Filed Pursuant to Rule

                                   424(b)(3)

                          Registration No. 333-86261

                                1,101,702 Shares

                                IDT Corporation

                                  Common Stock

                               ----------------

      This prospectus relates to the offer and sale of up to 1,101,702 shares
of common stock from time to time by several of our shareholders.

      The common stock is listed on the Nasdaq National Market under the symbol
"IDTC." On September 14, 1999, the last reported sales price as reported by the
Nasdaq National Market was $23 15/16 per share.

      Investing in the common stock involves a high degree of risk. Consider
carefully the "Risk Factors" beginning on page 2.

      Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.


               The date of this prospectus is September 14, 1999


                               TABLE OF CONTENTS



                                                                            Page
                                                                            ----
                                                                         
The Company................................................................   1

Risk Factors...............................................................   1

Recent Developments........................................................  21

Use of Proceeds............................................................  22

Selling Stockholders.......................................................  22

Plan of Distribution.......................................................  25

Legal Matters..............................................................  26

Experts....................................................................  26

Where You Can Find More Information........................................  26

Incorporation of Documents by Reference....................................  27

Information Regarding Forward-Looking Statements...........................  28



                                  THE COMPANY

      IDT Corporation is a leading emerging multinational carrier that combines
its position as an international telecommunications operator and its experience
as an Internet service provider to provide a broad range of telecommunications
services to its wholesale and retail customers worldwide. Our majority-owned
subsidiary, Net2Phone, Inc., is a leading provider of services enabling users
to make high-quality, low-cost telephone calls over the Internet.

      Our predecessor corporation, International Discount Telecommunications,
Corp., was incorporated in New York in 1990, and we reincorporated in Delaware
in December 1995. Our principal executive offices are located at 190 Main
Street, Hackensack, New Jersey, 07601, and our telephone number is (201) 928-
1000.

                                  RISK FACTORS

      OUR REVENUES AND PROFITS WILL NOT INCREASE IF WE ARE UNABLE TO CONTINUE
TO EXPAND OUR TELECOMMUNICATIONS BUSINESS.

      We have expanded the geographic scope of our operations and substantially
increased our revenues since fiscal 1995. Our purchases of property and
equipment increased from $1.3 million in fiscal 1995, to $41.3 million in
fiscal 1998, to $31.8 million for the first three quarters of fiscal 1999.
Similarly, in connection with our efforts to expand our customer base, our
selling, general and administrative expenses increased from $6.0 million in
fiscal 1995, to $62.0 million in fiscal 1998, to $70.8 million for the three
quarters of fiscal 1999. We will not be able to substantially increase our
revenues or our profits if we do not continue to expand our telecommunications
network, services, customer bases or markets. Our ability to continue to expand
may be affected by many factors, including regulation of the telecommunications
industry in the U.S. and in other countries, competition from other companies
and technological developments.

      WE WILL NOT BE PROFITABLE IF WE DO NOT MANAGE OUR OPERATIONS EFFECTIVELY.

      As we increase our service offerings and expand our target markets, we
will need to further expand our network and infrastructure, upgrade our
financial and information systems and controls and hire additional sales,
marketing and technical personnel, as well as additional qualified
administrative and management personnel. Our growth may also place additional
demands on our management team, customer service support, sales, marketing and
administrative resources. If we are unable to effectively manage our expanding
operations, our revenues will not increase, our costs of operations will rise,
and we may not be profitable.

      OUR EXPENSES WILL INCREASE SUBSTANTIALLY IF WE EXPAND OUR NETWORK AT A
RATE THAT IS FASTER OR SLOWER THAN THE GROWTH OF OUR TELECOMMUNICATIONS
TRAFFIC.

      Since fiscal 1995, part of our strategy has been to make large capital
expenditures to expand our network, and we intend to do so in the future. This
strategy differs from our earlier strategy of leasing transmission capacity on
the networks of other carriers. This strategy may not be successful if the
expansion of our network increases more rapidly than the increase in our
network traffic, or, on the other hand, if this expansion does not keep up with
the growth of our network traffic. In either case, our profitability will
suffer because our cost of revenues will become a much larger portion of our
revenues.

                                       1


      As we expand our network, the cost of our revenues will increasingly
consist of fixed costs arising from the ownership and maintenance of our
switches and other equipment. We believe that in the long-term, these
investments will allow us to reduce our cost of service and to enhance our
service offerings. However, in the short-term, these investments will increase
our costs, and may result in smaller profits. In addition, the fixed nature of
these costs is also expected to lead to larger fluctuations in our gross
margins, depending on the minutes of traffic that we generate. If our traffic
volume decreases, or fails to increase to the extent that is needed to make
efficient use of our network, our costs as a percentage of revenues would
increase significantly, which would reduce our profitability.

      On the other hand, our network may not expand rapidly enough to transmit
all of our customers' traffic. International and long distance
telecommunications equipment, including undersea fiber optic cables, typically
take several years to plan and construct. Like other carriers, we generally
make investments based upon a forecast of anticipated traffic. As a result, we
may not adequately anticipate the amount of traffic that our network will be
required to carry, and may not obtain enough network equipment to ensure the
cost-effective transmission of customer traffic.

      Our operations would be impaired if we are unable to obtain the products
and services of the telecommunications and internet companies that we are
dependent upon.

      Telecom companies

      We depend on other carriers for many of our services. As a result, our
services may be disrupted, or may become less profitable, if any of these
carriers cease to provide the services that they are currently providing to us
on the terms that are currently effective, including the pricing terms. We
generally do not have long-term contracts with these carriers, and these
carriers are not restricted from competing against us. We are currently
dependent upon MCI WorldCom Inc., which is our primary provider of leased
network capacity and data communications facilities, and from whom we lease
physical space for switches, modems and other equipment. If MCI WorldCom
becomes unwilling to provide its current level of service to us in the future,
we may have to pay additional costs to obtain service from other providers.

      In September 1998, we entered into a long-term agreement with Frontier
Communications to obtain dedicated circuit capacity over Frontier's network.
This agreement provides us with additional facilities that we believe will
enable us to expand the range and reliability of our data and voice
transmission services. However, our services may be interrupted if Frontier at
any time fails to satisfy its obligations under this agreement.

      Our ability to compete in the long distance telecommunications market
depends, in part, on our ability to procure advantageous rates from other
domestic and foreign carriers, and on the ability of these parties to carry the
calls we route to their networks. If our relationship with any of our key
carriers is terminated, or if any of these carriers becomes unable to carry
traffic routed to it, and we are required to route the traffic to another
carrier providing service at a less advantageous rate or with lesser quality,
our profit margins or network service quality may be reduced. A reduction of
our service quality could cause us to lose customers.

      We are also dependent upon established local service providers new
competitors to these companies and MCI WorldCom to provide telecommunications
services to our customers. Although

                                       2


alternative leased data communications services are currently available from
several alternative suppliers, including AT&T and Sprint, we may be unable to
obtain substitute services from other suppliers at reasonable or comparable
terms and prices or on a timely basis.

      We route international telephone calls using the networks of third
parties that operate or that may plan to operate in countries in which local
laws or regulations limit their ability to provide basic international service
in competition with state-owned or state-sanctioned monopoly carriers. We have
no control over the manner in which these companies operate in these countries.
Future regulatory, judicial, legislative or political considerations may not
permit these companies to offer to residents of these countries their services.
In addition, foreign telecommunications regulators or third parties may
challenge the compliance of these companies with local laws or regulations.
These regulatory, judicial, legislative or political decisions could limit the
ability of these companies to route calls to or from our network. If these
companies become unable to provide the services which they presently provide to
us or may provide in the future due to their inability to obtain or retain the
required governmental approvals or for any other reason related to regulatory
compliance, we may need to obtain similar services from other carriers for
higher prices.

      Developers of fiber optic cables

      We do not control the planning or construction of undersea fiber optic
transmission facilities. As a result, we must seek access to these facilities
through partial ownership positions. If ownership positions are not available,
we must seek access to these facilities through lease arrangements on
negotiated terms that may vary with industry and market conditions. We may not
be able to continue to obtain sufficient transmission facilities or access to
undersea fiber optic cables on favorable terms. If this occurs, our costs of
delivering international traffic may increase substantially.

      Suppliers of telecommunications equipment

      We are dependent upon our suppliers of equipment and hardware components,
including Sun Microsystems, Cisco Systems, Nortel Networks, Excel Switching and
Ascend Communications. If any of these suppliers fail to deliver quality
services or products on a timely basis, and if we are unable to develop
alternative sources as required, delays could develop which would limit our
ability to provide service to our customers or to expand our operations.

      Suppliers of internet access

      We also depend on other Internet service providers to provide Internet
access to our customers in areas not served by our Internet network. If a
significant number of the networks operated by these companies suffer
operational problems or failure, fail to serve new accounts, or are unable to
expand to satisfy our customer demand, we could lose customers and we will be
unable to expand our Internet access business.

      Suppliers of browser software

      We are currently dependent on software licensed from Netscape
Communications and Microsoft for the front-end software of our Internet access
services. We use and reproduce Netscape and Microsoft software products, and
distribute these products to distributors and end users together with our own
software. If there are any operating difficulties in connection with the
licensed

                                       3


software, customers may be deterred from using our Internet access services,
which could substantially reduce our revenues from our Internet business.

