15 thoughts on “BellSouth to Buy Vonage for $3.5 billion? … Not Likely”

  1. Wow, at $4375 per subscriber, that would mean that each Vonage subscriber would be worth as much as each Cablevision subscriber. The Dolans attempt to bring the cable company private is pegged at that metric. The Adelphia transaction was valued at $3500 per sub.

    Even though the Vonage story is a rumor, do VoIP companies really think that this valuation is realistic?

  2. well see SIRI at close to 10 bil in market cap which gets $13 a month charge per subs then vonage which charge atleast $25 per subs monthly,vonage will have 1.2 mil by year end + don’t forget the video over ip and wirless vonage.

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  4. One more time, there is no revenue in video over IP. After all, VoIP is free with in the walled garden. Similarly, video over IP should be free. Attempts to charge have ended in failure, as demostrated by other providers.

  5. The discussion on cost per subscriber is apples and ornages. That’s valid for discussions on established cable systems, telco CO’s and lines and where cash flow is a primary factor. It’s not valid for valuation of something like Vonage which would be more similar to growth companies. That’s not saying 3.5B doesn’t seem out of line unless there’s a lot that comes with it that’s unknown, since Vonage is private.

  6. Look at it this way: How much would it cost to set up a VoIP service with 800,000 paying customers (growing by maybe 50,000 per month)? In addition, how much would it cost to make your trade name almost synonymous with VoIP? Further, if VoIP is just starting its growth, Vonage could easily become huge in a few years — possibly with more customers than BLS now! Looked at it this way, the rumored $3.5 billion price tag makes sense. Also, don’t forget that Vonage must have spent well over $1 billion so far in setting up its business.

  7. Thomas (comment above), are you crazy? Vonage spend $1B? Seeing as Vonage has not raised more than about $400mm, it would be hard to believe that they have spent more than $1B. Furthermore, under NO CIRCUMSTANCES does it make sense for Bell South or anyone else to buy Vonage for that much money. How much brand do you think a company could build for $3.5 Billion. More importantly, for that, they could offer VoIP for $5/mo and get their 800k customers in about 3 months…and then go on to lose plenty of money like Vonage will.

  8. Jeff – Like several other so-called experts, you do not think things through in a serious manner, perhaps because you are crazy. Look at it this way — AT&T CallVantage has –maybe– 80,000 customers, despite heavy advertising and the AT&T name. That’s roughly 1/10 of Vonage’s customers. Further, in a sophisticated comparison released yesterday by Keynote (or similar name) Vonage was rated best VoIP provider. Some nuts think it is easy to set up and run a VoIP system. That is just not the case. By the way, I have no interest in Vonage, just like to tell it like it is….

  9. It’s interesting to note that one of the early trials of Vonage in the consumer space was done in conjunction with BellSouth. Vonage claim that at the end of the trial period, the majority of participants expressed an interest in staying with them, and that BellSouth ended the relationship. Presumably if BellSouth considered Vonage so threatening/appealing back in early 2002, they could have taken them out for far less than $3.5bn.

  10. Recent interview with CTO of BellSouth clearly indicates that BLS is very worried about VoIP attacking the very core of its business. Read this snippet from the interview (om: This is “fair use” not copyright violation) —

    –Smith soon cuts to the chase on his company’s involvement with IPTV: “From a competitive perspective, voice over IP has been a very good vehicle for cable companies to come in and attack our core business. I think IPTV may be an equally good opportunity for us to go in and attack their core business”….


  11. Various events – from more likely to less likely:

    BLS sells Cingular share to SBC
    BLS buys Sprint

    The problem with BLS buying Vonage is it puts them in the VOIP game at a level so far over the other guys (SBC, Verizon) that it seems oddly disproportionate.

  12. Sky is now the world’s largest Voice Over Inbternet (60 million subscribers) and calls are it is totally free. It was just bought EBay for about $3.6 B. How did South Bell miss out on it? And what is Sout Bell going to do about it?

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