Vonage Files for IPO..

LOS ANGELES (Reuters)—Internet telephone service provider Vonage Holdings may raise up to $250 million in an initial public offering to fund efforts to expand its subscriber base, according to a regulatory filing Wednesday.

The IPO announcement from the money-losing independent provider of VOIP (voice over IP) services comes as that fast-growing market appears to be on the verge of reaching a broader audience—and as competition from much larger companies intensifies.

Terms have not been set for the offering, expected to be led by underwriters Citigroup, Deutsche Bank Securities, and UBS Investment Bank, according to the filing with the U.S. Securities and Exchange Commission.

Vonage said in the filing that it had more than 1.4 million subscriber lines as of Feb. 8 and lost $189.6 million on revenue of $174.0 million in the first nine months of 2005. The company spent $176.3 million on marketing in the same period.

"To grow our revenue and customer base and enhance awareness of our brand, we have chosen to spend significant amounts on our marketing activities, and we intend to continue to do so," the company said.

Vonage's service allows a subscriber to make calls using a phone connected to a high-speed Internet line. Ninety-five percent of its customers are in the United States.

The VOIP market for voice services over high-speed Internet is estimated to grow from a range of 900,000 to 1.5 million North American consumer users in 2004 to between 8.2 million and 15.3 million users by the end of 2007, Vonage said.

from: http://www.eweek.com/article2/0,1759,1923338,00.asp?kc=EWRSS04069TX1K0000701