      OUR REVENUES AND OUR GROWTH WILL SUFFER IF OUR SALES REPRESENTATIVES AND
RETAILERS FAIL TO EFFECTIVELY MARKET AND DISTRIBUTE OUR PRODUCTS AND SERVICES.

      Independent sales representatives

      We are dependent upon our independent sales representatives, particularly
for the sales of our international long distance telecommunications services in
key foreign markets, such as Germany, South Africa, Colombia, Argentina and
Zimbabwe. Most of our independent sales representatives are located in foreign
jurisdictions and also sell services or products of other companies. As a
result, we cannot control whether these sales representatives will devote
sufficient efforts to selling our services. In addition, we may not succeed in
finding capable sales representatives in new markets which we may enter. If any
of our significant sales representatives fails to effectively market or
distribute our products and services, our ability to generate revenues could be
substantially impaired, and our customer base will not grow.

      Primary distributor of prepaid calling cards

      We are currently dependent upon Union Telecard Alliance, LLC, a joint
venture company formed with Mr. Carlos Gomez, for the sale of a substantial
portion of our prepaid calling cards. We own 51% of the outstanding equity
interests in this company through an agreement which we entered into with Union
Telecard and Mr. Gomez during fiscal 1998. The joint venture may be terminated
under the circumstances described in the agreement, including a material breach
of the agreement by either party, the insolvency of either IDT or Mr. Gomez or
the occurrence of a dispute between the parties with respect to a material
matter occurring during the company's first two years of operation. In the
event of a dispute, our ownership interests in Union Telecard could be
transferred to Mr. Gomez for all or a portion of our purchase price. We may not
be able to continue to effectively distribute these cards if Union Telecard
does not distribute them effectively, or if the agreement is terminated by
either party.

      WE MAY BE VULNERABLE TO TECHNICAL MALFUNCTIONS WHICH COULD HINDER OUR
PROVISION OF SERVICES.

      We are dependent upon management information systems and switching
equipment to provide services to our customers, manage our network, collect
billing information and perform other vital functions. These systems and
equipment are subject to hardware defects and software bugs which may be beyond
our control. If we experience substantial technical difficulties with our
hardware or software, we may not succeed in routing traffic effectively, or in
billing customers accurately, which could reduce our profitability.

      NETWORK FAILURES COULD PREVENT US FROM PROVIDING OUR SERVICES AND COULD
CAUSE US TO LOSE CUSTOMERS.

      Our success depends largely on our ability to deliver low-cost,
uninterrupted international and domestic long distance telephone services. Any
system or network failure that interrupts our operations could prevent us from
providing some or all of our services. Since our operations depend on our
ability to successfully expand our network and to integrate new technologies
and equipment

                                       4


into our network, there is an increased risk of system failure as well as a
natural strain on the system. Our operations also depend on our ability to
protect our hardware and other equipment from damage or interruption from
natural disasters or other sources of power loss, telecommunications failures
or similar occurrences. Significant or lengthy telephone network failures, or
difficulties for customers in completing long distance telephone calls could
damage our reputation and result in the loss of customers. These kinds of
damage and losses could prevent us from obtaining new subscribers and
customers, and substantially reduce our revenues.

      The success of our Internet-related business depends on our ability to
deliver high-quality, uninterrupted access to the Internet. In the past, we
experienced failures relating to individual Internet servers, and our
subscribers experienced difficulties in accessing and maintaining their
connection to the Internet. Significant or lengthy system failures or
difficulties for subscribers in accessing and maintaining connection with the
Internet could damage our reputation and result in the loss of subscribers,
which could reduce our customer base and our revenues.

      OUR OPERATIONS COULD BE INTERRUPTED BY THE FAILURE TO RESOLVE YEAR 2000
PROBLEMS.

      Many computer systems and software products are coded to understand only
dates that have two digits for the relevant year. These systems and products
need upgrading to accept four-digit entries in order to distinguish 21st
century dates from 20th century dates. Without upgrading, many computer
applications could fail or create erroneous results beginning in the year
2000. This could result in a major system failure or miscalculations. The lack
of a timely resolution to Year 2000 problems could substantially impair our
ability to:

      - route our customers' phone calls in a cost-effective manner;

      - process transactions;

      - deliver a substantial portion of our services;

      - properly obtain payment for our services; and

      - maintain accurate records of our business and operations.

      We may also become liable for substantial damages in the event that, as
a result of the Year 2000 problems, we fail to deliver any services that we
have contracted to provide.

      We are conducting an external review of our customers and suppliers, and
other third parties with whom we do business, including equipment and systems
providers and other telecommunications service providers, to determine their
vulnerability to Year 2000 problems and any potential impact on our business.
In particular, we may experience problems with other telecommunications
carriers whose services are resold by us or to which we send traffic for
termination who are not Year 2000 compliant. We are limited in our ability to
determine the ability of these third parties to address issues relating to
Year 2000 problem. If a limited number of carriers experience disruptions in
service due to Year 2000 problems, we believe that we will be able to obtain
service from alternate carriers. However, our ability to provide long distance
services to customers in some locations may be limited, which would reduce our
revenues, and damage the reputation of the quality of the service that we
provide.


                                       5


      Our revenues will not grow if demand for our services in new markets is
less than we expect.

      Prepaid calling cards

      Although we have substantial market presence in the prepaid calling card
business, especially with regard to international calls, the market for prepaid
calling cards is a new and emerging business with a large number of market
entrants. Because this market is new, it is impossible to accurately determine
what the demand will be for our products and services in this area. Substantial
markets may not continue to develop for prepaid calling cards, and we may not
be able to sustain or increase our sales of these products and services.

      Internet telephony

      In August 1996, through Net2Phone, we began offering PC2Phone, the first
commercial telephone service to connect calls between multimedia PCs and
telephones over the Internet, and in October 1997, we introduced Phone2Phone
Direct, a service that allows for phone-to-phone calling over the Internet.
Although these services enable users to benefit from substantially reduced long
distance rates, demand for these services in the future may not increase. We
cannot be certain that Internet telephony will gain market acceptance or prove
to be a viable alternative to traditional telephone service. Notwithstanding
the potential cost savings, many customers that have already invested
substantial resources in integrating traditional telephone service with their
operations may be particularly reluctant or slow to adopt a new technology that
makes their existing equipment obsolete. If the Internet telephony market fails
to develop or develops more slowly than we expect, Net2Phone's future revenues
may not increase substantially.

      RAPID TECHNOLOGICAL CHANGE AND FREQUENT NEW PRODUCT INTRODUCTIONS IN OUR
MARKETS COULD RENDER OUR PRODUCTS AND SERVICES OBSOLETE.

      The markets for our products and services experience rapid technological
change, frequent new product introductions and evolving industry standards. For
example, during the past several years, we have needed to substantially upgrade
our telecommunications network to use more sophisticated equipment with greater
bandwidth and reliability. Rapid technological change and new product
introduction could render one or more of our products or services obsolete or
place us at a competitive disadvantage. Accordingly, we believe that our
success depends upon our ability to anticipate changes in consumer preferences,
develop and market products and services that use new technologies and enhance
and expand our existing product lines and services to keep pace with competing
products. We will need to spend significant amounts of capital to develop,
market and enhance our products and services to meet and take advantage of
technological changes.

      Fundamental changes in the technologies for telecommunications, Internet
access and content, and Internet telephony services expose us to substantial
risks. For example, although our Internet access services are currently
accessed mainly by computers through telephone lines, several companies have
recently introduced delivery of Internet access services through cable
television lines. If the Internet becomes accessible by other methods or if
there are advancements in the delivery of telephony services, we will need to
develop new technology or modify our existing technology to accommodate these
developments. Our pursuit of these advances may require substantial time and
expense, and we cannot provide any assurance that we will succeed in adapting
our businesses to alternate access devices or other technological developments.

                                       6


      OUR BUSINESS WILL NOT GROW WITHOUT INCREASED USE OF THE INTERNET.

      The use of the Internet as a commercial marketplace is a recent
phenomenon. Demand and market acceptance for recently introduced products and
services over the Internet are still uncertain. We cannot predict whether
customers will be willing to shift their traditional activities online. The
Internet may not prove to be a viable commercial marketplace for a number of
reasons, including:

      - concerns about security;

      - Internet congestion;

      - inconsistent service; and

      - lack of cost-effective, high-speed access.

      If the use of the Internet as a commercial marketplace does not continue
to grow, we may not be able to grow our customer base, which may prevent us
from achieving profitability.

      THE GROWTH OF OUR INTERNATIONAL OPERATIONS MAY BE LIMITED IF WE CANNOT
EFFECTIVELY MANAGE OUR INTERNATIONAL OPERATIONS.

