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VOIP M&A Unlikely
By Mark Evans | March 22, 2005
Phone+ has an interesting story on the low chances of VOIP upstarts such as Vonage Holdings and 8×8 Inc. being snapped up by telephone carriers and cablecos because there is no competitive pressure to make a deal as the market is still emerging. With the exception of perhaps Vonage, this thesis is probably true because there isn't a start-up with features so compelling it attracts an offer. In other words, it's not like there is a VOIP version of Google that has taken the market by storm by offering something so different and wonderful from what's available now. Over the next couple of years, you will likely see carriers and cablecos try to build their own VOIP businesses. For carriers, it's a matter of elegantly and economically moving customers from circuit-switch systems to VOIP, while the cablecos charge ahead with Internet telephony.
At some point, however, a carrier or cableco will look at its VOIP strategy and decide it needs to be kick-started by acquiring Vonage and its large customer base. Clearly, price will be an issue given Vonage's value seems to be climbing with every new subscriber it adds. Then again, there are people such as Andy Abramson, who are starting to question Vonage's math.
The bottom line is M&A within VOIP from a service and software/hardware perspective has been, at best, minimal. Not sure if buyers and/or investors are waiting for more momentum before jumping on board but it's very un-dot-com like.
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