VOIP pioneer Vonage Holdings Corp. has heard several acquisition offers in the last two weeks, a source close to the situation says, and has already rejected at least one worth more than $1.5 billion.
Vonage is ostensibly preparing for an IPO, but has been taking a dual-track approach toward liquidity that includes the possiblity of an acquisition. Sources say the N.J.-based company’s investment banker partners have been looking for buyers for some time. (See Vonage Selects IPO Bankers.)
Meanwhile, analysts in recent weeks have floated a price of $1 billion to $1.5 billion as Vonage's likely valuation if a sale should take place in the near future. (See Vonage Exceeds One Mil .)
And the time for Vonage to sell may be right now.
The $2.6 billion valuation of Skype Technologies SA by eBay Inc. (Nasdaq: EBAY) caused many to believe that Vonage, when the time comes, would receive a similarly generous valuation.
Some observers believe a window of opportunity for a Vonage sale opened when eBay took Skype, and will close on the day Vonage becomes a public company. (See EBay Buys Skype for $2.6B.) Within that window, Vonage has the best chance of leveraging current investor buzz over VOIP to command a high selling price.
Rumors have been circulating for weeks that one of Vonage's suitors is BellSouth Corp. (NYSE: BLS), a notion Vonage has never denied. Board members at one Vonage competitor are so sure the RBOC will take Vonage that they have begun strategic planning as if the deal had already occurred.
A BellSouth acquisition of Vonage might indeed make sense for both parties. BellSouth might pay a premium for a ready-made entrée into the residential VOIP business, virtually erasing the headstart taken by competitors like Comcast Corp. (Nasdaq: CMCSA, CMCSK) and other RBOCs.
And BellSouth may be better positioned to expand the Vonage property than Vonage by itself. BellSouth owns its own access facilities and can offer Vonage service to customers as part of a larger, bundled offering. (See Broadbanders Bubbly Over Bundles.) If Vonage goes it alone, it would likely face persistent investor skepticism over the Vonage business plan’s long-term payoff potential.
Vonage’s eventual exit is seen as very important to the future of an entire class of “pure play” or "replacement" VOIP providers. (See Packet Voice Over Broadband.) A sale could take the valuation of such companies out of the realm of analyst speculation and provide a real cost-per-subscriber dollar amount on which to base future VOIP acquisitions or stock pricings. (See Does VOIP Business Add Up?)
If Vonage is bought at a high price, some analysts believe other privately held VOIP companies like Lingo Inc., Nuvio Corp.,
and SunRocket Inc. might be emboldened to jump up onto the selling block.
“I think the valuation of Vonage would be high, and I think that would potentially cascade down to 8x8 so you have that ‘rising tide raises the smallest boat’ kind of thing,” says 8x8's VP of sales and marketing, Huw Rees. “I think there’s a feeling that if they get valued at a high amount per subscriber, then we would expect our market cap to rise correspondingly."
Forget the RBOC, the wireless carriers should take an interest in Vonage. Why? I'll just point you to my blog: http://mmilliman.blogspot.com/2005/10/whats-vonage-to-do-part-ii.html
Plus articles in The Economist, the Guardian, The New York Times, CNN, Slashdot, etc. All over the place really.
But it got heated just last month by an EU meeting and statement of position. And then next month is the UN World Summit on Information Society in Tunis where the gauntlet/ultimatum will probably be thrown down.
Goodness! All we need is some bureaucrat (instead of some businessman) deciding how many character codings of your domain name you have to pay for separately.
There is nothing in the Internet today preventing any country from allowing local DNS providers to recognize and resolve any favoured character encoding within their national TLD. And I'm sure ICANN will get around to allocating them their "equivalent" TLD (e.g. allocate the ".[international character set encoding for China]" to China).
Are these countries just upset that neither IP(v4) addresses nor AS numbers are hierarchical?
I think the article has it right: these countries don't know what they want.
"Bits and pieces"? Which planet are you guys on? It's been all over shop, and even the Aussies are reporting it: http://australianit.news.com.au/articles/0,7204,16874891%5E15318%5E%5Enbv%5E15306,00.html
OK, so ICANN is headed by an Ocker so they're bound to have noticed, but I've even seen reports from New Zealand - and on the Beeb, of course.
As for what's the best way to run it, I have no idea, although the ITU could fossilise it instantly, in 3 languages to boot (been there, done that). The main problem with the present set-up is the perception (not necessarily valid, but not necessarily invalid, either) that Uncle Sam has some sort of hold over ICANN.
Don't expect sanity, though. This is a religious war.
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