      In Fiscal 1996, 1997, 1998, and the nine months ended April 30, 1999,
international customers accounted for approximately 23%, 25%, 11% and 12% of
our total revenues, respectively. We expect that revenues from international
customers will continue to account for a significant percentage of our total
revenues. In addition, part of our growth strategy is to continue to install a
switching infrastructure in foreign countries. However, we will not be able to
increase our revenues and profits from our international operations if we have
difficulties in managing our international operations. Our ability to manage
our international operations may be limited by a number of factors, including:

      - unexpected changes in legal and regulatory requirements;

      - changes in tariffs, exchange rates and other barriers;

      - political and economic instability;

      - difficulties in collecting accounts receivable;

      - difficulties in staffing and managing international operations;

      - difficulties in maintaining and repairing equipment abroad;

      - difficulties in protecting our intellectual property overseas; and

      - potentially adverse tax consequences.

      In addition, although our sales have generally been denominated in U.S.
dollars, some of our recent contracts are denominated in foreign currencies,
and the value of the U.S. dollar in relation to foreign currencies may also
adversely affect our sales to international customers as well as the cost

                                       7


of purchasing, installing and maintaining equipment abroad. If we expand our
international operations or begin to price our services in foreign currencies,
we will be exposed to increased risks of currency fluctuation if we do not
successfully manage the risks that arise from the fluctuating value of these
currencies.

     We are subject to the Foreign Corrupt Practices Act, which generally
prohibits U.S. companies from bribing foreign officials for the purpose of
obtaining or maintaining commercial opportunities. We may be exposed to
liability under this statute as a result of past or future actions taken
without our knowledge by agents, strategic partners and other third parties.
Any liability imposed under this statute could require us to pay substantial
amounts of damages.

     OUR REVENUES WILL BE IMPAIRED IF WE EXPERIENCE DIFFICULTIES IN COLLECTING
OUR RECEIVABLES.

     As a wholesale provider of international long distance services, we
depend upon traffic from other long distance providers, and the collection of
receivables from these customers. If we experience difficulties in the
collection of our accounts receivable from our major customers, our revenues
may be substantially reduced. While our most significant customers vary from
quarter to quarter, our five largest customers accounted for 20.8% of revenues
in fiscal 1997, 26.2% of revenues in fiscal 1998 and 10.5% for the nine months
ended April 30, 1999. This concentration of revenues increases the risk of
non-payment by customers, and we may experience significant writeoffs related
to the provision of wholesale carrier services if any of our large customers
fail to pay their outstanding balances.

     Historically, we have experienced losses from uncollectable receivables
in our Internet access and call reorigination businesses. These businesses are
characterized by a large number of retail customers, each of which generates
relatively small receivables. As a result, the collection costs associated
with delinquent receivables from these customers are high relative to the
receivable balances.

     In addition, we expend considerable resources to collect receivables from
customers who fail to make timely payments. We continually seek to minimize
bad debt, and at times require collateral to support accounts receivable from
customers that we believe pose a particular credit risk; however, our
experience indicates that a portion of past due receivables will never be
collected and that the existence of bad debt is a necessary cost of conducting
our business. As of April 30, 1999, we had reserved approximately $7.1 million
for receivables that were expected to be uncollectible. Our bad debt expense
could rise significantly above historical or anticipated levels. Any
significant increase in bad debt levels could substantially reduce our
profitability.

     OUR PROFITABILITY WILL BE REDUCED IF WE BECOME THE VICTIM OF FRAUD OR
THEFT OF SERVICES.

     The telecommunications and Internet access industries have historically
incurred losses due to fraud. Unauthorized transactions or theft of our
services could reduce our profitability substantially. Although we have
implemented anti-fraud measures in order to control losses relating to
fraudulent practices, we may not succeed in effectively controlling fraud when
operating in the international or domestic telecommunications markets. From
time to time, callers have obtained services without rendering payment by
unlawfully using our access numbers and identification codes. We attempt to
manage these theft and fraud risks through our internal controls and our
monitoring and blocking systems. We believe that our risk management practices
are adequate, and to date we

                                       8


have not experienced material losses from fraud or theft. However, our risk
management practices may not be sufficient to protect us in the future from
unauthorized transactions or thefts of services.

      COMPETITION IN OUR CORE BUSINESSES COULD SUBSTANTIALLY REDUCE OUR
REVENUES AND OUR PROFITS.

      Telecommunications

      Many of our competitors are significantly larger and have substantially
greater market presence as well as greater financial, technical, operational,
marketing and other resources and experience. Increased competition could force
us to reduce our prices and profit margins, and may reduce our market share.
Our competitors may be able to procure rates or enter into service agreements
that are comparable to or better than ours, and may be able to offer other
incentives to existing and potential customers. Currently, we compete in the
market for long distance and international telecommunications with:

    - long distance carriers, which carry network traffic between local
     exchanges, and other long distance resellers and providers, including
    AT&T, Sprint and MCI WorldCom;

    - foreign primary providers of significant international transmission
     facilities (often, the national telephone company of a country);

    - other providers of international long distance services, including
     STAR Telecommunications, Pacific Gateway Exchange and RSL
    Communications;

    - alliances that provide wholesale carrier services, including Global
     One (Sprint, Deutsche Telekom and France Telecom) and Uniworld (AT&T,
     Unisource-Telecom Netherlands, Telia AB, Swiss Telecom and Telefonica
     de Espana);

    - new entrants to the domestic long distance market, including the
     regional bell operating companies in the U.S., who have entered or have
     announced plans to enter the U.S. interstate long distance market; and

    - small long distance resellers.

      With respect to prepaid calling cards, we compete with many of the
largest telecommunications providers, including AT&T, MCI WorldCom and Sprint.
These companies are substantially larger and have greater financial, technical,
engineering, personnel and marketing resources, longer operating histories,
greater name recognition and larger customer bases than we do. We also compete
with smaller, emerging carriers in the prepaid calling card market, including
PT-1 Communications, RSL Communications, SmarTalk Teleservices, Pacific Gateway
Exchange and FaciliCom International. If we begin providing services to
customers outside the U.S. market, we may compete with large foreign operators,
including British Telecommunications in the U.K. We believe that additional
competitors will be attracted to the prepaid card market, including Internet-
based service providers and other telecommunications companies. Competition
from existing or new competitors or a decrease in the rates charged for
telecommunications services by the major long distance carriers or other
competitors would substantially reduce our revenues from the sale of these
cards.


                                       9


      Deregulation in foreign countries could result in competition from other
service providers that have large, established customer bases and close ties to
governmental authorities in their home countries. Deregulation and increased
competition in foreign markets could cause prices for direct-dial international
calls to decrease so much that customers will no longer be willing to use some
of our services, including calling cards or our international call
reorigination services. If any foreign telephone company with a dominant
position in its home country succeeds in competing on the basis of greater size
and resources, pricing flexibility or long-standing relationships with
customers in its own country, we will not be able to continue to grow our
customer base.

      Internet access

      Our current and expected competitors in the Internet access market
include many large companies that have substantially greater market presence,
as well as greater financial, technical, operational, marketing, resources and
experience. Our Internet access business competes or expects to compete with
the following types of companies:

    - other national and regional commercial Internet service providers,
     including NETCOM On-Line Communication Services, which was acquired by
     ICG Communications in January 1998, Verio, UUNet WorldCom, GTE
     Internetworking (formerly BBN Corporation) PSINet, Concentric Network
     Corporation and DIGEX; established on-line services companies that
     offer Internet access, including AOL, CompuServe and Prodigy;

    - computer software and other technology companies, including Microsoft;

    - national long distance telecommunications carriers, including AT&T,
     MCI WorldCom and Sprint;

    - regional bell operating companies;

    - cable television operators, including Comcast, TCI International and
     Time Warner; and

    - newly-licensed providers of spectrum-based wireless data services.

      Many of the established on-line services companies and telecommunications
companies have begun to offer or have announced plans to offer expanded
Internet access services. In addition, we believe that new competitors,
including large computer hardware and software, cable, media, wireless and
wireline telecommunications companies, may enter the Internet access market,
resulting in even greater competition. These or other competitors may be able
to bundle services and products that are not offered by us together with
Internet access services, which could place us at a significant competitive
disadvantage. In addition, some of the telecommunications companies that
compete with us may be able to provide customers with lower communications
costs or other incentives with their Internet access services, reducing the
overall cost of their Internet access services and significantly increasing
price pressures on us. This price competition could significantly reduce the
prices of our services and our revenues.

      In addition, increased competition for new subscribers could result in
increased sales and marketing expenses and related subscriber acquisition
costs, which could adversely affect our profitability. We may not be able to
offset the effects of any of our competitors' price reductions or

                                       10


incentives with an increase in the number of our customers, higher revenue from
enhanced services, cost reductions or otherwise.

      Internet telephony.

      The market for the services of our subsidiary, Net2Phone, has been
extremely competitive. Many companies offer products and services like
Net2Phone's, and many of these companies have a substantial presence in the
market. Current product offerings include VocalTec Communications' Internet
Phone, QuarterDeck's WebPhone and Microsoft's NetMeeting.

