One VoIP VP buys into the rumor mill that Sprint will buy Vonage. (I'm not sure Sprint won't get bought before it gets around to it). Ike Elliott has an analysis of Vonage's debt issue:
"If Vonage can refinance their $253M in convertible debt before December, 2008, then it looks like the company can avoid bankruptcy... in these markets ... The more worrisome scenario is if the debt cannot be refinanced, in which case the company may need an injection of capital from wealthy founder Jeffrey Citron, or may need to declare bankruptcy."
Ike also has the snapshot of Vonage's 4Q07 numbers:
- Subscriber growth declined, with only 56,000 net subscriber lines added, compared to 78,000 net subscribers added last quarter.
- Customer churn remained high, at 3% per month, same as last quarter.
- ARPU declined to $28.19 from $28.25 last quarter.
- Customer Acquisition cost is up to $223, from $206 last quarter. (Vonage calls it Marketing cost per gross subscriber addition).
- Overall spending was reduced.
- Reduced SG&A to $77M, compared to $84M last quarter.
- Vonage had about $800M in revenue in 2007.
Ike thinks the 3% churn is the big worry. TWTC has theirs at 1.1%. I don't see how a consumer commodity can get the churn to 2.3%, especially when it rides on top of a network that it has no control of. A network (called the Internet) that is increasingly moving towards an Exaflood due to video and voice streams in place of the original non-real-time, bursty nature of email and web surfing.
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