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Vonage homes in on 1 million subscriber mark-CEO

By Jeffrey Hodgson

TORONTO (Reuters) - Vonage Holdings Corp. will easily cross the 1 million subscriber mark before year-end, the head of the fast-growing Internet phone company said on Tuesday.

Vonage chief executive Jeffrey Citron said the closely held firm currently has more than 700,000 subscribers, and was adding about 15,000 a week.

"When you look at our pace of growth in that first quarter and what we're publicly stating in the second quarter, you forecast that out and Vonage will easily clear the million customer mark before the end of the year," he told Reuters on the sidelines of a telecoms conference in Toronto.

The U.S. firm offers its service through broadband Internet connections using voice over Internet protocol, or VoIP. Customers plug their phones into specially designed Internet adapters.

Unlike traditional phone calls, which require a dedicated line, VoIP breaks voice traffic into fast-moving packets that can be sent over the Internet or other data networks. This dramatically lowers costs.

Citron said that a cost advantage and other special features have helped Vonage win customers from traditional phone companies. The service is access independent, which means users can connect to it from any Internet access point on the planet.

Vonage added 249,000 subscribers in the first quarter, up from 114,000 in the fourth quarter. Citron said that growth rate will likely ease up a bit before accelerating again toward the end of the year.

He said the growth has been a bit of a strain on the company's 1,400 person workforce, but that there was no technological impediment to that pace of growth.

Citron declined to comment on the company's prospects for an initial public offering, but said it had adequate capital to expand. Privately held Vonage has raised $408 million in venture capital to date, including about $200 million in recent weeks.

"With that much capital coming into the company I think we're quite pleased with our progress and believe we've got a strong balance sheet to go out against the biggest players," he said.

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