      In addition, a number of large telecommunications providers and equipment
manufacturers, such as Alcatel, Cisco, Lucent, Northern Telecom and Dialogic
(which has entered into an agreement to be acquired by Intel), have announced
that they intend to offer similar products. We expect these products to allow
live voice communications over the Internet between parties using a personal
computer and a telephone and between two parties using telephones. Cisco
Systems has also taken further steps by recently acquiring companies that
produce devices that help Internet service providers carry voice over the
Internet while maintaining traditional phone usage and infrastructure. Other
competitors of ours, such as ICG Communications, IPVoice.com, ITXC, RSL
Communications (through its Delta Three subsidiary) and VIP Calling, route
voice traffic worldwide over the Internet. In addition, major long distance
providers, such as AT&T, Deutsche Telekom, MCI WorldCom and Qwest
Communications, as well as other major companies such as Motorola and Intel,
have all entered or plan to enter the market for carrying voice over the
Internet. These companies are larger than Net2Phone and have substantially
greater financial, distribution and marketing resources. Accordingly, Net2Phone
may not be able to compete successfully in this market.

      WE WILL NOT BE PROFITABLE IF WE DO NOT RECEIVE ATTRACTIVE RATES FROM
OTHER CARRIERS FOR OUR LONG DISTANCE TRAFFIC.

      Our telecommunications business will not be profitable if we do not
receive attractive rates from other carriers for the traffic that we route. Our
costs of routing domestic and international long distance traffic may increase
if the volume of minutes that we carry on our network decreases, because our
ability to obtain favorable rates and tariffs from suppliers depends, to a
significant extent, on our total volume of long distance traffic. We may not
succeed in maintaining the volume of international and domestic long distance
traffic necessary to obtain favorable rates and tariffs.

      In addition, our ability to market our long distance resale services
depends upon the existence of spreads between the rates offered by us and the
rates offered by the carriers with which we compete, as well as the carriers
from which we obtain service. A decrease in these spreads could substantially
reduce our profitability.

      PRIVATIZATION AND DEREGULATION OF FOREIGN MARKETS MAY INCREASE
COMPETITION FOR TELECOMMUNICATIONS SERVICES.

      Many of the foreign markets in which we currently market long distance
telephone services are undergoing dramatic changes as a result of privatization
and deregulation. While we expect that deregulation will create new
opportunities for us, the increase in competition that is expected to result
from deregulation could limit our ability to increase our customer base in
these countries. For example, the European Union has mandated competitive
markets for the European

                                       11


telecommunications industry and the various European countries are at different
stages of opening their telecommunications markets. As a result of
privatization and deregulation, a greater number of potential competitors is
likely to emerge in these markets. A new competitive environment is emerging in
which major European telephone companies, media companies and utilities are
entering the telecommunications market and forming new alliances which are
radically changing the landscape for domestic and international telephone
services. Changes in the foreign marketplace and new strategic alliances among
companies with greater resources may reduce our ability to increase our
overseas telecommunications customer base and our traffic volume, and to
recover the cost of building our international telecommunications
infrastructure.

      FEDERAL, STATE, AND INTERNATIONAL GOVERNMENT REGULATION MAY REDUCE OUR
ABILITY TO PROVIDE SERVICES, OR MAKE OUR BUSINESS LESS PROFITABLE.

      As a multinational enterprise, we are subject to varying degrees of
regulation by state, federal and foreign regulators. These laws are subject to
frequent changes and different interpretations, and therefore, it is difficult
for us to assess the impact of these factors on our operations. The
implementation, modification, interpretation and enforcement of these laws and
regulations vary and can limit our ability to provide many of our services.

      Our ability to compete in our target markets depends, in part, upon
favorable regulatory conditions and the favorable interpretations of existing
laws. The current domestic and international trend is toward deregulation of
telecommunications and Internet services. This trend has enabled us to compete
in new domestic and international markets. Notwithstanding this trend, several
countries, including the United States, are considering proposals that may
regulate or impose additional costs upon services that we offer or plan to
offer.

      CHANGES IN FEDERAL REGULATIONS MAY PERMIT REGIONAL BELL OPERATING
COMPANIES TO COMPETE AGAINST US.

      We compete with companies, including the regional bell operating
companies, that are also subject to government regulation. Existing regulations
may restrict these companies from fully competing with us in the market for
interstate long distance telecommunications services. If U.S. federal statutes
and regulations are amended to permit these companies to fully compete with us
in this market, our revenues from these services could be reduced if these
companies are able to acquire a substantial portion of our customers.

      WE MAY BECOME SUBJECT TO INCREASED COSTS OF OPERATIONS DUE TO UNCERTAINTY
OVER THE AMOUNT OF PAYPHONE SURCHARGES AND FEDERAL UNIVERSAL SERVICE FUND
OBLIGATIONS.

      Federal regulation of the telecommunications industry may also impact our
ability to sell prepaid calling cards. The Telecommunications Act of 1996
requires carriers, including our company, to pay the owners of payphones when a
payphone is used to make a telephone call using a prepaid calling card. If
these charges are increased, our margins from our prepaid calling card business
could be adversely affected. Alternatively, if these charges are passed on to
the users of the cards, demand for these services could be substantially
reduced. Since September 1996, the FCC has attempted to set the rate of
compensation that must be paid, but these charges have been successfully
challenged twice in federal court. The current charge imposed by the FCC, $.24
per call, is likely to be challenged in federal court by companies that operate
payphones, as well as by carriers.


                                       12


      In July 1999, the United States Court of Appeals for the Fifth Circuit
released its decision reviewing the FCC's Universal Service Order, which
supports the development of telephone service in rural and other high-cost
areas. This decision will have a significant impact on carriers' obligations to
make payments to the FCC's Universal Service Funds. The Court found that the
FCC cannot include intrastate revenues in the calculation of universal service
contributions. Local exchange carriers' revenues are largely intrastate and
their interstate revenues are primarily from other carriers and not subject to
universal service assessment. Therefore, the contributions required to be made
by these carriers will be sharply reduced, placing an even greater burden on
interexchange carriers, including IDT, to fund the universal service program.
The Court also reversed the FCC's decision to include the international
revenues of interstate carriers in the universal service contribution base. The
outcome of this FCC proceeding may impact IDT's required contributions to the
Universal Service Fund program.

      WE MAY BECOME SUBJECT TO INCREASED PRICE COMPETITION FROM OTHER CARRIERS
DUE TO FEDERAL REGULATORY CHANGES IN DETERMINING INTERNATIONAL SETTLEMENT
RATES.

      International settlement rates are beginning to decline, at least in part
as a result of regulatory initiatives. Lower settlement rates are scheduled to
be in effect for substantially all countries over the next several years. If
lower settlement rates result in lower prices for traditional international
telephone calls, our competitive advantage will be reduced, which could make
our services less attractive to customers.

      The FCC's International Settlements Policy requires international
carriers to observe several rules, including the equal division of accounting
rates, proportionate return of traffic terminating in the U.S. and
nondiscriminatory treatment of U.S. carriers. In May 1999, the FCC issued an
order exempting competitive carriers and specified competitive routes from the
International Settlements Policy. Historically, our exemption from the Policy
has been a chief factor enabling us to offer competitive long distance
services, including Net2Phone's Internet telephony services. Under the FCC's
May 1999 order, providers of traditional telephone services will have increased
flexibility to enter into more economically efficient arrangements with foreign
correspondent carriers, which could, over time, decrease the competitive price
advantage of our services, and make these services less attractive to our
customers.

      EUROPEAN REGULATION OF TELECOMMUNICATIONS SERVICES MAY NOT CONTINUE TO
EVOLVE TOWARDS INCREASED COMPETITION AND STREAMLINED REGULATION.

      The European Union, as well as national European governments, have been
generally deregulating many of the major European markets for
telecommunications services so as to permit increased competition. In addition,
the European Union has attempted to harmonize the regulation of
telecommunications companies across its member states. As a result of these
developments, we have been able to enhance our market presence in a number of
European countries.

      Changes to existing regulations of the European Union or its member
states may decrease the opportunities that are available for us to enter into
those markets, or may increase our legal, administrative or operational costs,
or may constrain our activities in other ways that we cannot necessarily
anticipate. Any of these developments could impair our efforts to develop our
European operations.

                                       13


      TELECOMMUNICATIONS REGULATIONS OF OTHER COUNTRIES MAY RESTRICT OUR
OPERATIONS.

      We are subject to the regulatory regimes in each of the countries in
which we conduct business. Local regulations range from permissive to
restrictive, depending upon the country. In the past, we have experienced
problems in certain countries and have from time to time modified or terminated
our services to comply with local regulatory requirements. In the future,
changes to statutes or regulations may inhibit or restrict the types of
telecommunications services we can offer.

      GOVERNMENTAL REGULATIONS REGARDING THE INTERNET MAY BE PASSED, WHICH
COULD IMPEDE OUR BUSINESS.

      To date, governmental regulations have not materially restricted use of
the Internet in the Internet telephony market. However, the legal and
regulatory environment that pertains to the Internet is uncertain and may
change. New regulations could increase our costs of doing business and prevent
us from delivering our products and services over the Internet. The growth of
the Internet may also be significantly slowed. This could delay growth in
demand for our products and services and limit the growth of our revenue.

      In addition to new regulations being adopted, existing laws may be
applied to the Internet. New and existing laws may cover issues that include:

      - access charges;

      - user privacy;

      - pricing controls;

      - reciprocal compensation;

      - characteristics and quality of products and services;

      - consumer protection;

      - contributions to the universal service fund;

      - cross-border commerce;

      - copyright, trademark and patent infringement; and

      - other claims based on the nature and content of Internet materials.

