A View on View :: Vonage's Economics

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Vonage's Economics

by Mark Evans on Fri 11 Mar 2005 02:08 PM EST | Permanent Link

Although Vonage has shown no indication of doing an IPO, it provided some interesting financial highlights during an interview CEO Jeff Citron did recently with BusinessWeek. Citron said Vonage is adding 10,000 customers a week; generating US$30 in ARPU a month, spending US$150 to US$200 to acquire each customer, and has churn of less than 2%. The bottom line is Vonage is spending more money marketing than it earns in free cash flow from its existing customer. Of course, this economic model is possible if you have more than US$100-million of private equity in the bank.
Based on this data, Kona Shio, who runs an investment firm in Montreal, believes Canadian cablecos could do better than he had originally forecast. As a result, he remains bullish on Rogers Communications and Quebecor, which owns Videotron, as the main beneficiaries of VOIP growth.
For more thoughts about a Vonage IPO and Spring Von, which happened earlier this week in San Jose, check out Om Malik's posting.

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\n"; $this->_updateAdFileParameters($AdFilePath, $new_ad_params); #echo "Returning updated parameters
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