Vonage chooses IPO banks, report says

Vonage has chosen four banks to handle its IPO, the Wall Street Journal is reporting this morning. The IPO underwriters include Citigroup Inc., UBS AG, Deutsche Bank AG and Bear Stearns Cos.

There was no immediate comment on the report by Vonage officials.

The VoIP pioneer has been expected to issue an IPO this fall, and speculation on its value has been swirling around the industry for weeks, given eBay’s acquisition of Skype for between $2.6 billion and $4.1 billion. Vonage is rumored to be expecting a $600 million valuation.

Industry analyst Jeffrey Kagan sees Vonage's value peaking right now, with competition from cable and phone companies in the VoIP business looming.

"In the next six to 18 months the [Bell companies] and the cable television companies are going to begin offering the same VoIP service," he said. "Not only will it be a better service with E911 and directory assistance, but it will be combined with television and high speed internet service. I believe most customers will choose one or the other, their telephone company or their cable television company, and say goodbye to the other. At that point I think Vonage's growth will slow dramatically. Vonage will continue to compete and may remain a healthy company, but a much smaller company."