Vonage reports lower customer count in 4Q

HOLMDEL, N.J. -- Vonage Holdings Corp. reported a net customer loss for the fourth quarter Thursday, a first for the Internet telephone pioneer.

The company said its loss for the quarter widened because of debt refinancing costs, while revenue grew modestly.

But after several quarters of adding just a few thousand subscribers, Vonage said it lost more than 14,000 during the last three months of the year, ending the period with more than 2.6 million lines in service.

"While our financial performance was sound, we fell short in our ability to substantially grow our subscriber base," Chief Executive Marc Lefar said in a statement.

Vonage said its net loss came to $40.9 million, or 26 cents per share, compared with a loss of $13.8 million, or 9 cents per share, in the year-ago quarter. The results included a $31 million charge related to debt extinguishment.

On an adjusted basis, Vonage said its loss narrowed to $10 million.

Sales grew 3 percent to $222.2 million from $215.9 million.

Average revenue per user was $28.33, up from $28.19 in the year-ago quarter but down from $28.75 sequentially.

Churn, or customer turnover, declined to 2.9 percent from 3.0 percent sequentially.

Once a major competitor for traditional telephone companies, Vonage has seen subscriber growth dwindle as cable providers take more of the market with similar services.

For the full year, Vonage said its net loss narrowed to $64.6 million, or 41 cents per share, compared with a loss of $267.4 million, or $1.72 per share, in 2007.

Excluding debt costs, the loss came to $34 million. Vonage completed the refinancing of $253 million in convertible debt Nov. 3.

Revenue climbed 9 percent to $900.1 million from $828.2 million. Churn edged up to 3.1 percent from 2.8 percent in 2007.