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Re: Diggin' into Vonage's S-1
by
Anonymous
The cost of acquisition (based on equipment subsidies, retail payments and advertising -- it excludes in-house marketing staff) was $99M or $234 per gross addition. Of this amount, $22M was spent replacing the 94k subscribers who churned during the first quarter -- in other words, even if they decided to drastically cut spending and stop net subscriber growth, Vonage might be marginally profitable on an EBITDA basis.
They may yet grow to sufficient scale that the business because a significant cash generator, but they aren't there yet. If 1.5M customers are not enough, and competition is increasing, the situation doesn't look great.
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