      GOVERNMENT REGULATION OF INTERNET ACCESS MAY INCREASE OUR COSTS OF
OPERATIONS.

      Internet service providers are generally considered "enhanced service
providers" in the U.S. and are exempt from U.S. federal and state regulations
governing common carriers. Accordingly, our provision of Internet access
services is currently exempt from tariffing, certification requirements and
rate regulation. Nevertheless, regulations governing disclosure of confidential
communications, copyright, excise tax and other requirements may apply to our
provision of Internet access services.

                                       14


State, federal or foreign governments may impose additional regulation on our
Internet business, which could substantially increase the costs of our Internet
operations, or limit the nature of our Internet operations.

      In December 1996, the FCC initiated a Notice of Inquiry regarding whether
to impose regulations or surcharges upon providers of Internet access. The
Notice of Inquiry, and several ongoing FCC proceedings, seek public comment as
to whether to impose or to continue to forebear from regulation of Internet and
other packet-switched network service providers. In addition, on April 10,
1998, the FCC issued a Report to Congress on its implementation of the
universal service provisions of the Telecommunications Act. In that Report, the
FCC indicated that it would reexamine its policy of not requiring an Internet
service provider to contribute to the FCC's universal service funds when the
Internet service provider provides its own transmission facilities and engages
in data transport over those facilities in order to provide an information
service. Any contributions of this kind would be related to the Internet
service provider's provision of telecommunications services itself. We can not
predict the outcome of any future proceedings that may impact our provision of
Internet access or that may impose additional requirements, regulations or
charges upon our provision of Internet access services.

      WE MAY BECOME SUBJECT TO INTERNET ACCESS CHARGES.

      We use the networks of local carriers to connect our Internet customers
and Net2Phone's Internet telephony customers to our network. Under current
federal and state regulations, neither we or these customers pay charges for
using these networks in this manner, other than the monthly service charges
that apply to basic telephone service. The imposition of these access charges
could substantially reduce the ability of our Internet business or Net2Phone's
Internet telephony business to generate profits. A number of local exchange
carriers have asked the FCC to change its rules and require Internet service
providers to pay additional access charges for their use of local networks,
which would significantly increase our costs of doing business. In addition, in
September 1998, two regional Bell operating companies advised Internet
telephony providers that these companies would impose access charges on
Internet telephony traffic. One of these companies also petitioned the FCC for
a declaratory ruling that providers of interstate Internet telephony must pay
federal access charges, and has petitioned the public utility commissions of
Nebraska and Colorado for similar rulings concerning payment of access charges
for intrastate Internet telephone calls.

      The FCC previously determined that it would not impose interstate access
charges on Internet service providers. However, the FCC is currently conducting
proceedings in which it is exploring the impact of the Internet on the public
network, and may decide to impose additional access or other charges on
Internet service providers. We can provide no assurance that the FCC will
continue to permit Internet service providers to use basic telecommunications
services without imposing any additional charges. In addition, if Nebraska,
Colorado or any other states decide that access charges may be levied against
Internet telephony providers, our Net2Phone subsidiary would have to pay for
access in those states.

      THE INFRINGEMENT OR DUPLICATION OF OUR PROPRIETARY TECHNOLOGY COULD
INCREASE OUR COMPETITION.

      We could suffer from additional competition, and our profitability could
suffer, if third parties infringe upon our intellectual property rights, and
misappropriate our technologies and our

                                       15


trademarks for their own businesses. We rely on patent, copyright, trademark
and trade secret laws and the confidentiality provisions of our contracts with
third parties to establish and protect our technology. We do not currently own
any issued patents or registered copyrights, although we own a number of
registered service marks relating to our business and have applied for other
trademarks. We have a policy that requires our employees and consultants to
execute confidentiality and technology ownership agreements when they begin
their relationships with us.

      The steps taken by us may not be adequate to protect our trade secrets,
and to prevent misappropriation of our technology or other proprietary rights.
Our competitors may independently develop technologies that are substantially
equivalent or superior to our technology. Our trademark applications may not be
allowed and the issuance of any registration does not mean that a third party
may not have superior rights to the registered mark, or to a mark that is
confusingly similar to the registered mark. Any licenses for any intellectual
property that might be required for our services or products may not be
available on reasonable terms.

      WE COULD INCUR SUBSTANTIAL COSTS IN DEFENDING OR PURSUING ANY CLAIMS
RELATING TO PROPRIETARY RIGHTS.

      We do not believe that our products infringe the proprietary rights of
others, and no third parties have asserted any material patent infringement or
other similar claims against us. However, third parties may assert these types
of claims against us in the future, and one or more of these claims could be
successful. Parties making these types of claims could obtain a judgment
awarding substantial damages, as well as injunctive or other equitable relief,
which could effectively block our ability to provide services in the U.S. or
abroad. We are aware that patents have been granted recently to others on
technologies in the communications, multimedia and Internet telephony areas,
and patents may issue which relate to the basic technologies incorporated in
our services and products. Since patent applications in the U.S. are not
publicly disclosed until issued as patents, applications may have been filed
which, if issued as patents, could relate to our services.

      OUR NETWORK MAY BE SUBJECT TO DISRUPTIONS THROUGH UNAUTHORIZED USE.

      Computer viruses, break-ins and similar disruptive problems caused by
customer or other Internet users could cause interruptions, delays or loss of
services to our Internet customers. We have implemented a variety of network
security measures, including limiting physical and network access to our
routers. However, our Internet access systems and Genie entertainment and
information services are vulnerable to these types of problems. Furthermore,
inappropriate use of the Internet by third parties could also jeopardize the
security of confidential information stored in the computer systems of our
customers and other parties connected to the Internet, which may deter
potential subscribers.

      Potential security problems continue to plague public and private data
networks. Break-ins reported in the press and otherwise have reached computers
connected to the Internet at major corporations as well as Internet access
providers. A number of these break-ins have involved the theft of information,
including incidents in which hackers bypassed firewalls through fraudulent
means. Alleviating problems caused by computer viruses, break-ins or third
parties may require significant expenditures of capital and resources. Until
more comprehensive security technologies are developed, the security and
privacy concerns of existing and potential customers may inhibit the growth of
the Internet service industry in general and our customer base and revenues.
Moreover, if we become the

                                       16


victim of a breach of network security or privacy, customers may threaten
claims against us for any damages that result. These types of claims, if
upheld, could require us to pay substantial amounts of damages to the
claimants.

     WE MAY BE SUBJECT TO LIABILITY FOR INFORMATION DISSEMINATED OVER OUR
INTERNET NETWORK.

     As an Internet service provider and an Internet content provider, we
could face substantial potential liability for the actions of subscribers and
others using our systems, including liability for infringement of intellectual
property rights, rights of publicity, defamation, libel and criminal activity
under the laws of the U.S. and foreign jurisdictions. Although recent federal
legislative enactments and court decisions have substantially reduced the most
serious threats of liability for the activities of third parties, some
possible sources of liability remain. For example, the recently enacted U.S.
Digital Millennium Copyright Act preserves the liability of an Internet
service provider that transmits content that it knows, or has reason to know,
is infringing of another person's intellectual property.

     Other recent legislative enactments and pending legislative proposals
aimed at limiting the use of the Internet to transmit indecent or pornographic
materials could, depending upon their interpretation and application, result
in significant potential liability for us, as well as additional costs and
technological challenges in complying with any new statutory or regulatory
requirements. For example, in October 1999, the U.S. Congress enacted a new
version of the Communications Decency Act, making it a crime to disseminate
material "harmful to minors" to anyone under the age of eighteen. The statute
is currently facing constitutional challenge; if it is upheld, it could
require us to develop extensive regulatory compliance procedures. In April
1999, the U.S. Supreme Court upheld a provision of the Communications Decency
Act of 1996, which makes it a crime to transmit a communication which is
obscene with intent to annoy, abuse, threaten or harass another person. In
addition, CompuServe faced action by German authorities in response to which
CompuServe temporarily restricted the scope of the Internet access it provides
to all subscribers, both in the U.S. and internationally. A number of
countries are considering content restrictions based on factors that include
political or religious views, pornography and indecency. The operation of our
Genie on-line service has increased our exposure to this type of legislation,
and to libel and defamation suits, primarily because of the increased level of
content being provided by or through our network.

     WE MAY NOT BE ABLE TO GROW OUR OPERATIONS IN THE FUTURE IF WE CANNOT
RAISE ENOUGH CAPITAL.

     We believe that we must continue to enhance and expand our network and
build out our telecommunications network infrastructure in order to maintain
our competitive position and meet the increasing demands for service quality,
capacity and competitive pricing. Our ability to grow depends, in part, on our
ability to expand our operations through the ownership and leasing of network
capacity, which requires significant capital expenditures that are often
incurred before we begin to receive the related revenue. If we cannot obtain
cash from operations or from debt or equity investments in our company, we may
not be able to grow as rapidly as we have during the last several fiscal
years, or we may be required to reduce the scope of our anticipated expansion.

