Vonage has filed for a $250m initial public offering. The VoIP provider will use the funds to further expand its business and make acquisitions or strategic investments, the company said in documents filed with the Securities and Exchange Commission (SEC).
A date for the IPO has yet to be determined. Vonage is the largest VoIP provider in its segment and currently claims 1.4 million subscribers. The company boasted recently that it more than tripled its subscriber base in 2005.
Vonage currently operates in the US, Canada and the UK, and has received a licence to start offering its services in Singapore.
It allows customers to apply for local phone numbers in Austria, France, Italy, Mexico, the Republic of Ireland and Spain and expects to add additional countries in the future.
Industry analysts estimated the overall VoIP market in 2004 at between 900,000 to 1.5 million subscribers, and predict that it will grow to between 8.2 million and 15.3 million by 2007, according to data quoted in the SEC filing.
Vonage posted a net loss of $189m in the first three quarters of 2005 on revenues of $174m. During that period, the UK accounted for $514,000 in revenue and Canada for $4.6m.
The revenues come mostly from the sale of telephony services, with about four per cent of revenues derived from the sale of the VoIP adapters, routers and handsets required to use the service.
Vonage sells its hardware below cost, subsidising about $4.50 for every $1 that its customers spend on hardware, the SEC documents showed.
But most money is being spent on marketing. The company said that it paid $213.77 per subscriber line addition during the first nine months of 2005.
Vonage warned prospective investors that it plans to continue to incur losses in the future, and that losses are increasing on a quarter by quarter basis.
"In order to grow our revenue and customer base, we have chosen to increase our marketing expenditures significantly," the firm said in the SEC filing.
"We are pursuing growth, rather than profitability, in the near term to capitalise on the current expansion of the broadband and VoIP markets and enhance the future value of our company."
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