Destia Communications, Inc. Reports Record Results for the Second Quarter of 1999.

PARAMUS, N.J--(BUSINESS WIRE)--Aug. 3, 1999--

Significant Growth Realized in European Retail Business Units;

Innovative Marketing Programs Initiated;

Geographic Expansion Continues on Schedule

Destia Communications, Inc. (Nasdaq:DEST) today reported record results for the second quarter of 1999.

Revenues for the quarter ended June 30, 1999 were $76.0 million, representing an increase of 56% over revenues of $48.8 million for the second quarter of 1998, and an increase of 21% over revenues of $62.6 million for the quarter ended March 31, 1999. Destia's retail customer base continued to expand substantially, with the Company billing nearly 490,000 end-users at June 30, 1999, up 10% from March 31, 1999. The majority of Destia's sequential quarterly customer growth came from its European operations, which accounted for over 85% of new customer additions. Destia's 212,000 end-users in Europe at June 30, 1999 represented a 22% increase over the number of billed customers in Europe at March 31. Of this customer base, 57,000 come from continental Europe, where the Company realized a 69% increase over the three month period.

"By every operating measure, we had an extremely successful second quarter," said Alan Levy, Destia's President and Chief Operating Officer. "We realized significant growth in each of our primary business units, particularly in Europe, and we are now beginning to realize the benefits of leveraging the network and customer support infrastructure that we have been building for the past two years."

Continental European and North American revenues increased 27% and 14%, respectively, from the prior quarter and 130% and 78%, respectively, from the second quarter of 1998. Retail revenues in the U.K. increased 39% over the first quarter of 1999 and more than 150% over the second quarter of 1998. As a result of Destia's strong revenue growth in both Continental Europe and the U.K., revenues in Europe comprised 39% of Destia's total revenues for the second quarter, as compared to 35% during the first three months of 1999. The increase in European revenues occurred despite a significant decline in exchange rates for European currencies against the U.S. dollar since the beginning of 1999, which negatively impacted revenues for the quarter by approximately $1.5 million.

Gross margins improved from 27.0% in the second quarter of 1998 to 28.4% in the second quarter of 1999 as a result of the growth in retail revenues supported by the continued expansion of the Destia network, increased utilization of owned and leased transmission capacity and improved global routing. Reported gross margins declined slightly from 29.1% reported in the first quarter of 1999, largely as a result of the decline in European currencies against the U.S. dollar. Eliminating the effects of this exchange rate decline, pro forma gross margins were approximately the same as the first quarter 1999.

Mr. Levy noted that "at an operating level, our gross margins remained steady. Our retail-focused strategy, innovative marketing initiatives and network expansion allow us to maintain high gross margins and realize continued improvements in EBITDA margins. This is our third consecutive quarter of EBITDA margin improvements, and we remain on schedule to record positive EBITDA by the second half of 2000."

Selling, general and administrative ("SG&A") expenses as a percentage of revenues were 39.4% for the second quarter of 1999, an improvement of 3.1% from the 42.5% reported for the first quarter. In absolute terms, SG&A expenses for the second quarter increased only 12% over the first quarter of 1999 while total revenues increased by 21%, further reflecting that the Company is leveraging its existing infrastructure.

The strong revenue growth and improvements in gross margin contributed to the improvement in EBITDA (earnings before interest, taxes, depreciation and amortization) as a percentage of revenues from a negative 13.4% for the quarter ended March 31, 1999 to a negative 10.9% for the second quarter of 1999. EBITDA margins also improved year-to-year from the negative 12.5% reported for the second quarter of 1998. In absolute terms, EBITDA for the second quarter of 1999 was a negative $8.3 million, approximately the same as the first quarter of 1999. The Company reported a net loss of $25.2 million in the second quarter of 1999 compared to a net loss of $15.3 million in the same period a year ago. The increase in both EBITDA loss and net loss reflect the SG&A expenses associated with the development of the Company's sales and marketing channels and the build out of its customer and network support infrastructure. Additionally, the gap between EBITDA and net loss was primarily attributable to interest expense and depreciation expenses resulting from the Company's debt issuances and global network rollout.

