Vonage declines to comment on IPO report

Vonage Holdings Corp., the rapidly growing provider of residential VOIP (voice over Internet Protocol) service, declined to comment Thursday on a press report that the company was planning to go public.

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The Wall Street Journal reported that Vonage has selected four banks to manage its initial public offering (IPO) of stock, and that the company was planning to file IPO paperwork with the U.S. Securities and Exchange Commission within a couple of weeks. Vonage expects the IPO to raise US $600 million, the Wall Street Journal reported.

But Vonage has remained mum on the possibility of an IPO. "We don't comment on industry gossip," said Brooke Schulz, Vonage's senior vice president of corporate communications.

The Wall Street Journal report isn't the only media report of a Vonage IPO in the works. In August, several media outlets reported that Vonage planned an IPO, but the company also refused to comment then.

Some analysts see now as the perfect time for Vonage to go public. On Sept. 6, Vonage announced it had exceeded 1 million VOIP lines in service in North America, the first VOIP provider to do so. In March, Vonage announced it surpassed 500,000 lines.

But that growth may slow as large incumbent telecommunications carriers and cable television providers began focusing on VOIP services, said Jeff Kagan, an independent telecom analyst. In the next six to 18 months, those companies will begin packaging VOIP with cable TV or broadband Internet service.

Large telecom carriers or cable operators will be able to bundle those services and offer attractive deals to consumers, Kagan added.

"Customers will have two big competitors to choose from, competitors that they already do business with, " he said. "I believe most customers will choose one or the other, their telephone company or their cable television company, and say good-bye to the other. At that point, I think Vonage's growth will slow dramatically. Vonage will continue to compete and may remain a healthy company, but a much smaller company."