | 162,123 |                 | $ | 7,680       |  | $           | 57,979  |               | $ | 25,182 |  | $ | 71,282
|Purchase obligations               |  | $                                                        | 16,526  |                 | $ | 16,291      |  | $           | 235     |               | $ |       |  | $ |      
|Capital lease obligations          |  | $                                                        | 951     |                 | $ | 730         |  | $           | 221     |               | $ |       |  | $ |      
|Senior note obligations            |  | $                                                        | 100,000 |                 | $ |            |  | $           | 50,000  |               | $ | 50,000 |  | $ |      
|Other long-term liabilities        |  | $                                                        | 2,360   |                 | $ | 240         |  | $           | 480     |               | $ | 409    |  | $ | 1,231 
|                                   |  |                                                          |         |                 |   |             |  |             |         |               |   |        |  |   |       
|Total contractual cash obligations |  | $                                                        | 281,960 |                 | $ | 24,941      |  | $           | 108,915 |               | $ | 75,591 |  | $ | 72,513
|                                   |  |                                                          |         |                 |   |             |  |             |         |               |   |        |  |   |       



|                             |  |                       |       |                 |   |             |  |             |   |             |   |   |  |   |  
|---------------------------- |  | --------------------- | ----- | --------------- | - | ----------- |  | ----------- | - | ----------- | - | - |  | - | -
|Other Commercial Commitments |  | TotalAmountsCommitted |       | Less than1 Year |   | 1  3 years |  | 4  5 years |   | Over5 years
|Standby letters of credit    |  | $                     | 7,371 |                 | $ | 7,371       |  | $           |  |             | $ |  |  | $ | 
|                             |  |                       |       |                 |   |             |  |             |   |             |   |   |  |   |  
|Total commercial commitments |  | $                     | 7,371 |                 | $ | 7,371       |  | $           |  |             | $ |  |  | $ | 
|                             |  |                       |       |                 |   |             |  |             |   |             |   |   |  |   |  



We have 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
no later than May 31, 2008 in addition to interest expense relating to this loan at 10% per annum plus 1% of the outstanding balance at the end of the first year and 2% of the outstanding balance at the end of the second year.



Item 3. Quantitative and Qualitative Disclosure About Market Risk



The Company 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 debt in that it is fixed and accordingly the fair value of the new
debt may fluctuate if the interest rate is not commensurate with 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 three and
nine month period ended September 30, 2004.



Item 4. Controls and Procedures



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 composed of several key management employees,
that 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 reviews 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 effective as of the end of the third quarter of 2004. The Chief Executive Officer and Chief Financial Officer believe that 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.



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##### Table of Contents

Changes to Internal Control over Financial Reporting.



There have been no significant changes in the Companys internal
control 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.



29



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##### Table of Contents

PART IIOther Information



Item 1. Legal Proceedings



FCPA Investigation



On 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 countries. The Company voluntarily notified the Securities and Exchange Commission (the SEC) and
the U.S. Department of Justice (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 of the 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 the Companys Executive Vice President and General Counsel, formerly Vice President, General Counsel and Secretary of ITXC prior to its merger with Teleglobe.



Debevoise has reported to the Audit Committee that it has completed its
investigation with respect to ITXCs agency agreements and has issued an executive report and a final report concerning the results thereof to the Audit Committee. The Debevoise report states that its investigation revealed that certain
employees of ITXC do appear to have violated the FCPA and to have committed commercial bribery in connection with certain telecommunications contracts in Africa. Based upon this report, no additional resignations or terminations of officers are
expected. Although Debevoise is not aware of any evidence to suggest any FCPA violations or commercial bribery in any of the activities of Teleglobe, other than the instances of noncompliance relating to ITXCs operations in certain African
countries, Debevoise will subsequently conduct an investigation into the agency agreements entered into by Teleglobe in order to confirm that no similar issues exist with respect to Teleglobes compliance with the FCPA.



The Company has been cooperating fully with 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 documents to it on a voluntary basis. The Company intends to fully cooperate with the SEC and the DOJ concerning these matters, and has voluntarily provided certain documents
to the SEC in response to its request. The Company intends to resolve any potential claims that the SEC or the 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, 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. 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.



See Note 15 Contingencies to the accompanying Consolidated Financial Statements (Successor) and Combined
Financial Statements (Predecessor) (Unaudited) for a discussion of certain ITXC legal proceedings affecting the Company.



Item 5. Other Information.



On October 22, 2004,
the Company received notification from NASDAQ that the Company is fully compliant with all listing requirements and its common stock would continue to be listed on the NASDAQ National Market. Accordingly, NASDAQ removed the fifth character
E from the Companys ticker symbol and the symbol reverted to TLGB effective October 25, 2004. In its decision, the NASDAQ Listing Qualifications Panel specifically acknowledged the Companys significant efforts to
address the previously announced issue of potential instances of noncompliance with the FCPA relating to ITXCs operations in certain African countries and to keep the investing public apprised of the results of the investigation by the Audit
Committees independent counsel. The Companys ongoing listing is conditioned upon the timely filing of all SEC periodic reports until September 30, 2005 and its continued compliance with all requirements for continued listing on the
NASDAQ National Market.



30



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##### Table of Contents

Item 6. Exhibits



(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))                                                                        
|     | 
|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))                                                                                                                                                                                                 
|     | 
|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))                                                  
|     | 
|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))                                                                                      
|     | 
|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))                                                                                                                                                               
|     | 
|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)                               



31



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##### Table of Contents

|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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))                                                                                                                                                                                                                                             



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|       |  |                                                                                                                                                                                                                 
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | 
|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* |  | Third Amendment to Master Wholesale Pricing and Services Coordinating Agreement between Teleglobe Canada ULC and Bell Canada dated September 1, 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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##### Table of Contents

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 HOLDINGS LTDBy:

/s/ RICHARD WILLETTRichard Willett Chief Financial Officer and Executive Vice President (principal financial officer and duly authorized officer)


Dated: November 12, 2004



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##### Table of Contents

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))                                                                                                                                                                                                               
|     | 
|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))                                                                                                                                                                                                                                                                                                                                        
|     | 
|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))                                                                                                                                                                                         
|     | 
|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))                                                                                                                                                                                                                             
|     | 
|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))                                                                                                                                                                                                                                                                                                      
|     | 
|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))



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##### Table of Contents

|       |  |                                                                                                                                                                                                                                                                                                                                    
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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* |  | Third Amendment to Master Wholesale Pricing and Services Coordinating Agreement between Teleglobe Canada ULC and Bell Canada dated September 1, 2004.                                                                                                                                                                              



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##### Table of Contents

|      |  |                                                                                                                                                       
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|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
|- | --------------



37