A loyal reader tipped me to Internet Telephony's Rich Tehrani having the jump on the possible buy of Vonage by BellSouth.
The price of $3.5 billion seems almost excessive and for 800,000 customer or so, no real in house technology, a team that would largely go bye bye after acquisition, I don't see the value.
Besides you can license VoIP for less or have someone build out a network the way Cablevision and others have, so unless someone can explain the rationale behind this to me, in an era where brand switching by consumers is ever increasing, and choices abound, I wonder what BellSouth could be thinking if true.
That said, if the deal did go through then the value of a Vonage customer is somewhere in the range of $4375.00 a subscriber, and that's just about ten times the cost of what Vonage has spent to acquire them. Given the average of say $25.00 a month a customer pays that would mean that the customer would have to be with BellSouth for almost 15 years before they make their investment back and before costs associated with running the business and maintaining the customers.
Of course BellSouth would contend that they can grow the business so the payback is less than five or so, but I wonder once other companies start to market again, how much slower the Vonage take rate will be, unless this is an International Play by BellSouth as Vonage, which just held their International Country Heads meeting recently.
Om lays the smack-down on the rumor. I think we both said the same thing.