Mr. Levy highlighted that "in addition to our positive financial results, Destia realized several significant milestones during the second quarter of 1999. Following the completion of our initial public offering in May, we launched several major marketing campaigns, including our successful One World, One Rate campaign in the United States and our alliances with Dixon's Freeserve, the U.K.'s largest internet service provider, and the U.K.'s National Union of Students, which has over two million student members. In Switzerland, we introduced Internet access service bundled with long distance, resulting in the addition of over 10,000 Internet access clients at June 30. During the second half of the year, we expect to replicate this rollout in Belgium, Germany and the United Kingdom."

Also during the second quarter, Destia expanded its product base in the United Kingdom to include wireless service through the acquisition of Wavetech, Ltd, and the Company continued the expansion of its geographic footprint by receiving one of the first closed user group licenses in Greece and signing an interconnection agreement with the Austrian PTT. In the Netherlands, Destia recently completed its interconnect with KPN, the Dutch PTT, at the Hague and expects to begin testing its interconnect in Amsterdam within the next few weeks.

Mr. Levy elaborated on the Company's results for the quarter indicating that "Destia continues to execute its business plan at the highest level. Our end-user focus and our efficient deployment of network and operating systems provide real time visibility into operations. We are now just beginning to realize the benefits of leveraging these systems to support a much larger customer base and to include new product sets. These systems, when coupled with our end-user focused customer support infrastructure will allow us to move faster and more efficiently than the other companies that compete in the markets where we do business. We believe that these tools put us in the best position to be a market leader, both in terms of delivering the results expected by our investors and developing the optimal business model for the emerging multinational communications carrier."

Destia Communications, Inc. (www.destia.com) (formerly EconoPhone) is a facilities-based provider of domestic and international telecommunications services in North America and nine countries in Europe. Destia provides its end-users with a variety of retail telecommunications services, including international and domestic long distance, calling card and prepaid card services, carrier wholesale transmission services and Internet access.

Certain statements herein are "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements are based upon the belief of Destia's management, as well as assumptions made beyond information currently available to Destia's management. Because such "forward-looking statements" are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such "forward-looking statements." Factors that could cause results to differ materially from those expressed or implied by such "forward-looking statements" include, but are not limited to, highly competitive market conditions; general economic conditions; the rate of expansion of Destia's network and/or customer base; inaccuracies in Destia's forecasts of telecommunications traffic or customers; changes in the availability of transmission facilities; customer retention and credit risk; changes in or developments under laws, regulations, licensing requirements or telecommunications standards; currency fluctuations; changes in retail or wholesale telecommunications rates; changes in international settlement rates; the loss of the services of certain members of Destia's senior management and other factors discussed in filings made by Destia with the Securities and Exchange Commission. The foregoing review of important factors should not be construed as exhaustive; Destia undertakes no obligation to release publicly the results of any future revisions it may make to any forward-looking statements to reflect events or circumstances after the date hereof, including the occurrence of unanticipated events. -0-

                      Destia Communications, Inc.
                 Consolidated Statements Of Operations
                           ($ in thousands)

                           Three Months Ended       Six Months Ended
                               June 30th,              June 30th,
                            1999        1998       1999         1998
                            ----        ----       ----         ----
Revenues                $  75,971   $  48,754   $ 138,590   $  90,414
Cost of services           54,367      35,585      98,737      67,041
Gross profit               21,604      13,169      39,853      23,373
Selling, general and
administrative expenses    29,911      19,272      56,526      34,756
EBITDA (a)                 (8,307)     (6,103)    (16,673)    (11,383)
Depreciation and
amortization                6,915       2,424      12,764       4,102
Loss from operations      (15,222)     (8,527)    (29,437)    (15,485)
Interest income, interest
expense, other, net        (9,989)     (6,795)    (20,273)    (12,431)
Income before tax         (25,211)    (15,322)    (49,710)    (27,916)
Tax                            --          --          --          --
Net loss                ($ 25,211)  ($ 15,322)  ($ 49,710)  ($ 27,916)

Percent of revenue:
Gross profit                 28.4%       27.0%       28.8%       25.9%
Selling, general and
administrative expenses      39.4        39.5        40.8        38.4
EBITDA                      (10.9)      (12.5)      (12.0)      (12.6)

(a)  EBITDA represents loss from operations before interest and other
     expenses, taxes, and depreciation and amortization expense.
     Destia has included information concerning EBITDA herein because
     such information is commonly used in the telecommunications
     industry as one measure of operating performance and ability to
     service debt.