                                      17


      WE MAY SUFFER LOSSES IN THE FUTURE, WHICH COULD REDUCE THE TRADING PRICE
OF OUR STOCK.

      The value of an investment in our company is likely to decrease if we
incur financial losses. We incurred net losses in Fiscal 1996, 1997 and 1998
of $15.6 million, $3.8 million and $6.4 million, respectively. For the nine
months ended April 30, 1999, we generated $9.0 million of net income. Although
we have experienced significant growth in recent periods, our growth may not
be sustainable and may not be indicative of our future growth. Further, we
expect to recognize significant additional charges relating to non-cash
compensation in connection with stock options granted by Net2Phone in May 1999
and July 1999.

      OUR BUSINESS MAY BE LESS PROFITABLE, AND LESS CAPABLE OF GROWING, AS A
RESULT OF OUR SUBSTANTIAL INDEBTEDNESS.

      On April 30, 1999, we had long-term debt of approximately $117.9
million. We may incur additional indebtedness in the future. This substantial
indebtedness, including $108.1 million under our bank credit facility, could
have important adverse consequences:

    - increasing our vulnerability to adverse business conditions;

    - limiting our ability to obtain additional financing to fund future
     working capital, capital expenditures, future acquisitions and other
     general corporate purposes;

    - requiring the dedication of a substantial portion of our cash flow
     from operations to the payment of principal of, and interest on, our
     indebtedness, which reduces the availability of our cash flow for other
     purposes; and

    - limiting our flexibility in planning for, or reacting to, changes in
     our business and the industry.

      Our ability to pay the principal of, or the interest on, or to
refinance, our indebtedness, or to fund planned capital expenditures or future
acquisitions will depend on our future performance. Based upon our current
level of operations and anticipated revenue growth, we believe that cash flow
from operations and available cash will be adequate to meet our anticipated
future requirements for working capital, budgeted capital expenditures and
scheduled payments of principal and interest on our indebtedness for the next
12 months. However, we cannot provide any assurances that our business will
generate enough cash or that our revenue growth will enable us to repay our
indebtedness.

      OUR OPERATIONS MAY BE LIMITED BY RESTRICTIVE COVENANTS CONTAINED IN OUR
BANK CREDIT FACILITY.

      Our bank credit facility contains numerous financial and operating
covenants that limit the discretion of our management with respect to a wide
variety of business matters. These restrictions may bar transactions that
would otherwise be beneficial to our company. These covenants place
significant restrictions on, among other things, our ability to incur
additional indebtedness, to create liens or other encumbrances, to make
different types of payments and investments, and to sell or otherwise dispose
of assets and to merge with other entities. A failure to comply with the
obligations contained in our credit facility could result in an event of
default, and the acceleration of the related

                                      18


debt and the acceleration of debt under other instruments that may contain
cross-acceleration or cross-default provisions.

      IF WE ARE UNABLE TO ATTRACT AND RETAIN QUALIFIED MANAGEMENT AND TECHNICAL
PERSONNEL, WE MAY NOT REMAIN PROFITABLE.

      We are highly dependent on the technical and management skills of our key
employees, including our technical, sales, marketing, financial and executive
personnel, and on our ability to identify, hire and retain qualified personnel.
Competition for these types of personnel is intense and we may not be able to
retain existing personnel or to identify or hire additional personnel. In
particular, we are dependent on the services of Howard S. Jonas, our Chief
Executive Officer, Chairman of the Board and founder, and on James A. Courter,
our Vice Chairman and President. Any failure to attract and retain appropriate
personnel, or the loss of the services of either Mr. Jonas or Mr. Courter,
could substantially reduce our ability to grow our operations and to increase
our profitability.

      WE ARE CONTROLLED BY OUR PRINCIPAL STOCKHOLDER, WHICH LIMITS THE ABILITY
OF OTHER STOCKHOLDERS TO AFFECT THE MANAGEMENT OF OUR COMPANY.

      Howard S. Jonas, our Chief Executive Officer, Chairman of the Board and
founder, is the beneficial owner of all of our outstanding shares of Class A
common stock and therefore, currently holds more than 50% of the combined
voting power of our outstanding capital stock. Mr. Jonas is able to control
matters requiring approval by our stockholders, including the election of all
of the directors and the approval of significant corporate matters, including
any merger, consolidation or sale of all or substantially all of our assets. As
a result, the ability of any of our stockholders to influence the management of
our company is limited.

      OUR STOCK PRICE MAY BE VOLATILE, WHICH COULD REDUCE THE VALUE OF AN
INVESTMENT IN OUR SHARES.

      The market price of our common stock has fluctuated significantly since
our initial public offering in 1996. Factors including variations in our
revenue, earnings and cash flow from quarter-to-quarter and announcements of
new service offerings, technological innovations or price reductions by us, or
our competitors or providers of alternative services could cause the market
price of our common stock to fluctuate substantially. In addition, the stock
markets recently have experienced significant price and volume fluctuations
that particularly have affected companies in the technology sector and resulted
in changes in the market price of the stocks of many companies, which have not
been directly related to the operating performance of those companies. Broad
market fluctuations may adversely affect the market price of our common stock
in the future.

      In July 1999, the common stock of our majority-owned subsidiary,
Net2Phone, began to be traded on Nasdaq under the symbol "NTOP." Because we own
the majority of the shares of Net2Phone, adverse changes in the market price of
Net2Phone's common stock, whether or not they accurately reflect the financial
performance or prospects of Net2Phone, are likely to adversely affect the
market price of our common stock.

      Rapid and adverse changes in the trading value of our stock could subject
us to lawsuits from our stockholders. The defense of these types of lawsuits
could require a substantial portion of the

                                       19


attention of the management of our company. In addition, an adverse judgment
or settlement of a stockholder lawsuit could require us to pay substantial
amounts, which would limit our ability to fund the growth of our operations.

      SHARES OF COMMON STOCK THAT WILL BE AVAILABLE FOR RESALE IN THE FUTURE
MAY INCREASE THE NUMBER OF SHARES ON THE PUBLIC MARKET, CAUSING OUR STOCK
PRICE TO DECLINE.

      Sales of a substantial number of shares of our common stock into the
public market could adversely affect its market price. In connection with our
acquisition of InterExchange in April 1998, we issued 3,242,323 shares of
common stock as part of the purchase price. Of those shares, 58,667, 537,032,
74,344, 370,899 and 217,348 shares were registered for resale in June 1998,
October 1998, April 1999. May 1999, and June 1999 respectively. The remainder
of these shares will become eligible for resale in installments between
September 1999 and October 2002, although up to 210,605 of these shares will
remain subject to claims for indemnification that we may be entitled to raise
prior to September 15, 1999 against the former stockholders of InterExchange,
and may be returned to us for cancellation. In addition, through our
acquisition of an interest in Union Telecard, we became obligated to issue and
register up to 200,000 shares of common stock, of which 100,000 shares were
registered for resale in April 1999. As of July 31, 1999, 2,139,923 shares of
our common stock were issuable upon exercise of outstanding employee stock
options, and as of July 31, 1999, 29,234 shares of our common stock were
issuable upon the exercise of outstanding warrants.

      ANTI-TAKEOVER PROVISIONS AFFECTING US COULD PREVENT OR DELAY A CHANGE OF
CONTROL OR COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK.

      Our certificate of incorporation authorizes the board of directors to
issue, without stockholder approval, one or more series of preferred stock
having dividend rights, voting rights and other rights as the board of
directors may determine. Our issuance of this "blank-check" preferred stock
could make it more difficult or discourage an attempt to obtain control of our
company by means of a tender offer, merger, proxy contest or otherwise, which
may limit the ability of our stockholders to obtain the maximum value for
their shares of common stock.

      Furthermore, the certificate of incorporation provides for a classified
board of directors, which may also have the effect of inhibiting or delaying a
change in control of our company, in that only approximately one-third of our
directors will be subject to reelection at each of our annual stockholder
meetings.

                                      20


                              RECENT DEVELOPMENTS

      Tender Offer and Consent Solicitation. In March 1999, we commenced a
tender offer for all of our outstanding senior notes. As of July 31, 1999,
substantially all of the notes had been tendered. The purchase price for the
senior notes was $1,020 in cash per $1,000 principal amount, plus accrued and
unpaid interest through the date of payment. Together with the offer, we
solicited consents to eliminate the primary restrictive covenants and to amend
other provisions contained in the indenture relating to the senior notes. These
amendments became operative when we accepted the tendered senior notes for
purchase.

      Credit Facility. In May 1999, we entered into a credit agreement with
Lehman Commercial Paper Inc., CIBC World Markets Corp. and Bankers Trust
Company. These institutions have committed to provide us with a $150 million
credit facility that includes term loans in a total amount of up to $125
million and revolving loans in an amount of up to $25 million and an additional
uncommitted amount of up to $100 million. Bankers Trust Company serves as
administrative agent for the facility. We used the proceeds from the initial
borrowings under the credit facility to purchase the tendered senior notes. As
of July 31, 1999, an aggregate of $108.1 million of indebtedness was
outstanding under the credit facility.

