Cable Tech

VOIP Chases Dallas ISP

VOIP Inc. says it isn't going to choke on Internet America Inc.'s poison pill.

Florida-based VOIP, a provider of Internet-based phone services, announced plans to acquire 49 percent of Internet America's shares and sell off the company's assets in July. It offered shareholders a half share of VOIP stock for every share of Internet America (see VOIP Plans to Buy Internet America). At that time, Internet America, a Dallas-based provider of dial-up and DSL services, rejected the bid.

VOIP says it wants to begin marketing broadband and VOIP phone services to Internet America's 65,000 customers. A successful takeover would give VOIP access to about $1.8 million in cash.

"They have a massive infrastructure that we could take advantage of, and we could use the relationships they have with carriers," VOIP Inc. CEO Steven Ivester says.

Last week, Internet America adopted a so-called poison pill, a strategy used by some companies to make a hostile takeover more difficult or expensive for a potential acquirer. Internet America CEO William Laden said that adopting the shareholder rights plan had nothing to do with VOIP’s tender offer. He declined to comment further.

VOIP, with about 24 employees, has grown its revenues to $1.5 million in less than one year since its inception, Ivester said. The provider has been pursuing acquisitions of businesses in the Internet telephony market (see VOIP Inc. Adds Service in Florida). It most recently acquired DTNet Technologies, a seller of equipment to cable and DSL service providers.

VOIP CEO Ivester says plans to take over Internet America are still on the table. "The deal is not completely dead yet. It's still going on," he says.

VOIP will file a tender offer for Internet America with the Securities and Exchange Commission (SEC) in about four weeks, Ivester says. Ivester told Light Reading on Friday that he was planning to meet with Laden at VOIP's headquarters.

"They have built up a substantial network over the last several years. But the dial-up Internet service business model is going away,” Ivester says. "We can give the shareholders good opportunities to get into a new space.”

Internet America, once the largest ISP in North Texas, has been losing subscribers and watching its revenues drop for years. It reported revenue of $2.8 million for the third quarter ended March 31, compared to $4.2 million a year ago.

In recent months, Laden has set out to revitalize the company by providing broadband services to customers.

In a statement last month, Laden said that Internet America was installing wireless broadband pilot programs in Dallas and Houston. Laden said Internet America is talking with several wireless ISPs about possible acquisitions or joint ventures.

— Joanna Sabatini, special to Light Reading

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