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Last Updated: Wednesday, 24 May 2006, 21:36 GMT 22:36 UK
Vonage market debut disappoints
Man talking on computer via a phone headset
The telecoms industry is being revolutionised by VoIP
Shares in the loss-making internet phone company Vonage plunged by almost 13% on Wednesday - on their first day of trading.

The firm, which has admitted demand for its services may wane as competition increases, priced its shares at $17 (9.10) on the New York Stock Exchange.

But they closed at $14.85 - down 12.7%- wiping $67m off its opening value.

Vonage's Voice-over-Internet protocol (VoIP) services offer calls at cheaper rates than fixed-line phone providers.

The firm hopes that the $531m cash raised from selling the 31.25 million shares would help it expand and pay marketing costs as well as tackle debt.

But analysts have questioned Vonage's investment prospects since its technology is easy to replicate.

Heavyweight challengers

Subscribers need to fix a Vonage phone box between their computer and telephone lines, but can then make unlimited calls.

The problem for Vonage is that cable and telephone companies are starting to offer similar services alongside their internet and TV programme packages.

Online heavyweights such as Google are also muscling in.

However, experts believe the company still has good scope for growth.

In its filing with US regulators, Vonage forecast that the number of VoIP users in the US could rise from a minimum of about one million in 2004 to eight million by the end of 2007.


SEE ALSO
Vonage flotation to raise $531m
24 May 06 |  Business
US web phone firm Vonage to float
08 Feb 06 |  Business
Fresh backing for web phone firm
19 Dec 05 |  Business
EBay to buy Skype in $2.6bn deal
12 Sep 05 |  Business
Broadband telephony gets a boost
20 May 05 |  Technology
The free phone call revolution
19 May 05 |  Business

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