      Management Changes. A number of changes have been made to the management
of our company since fiscal 1998. In March 1999, our President, James Courter,
was appointed Vice Chairman of the Board. He replaces Howard Balter, who
resigned his positions as Chief Operating Officer, Vice Chairman and a director
of our company in order to serve full-time as Chief Executive Officer and a
director of Net2Phone, Inc. Hal Brecher, our Executive Vice President of
Operations, replaced Mr. Balter as Chief Operating Officer. In addition, we
appointed three new directors to our board of directors: Irving Goldstein,
Moshe Kaganoff and Geoffrey Rochwarger. Mr. Goldstein is the former Chief
Executive Officer and Director General of Intelsat and the former Chairman and
Chief Executive Officer of Comsat. Mr. Kaganoff has served as our Senior Vice
President of Operations since July 1998. Mr. Rochwarger has served as our
Senior Vice President of Telecommunications since 1996. In June 1999, Mr. James
Mellor resigned his position as a director of our company in order to join the
board of directors of Net2Phone.

      Financing of Net2Phone. In May 1999, SOFTBANK Technology Ventures IV, GE
Capital Equity Investments, America Online, Access Technology Partners,
Hambrecht & Quist and its affiliates and BT Alex. Brown and its affiliates,
purchased from us, in the aggregate, 3,140,000 shares of Net2Phone Series A
preferred stock convertible into 9,420,000 shares of common stock and warrants
to purchase up to 180,000 shares of Net2Phone common stock, for a net aggregate
purchase price of $29.9 million. Additionally, a warrant to purchase 92,400
shares of Net2Phone common stock was issued to Hambrecht & Quist as part of its
fee as placement agent with respect to the sale of the Series A preferred
stock.

      In August 1999, Net2Phone completed the initial public offering of
6,210,000 shares of its common stock. Net2Phone received approximately $85.3
million in net proceeds from the offering. As a result of the transactions
contemplated by this offering, we now own shares of Net2Phone's Class A stock,
amounting to approximately 56.2% of Net2Phone's capital stock, after giving
effect to the transfer of shares of Net2Phone stock to the Chairman of
Net2Phone under the terms of his employment contract. Since the Class A stock
has two votes for each share of common stock, we have approximately 64.0% of
the votes that may be submitted to the vote of Net2Phone's shareholders.

                                       21


      Joint Venture with Telefonica Internacional. We recently entered into a
memorandum of understanding with Telefonica Internacional to enter into
agreements under which we expect to purchase a minimum of $100 million in cable
capacity to help meet our increasing demand for bandwidth between the U.S. and
Latin America. Under the proposed agreements, we plan to acquire a 10% equity
interest in Telefonica's SAm-I Latin American submarine cable project. SAm-I is
Latin America's largest and first state of the art backbone to support high
capacity connectivity for voice and Internet traffic. It is based on a fiber
optic ring around Latin America with connections in Brazil, Argentina, Chile,
Peru, Colombia, Central America, the Caribbean and the U.S. The system is
scheduled to become operational in phases during 2000 and 2001. The proposed
agreements also provide for the creation of a joint venture between the
companies that will be managed by Telefonica and that will market the joint
venture's products and services to the Hispanic market in the U.S. and related
markets in Latin America.

                                USE OF PROCEEDS

      We will not receive any of the proceeds from the sale of the common stock
by the selling stockholders.

                              SELLING STOCKHOLDERS

      Shares Issued to InterExchange Shareholders.

      Up to 876,702 shares of common stock that may be offered by David Turock,
Richard Robbins, Eric Hecht, Bradley Turock, Lisa Mikulynec, Wai Nam Tam and
Mary Jo Altom by means of this prospectus were originally issued under a merger
agreement, dated April 7, 1998, in which we agreed to acquire all of the issued
and outstanding shares of InterExchange, Inc., a Delaware corporation,
including four related companies. In accordance with the merger agreement, the
former stockholders of InterExchange received an aggregate of 3,242,323 newly
issued shares of our common stock, of which 1,258,290 shares were previously
registered for resale. The remainder of these shares will become eligible for
resale in installments between September 1999 and October 2002, although up to
210,605 of these shares will remain subject to claims for indemnification that
we may be entitled prior to September 15, 1999 to raise against the former
stockholders of InterExchange, and may be returned to us for cancellation. Of
the 865,837 shares currently being registered pursuant to the merger agreement,
an aggregate of 588,247 shares become eligible to be sold on September 15, 1999
and 288,455 shares on become eligible for sale on October 15, 1999.

      Dr. David Turock has served as our Director of Technology since November
1997. From 1992 to 1997, Dr. Turock provided consulting services to IDT through
Rock Enterprises, Inc., a telecom engineering firm, which we acquired from Dr.
Turock in September 1997. Richard Robbins served as the President of
InterExchange, Inc. between May 1998 and April 1999, and served as
InterExchange's Chief Financial Officer from its inception in 1995 until May
1998. Eric Hecht has served as the Vice President of New Business Development
since June 1999, and between June 1999 and May 1998 he served as the Chief
Executive Officer of InterExchange. Mr. Hecht also served as the President of
InterExchange from its inception in 1995 until May 1998.

      Bradley Turock has served as a Senior Development Engineer of
InterExchange since May 1998. Between 1995 and May 1998, Mr. Turock provided
consulting services to InterExchange, and

                                       22


provided consulting services to IDT between 1993 and May 1998. Wai Nam Tam has
also served as a Senior Development Engineer of InterExchange since May 1998,
and between 1993 and May 1998, Mr. Tam provided consulting services to
InterExchange and to IDT. Lisa Mikulynec has served as InterExchange's Vice
President of Operations since May 1998, and served as InterExchange's Director
of Network Services from 1996 to 1998. Ms. Mikulynec provided consulting
services to InterExchange and IDT between 1994 and 1996. Mary Jo Altom has
served as our Vice President of Telecommunications Operations since May 1998,
and provided consulting services to IDT between June 1996 and May 1998.

      In connection with the transactions contemplated by the merger agreement,
each of Bradley Turock, Lisa Mikulynec and Wai Nam Tam entered into employment
agreements with InterExchange and ceased to act as consultants to
InterExchange. Similarly, Mary Jo Altom entered into an employment agreement
with IDT and ceased to act as consultant to us.

      Option Shares.

      A total of 200,000 shares of our common stock that may be offered by
James A. Courter and Hal Brecher are shares that are issuable under employee
stock option agreements dated March 1, 1999, which grant options to purchase
shares of our common stock. Messrs. Courter and Brecher were granted options to
purchase 300,000 shares of common stock of our company which vest over a three
year period that began on March 1, 1999. This prospectus only includes the
portion of these options that will vest on or prior to January 31, 2000.

      James A. Courter has served as the President of IDT since October 1996,
and has been a director of IDT since March 1996. He was appointed Vice Chairman
of the Board in March 1999. Mr. Courter has been a senior partner in the New
Jersey law firm of Courter, Kobert, Laufer & Cohen since 1972, which provides
legal services to our company. Hal Brecher was appointed as our Chief Operating
Officer in March 1999. Between November 1996 and March 1999, Mr. Brecher served
as our Executive Vice President of Operations, and became a director of IDT in
April 1997.

      Beneficial Ownership of Selling Stockholders.

      The following table sets forth information about the beneficial ownership
of each selling stockholder as of July 31, 1999, as to:

    - the number of shares of common stock that are beneficially held by
     each selling stockholder,

    - the maximum number of shares that may be offered by each selling
     stockholder in this prospectus, and

    - the number of shares of common stock and the percentage of outstanding
     our shares of common stock that will be held by each selling
     stockholder if he or she sells all of the shares that can be sold under
     this prospectus.

                                       23


      The percentages in the table assume that each share of our class A common
stock has been converted into shares of common stock. We can provide no
assurance as to the number of shares that will be held by each of the selling
stockholders after this offering because each of the selling stockholders may
offer all or some part of the shares which he or she holds by means of this
prospectus, and because this offering is not being underwritten on a firm
commitment basis.



                          Shares                        Shares
                       Beneficially     Number of    Beneficially
                        Owned Prior   Shares Offered Owned After
Selling Stockholder   to the Offering     Hereby     the Offering Percentage
- -------------------   --------------- -------------- ------------ ----------
                                                      
David Turock (1)(2)       889,670        392,472       497,198       1.5%
Richard Robbins (1)       320,226        164,133       156,093         *
Eric Hecht (1)            320,228        164,134       156,094         *
Bradley Turock (1)         99,527         50,402        49,125         *
Lisa Mikulynec (1)         81,591         41,372        40,219         *
Wai Nam Tam (1)            94,437         47,749        46,688         *
Mary Jo Altom (1)          32,565         16,440        16,125         *
James Courter (2)(3)      507,437        100,000       407,437       1.2%
Hal Brecher (4)           187,500        100,000        87,500         *
Joyce Mason (5)           118,700         25,000        93,700         *


- --------
* Less than one percent.

(1)   A portion of these shares are currently held in escrow accounts
      maintained by The Bank of New York, as Escrow Agent. Pursuant to the IX
      Merger Agreement, the Selling Stockholders are prohibited from
      transferring all of these shares of common stock (except for gratuitous
      transfers to immediate family members, transfers in trust for the benefit
      of such relatives, and transfers to charities) until September 15, 1999,
      October 7, 1999, October 7, 2000, April 7, 2000, October 7, 2001 and
      October 7, 2002. On each of these dates these transfer restrictions will
      be removed as to a portion of these shares. In addition, during the
      period in which these shares of Common Stock are subject to these
      limitations on resale, each of these Selling Stockholders has granted an
      irrevocable proxy to Mr. Howard S. Jonas, our Chairman and Chief
      Executive Officer, to vote them.

(2)   Shares owned prior to and after offering includes 9,937 shares
      beneficially owned by the JTBC Foundation. The JTBC Foundation is a
      charitable organization of which Messrs. Howard S. Jonas, David L.
      Turock, Howard Balter (IDT's former Chief Operating Officer and current
      Chief Executive Officer of Net2Phone, our subsidiary) and James A.
      Courter are trustees.

(3)   Shares owned prior to after offering includes 20,000 shares beneficially
      owned by and Mr. Courter's wife 235,000 shares issuable upon exercise of
      stock options that are and currently vested. Shares owned prior to
      offering also includes 100,000 shares that may be sold under this
      prospectus, only 50,000 of which are currently vested.

(4)   Shares owned prior to and after offering includes 55,000 shares issuable
      upon exercise of options that are currently vested or that will vest
      within 60 days. Shares owned prior to

                                       24


      offering also 100,000 shares that may be sold under this prospectus,
      only 50,000 of which are currently vested.

(5)   Includes an aggregate of 4,000 shares of common stock owned by members
      of Ms. Mason's immediate family and 80,200 shares issuable upon exercise
      of stock options which are vested and exercisable.

                             PLAN OF DISTRIBUTION

      The shares offered for sale hereby may be sold from time to time by the
selling stockholders in one or more transactions on the Nasdaq National
Market, in the over-the-counter market, in negotiated transactions or in a
combination of these methods. An aggregate of 588,247 and 288,455 shares being
registered for each of the former shareholders of InterExchange listed above
may not be offered for sale until after September 15, 1999 and October 7,
1999, respectively, when they will be released from the applicable
restrictions as to resale. These shares may be sold at fixed prices, at market
prices prevailing at the time of sale, at prices relating to prevailing market
prices or at negotiated prices. The selling stockholders may make sales
directly to purchasers or to or through broker-dealers which may act as agents
or principals. Broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the selling
stockholders. This compensation, as to a particular broker-dealer, may be more
or less than customary commissions. In addition, any shares covered by this
prospectus that qualify for sale under Rule 144 of the Securities Act may be
sold under Rule 144 rather than by means of this prospectus.

      If necessary to comply with the securities laws of any state, the shares
will be sold only through brokers or dealers. In addition, in some states, the
shares may not be sold unless they have been registered or qualified for sale
or an exemption from registration or qualification is available and is
complied with.

      Any broker-dealers who participate in a sale of the shares may be deemed
to be "underwriters" within the meaning of Sections 11 and 12 of the
Securities Act and Rule 10b-5 of the Exchange Act, and any commissions
received by them, and proceeds of any sales as principals, may be deemed to be
underwriting discounts and commissions under the Securities Act. If any of the
selling stockholders are deemed to be acting as an underwriter, they may be
subject to statutory liabilities of the Securities Act.

      In addition, the selling stockholders and any other person participating
in the sale or distribution of the shares offered under this prospectus will
be subject to the Exchange Act and its rules and regulations, including
without limitation Rules 10b-5 and Regulation M. These provisions may limit
the timing of purchases and sales of any of the shares. In addition, any
person engaged in a distribution of the shares may not simultaneously engage
in market-making activities during the period beginning when he or she becomes
a distribution participant and ending upon his or her completion of
participation in a distribution. All of these factors may affect the
marketability of the shares and the ability of any person or entity to engage
in market-making activities.

      IDT has agreed to pay all expenses of the offering which we estimate
will amount to approximately $32,000.


                                      25


                                 LEGAL MATTERS

      Joyce J. Mason, our Senior Vice President, General Counsel, Secretary and
a director of our company, has issued an opinion regarding the validity of the
shares offered by this prospectus. Ms. Mason beneficially owns 118,700 shares
of our common stock, which includes an aggregate of 4,000 shares of common
stock owned by members of her immediate family and 80,200 shares issuable upon
exercise of stock options which are vested and exercisable.

                                    EXPERTS

      Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our annual report on Form 10-K,
as amended, for the fiscal year ended July 31, 1998, as set forth in their
report, which is incorporated by reference in this prospectus and elsewhere in
the registration statement. Our financial statements and schedule are
incorporated by reference in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.

      The combined financial statements of InterExchange and combined
affiliates as of December 31, 1997, 1996 and 1995 and for each of the three
years in the period ended December 31, 1997 incorporated by reference in this
prospectus and the related registration statement have been audited by Amper,
Politziner & Mattia P.A., independent auditors, as set forth in their report
thereto which is also incorporated by reference, and are included in reliance
upon such report given upon their authority as experts in accounting and
auditing.

                      WHERE YOU CAN FIND MORE INFORMATION

      We are subject to the reporting requirements of the Exchange Act, and
file annual and quarterly reports, proxy and information statements and other
information with the Securities and Exchange Commission. These documents can be
inspected and copied at the public reference facilities maintained by the
Commission at its office at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at its regional offices at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of these materials can be obtained
from the Public Reference section of the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition,
reports, proxy statements and other information that we electronically file
with the Commission are contained in the Commission's Internet Web site which
is http://www.sec.gov.

      We have filed with the Commission a registration statement on Form S-3
relating to the common stock offered in this prospectus. This prospectus does
not contain all of the information in the registration statement and its
exhibits. The registration statement, its exhibits and the documents
incorporated by reference in this prospectus and their exhibits, all contain
information that is material to the offering of the common stock. Whenever a
reference is made in this prospectus to any of our contracts or other
documents, the reference may not be complete. You should refer to the exhibits
that are a part of the registration statement in order to review a copy of the
contract or document.

                                       26


                    INCORPORATION OF DOCUMENTS BY REFERENCE

      The Commission allows us to incorporate by reference many of the
documents that we file. This permits us to disclose important information to
you by referencing these filed documents. Any information referenced in this
way is considered part of this prospectus. We are incorporating by reference in
this prospectus the following documents which we have filed with the
Commission, together with the filings that have amended them:

      (1)   annual report on Form 10-K for the fiscal year ended July 31, 1998;

      (2)   quarterly report on Form 10-Q for the fiscal quarter ended October
31, 1998;

      (3)   quarterly report on Form 10-Q for the fiscal quarter ended January
31, 1999;

      (4)   quarterly report on Form 10-Q for the fiscal quarter ended April
30, 1999;

      (5)   current report on Form 8-K dated May 26, 1998; and

      (6)   the description of our common stock contained in our registration
statement on Form 8-A, dated March 5, 1996.

      All reports and other documents that we will file with the Commission
under sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this prospectus and before the termination of the offering of the common stock
hereunder will be incorporated by reference into this prospectus from the date
of the filing of these reports and documents, and will supersede the
information herein. We undertake to provide without charge to each person who
receives a copy of this prospectus, upon written or oral request, a copy of all
of the preceding documents that are incorporated by reference (other than
exhibits, unless the exhibits are specifically incorporated by reference into
these documents). Requests for documents should be sent in writing to the
General Counsel at our headquarters at 190 Main Street, Hackensack, New Jersey
07601 or by telephone at (201) 928-1000.

                                       27


                INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

      When used in this prospectus, the words "expects," "anticipates,"
"estimates" and similar expressions identify forward-looking statements. We
believe that these statements are "forward-looking" statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. These statements, which include statements under the caption "Risk
Factors" and elsewhere in this prospectus refer to our plans to implement our
growth strategy, improve our financial performance, expand our infrastructure,
develop new products and services, expand our sales force, expand our customer
base and enter international markets. The forward-looking statements also
include our expectations concerning factors affecting the markets for our
products, including the demand for long distance telecommunications, Internet
access and online and Internet telephony services.

      These forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from the results that we
anticipate. These risks and uncertainties include, but are not limited to,
those risks discussed in this prospectus and in the documents incorporated by
reference in this prospectus. In addition to the factors specifically noted in
the forward-looking statements, other important factors that could result in
those differences include:

      - general economic conditions in the telecommunications and Internet
markets, including inflation, recession, interest rates and other economic
factors;

      - casualty to or other disruption of our facilities and operations; and

      - other factors that generally affect the business of telecommunications,
Internet and other communications companies.

      We assume no obligation to update these forward-looking statements or to
update the reasons actual results could differ materially from the results
anticipated in the forward-looking statements.

                                       28



                                1,101,702 Shares

                                IDT CORPORATION

                                  Common Stock

                                 -------------

                                   PROSPECTUS

                                 -------------

                               September 14, 1999


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      You should rely only on the information in this prospectus and the
additional information described under the heading "Where You Can Find More
Information." We have not authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely upon it. Neither we or any of the selling
stockholders are making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the
information in this prospectus was accurate on the date of the front cover of
this prospectus only. Our business, financial condition, results of operations
and prospects may have changed since that date.

- --------------------------------------------------------------------------------