vonage.jpgVonage, the Internet telephone company, is about to file for an initial public offering and is hoping to raise between $400 and $600 million, according to The Deal.

Talk about a thriller endgame. This is not a Silicon Valley company, but a host of valley venture capital firms have made a gutsy bet on it — as we’ve reported before.

First, here’s the relevant snippet from the Deal, a story picked up by the WSJ and others too:

According to sources, it�s possible that Vonage might pursue a dual-track process, allowing it to explore a potential merger as well as an IPO. If Vonage goes the IPO route, it would likely use the money the same way it used the proceeds from its previous rounds of funding: to expand its network in the U.S., Canada and overseas.

The IPO filing comes at a time when a host of other competitors, including the nation’s favorite (or least favorite) company, Google, are hitting the market with similar products. Google has already come up with a voice-over-IM offering, and is trying its best to launch an offering that would allow users to call regular phones too. Yahoo, AOL and MSN are doing the same. So, does the IPO filing reek a bit of desperation?

For context, as usual, Om nails this on the head:

Dual track process? Now that�s interesting! I get a feeling, that it might be a one-track process – IPO because of the greater fool theory – because not many buyers out there who can pay enough money to give investors (read VCs) a decent return on investment.

Lots of questions in my mind, which will hopefully clear up soon. Just doing the numbers – Vonage has raised $400 million, and with $600 million in IPO proceeds, that�s a whopping $1 billion. Not bad for a company that has shade less than a million customers. So investors in the company are tentatively valuing each Vonage customer at about $1000 – or about 40 months of revenues.

I find the timing of this news pretty interesting! There is clearly lots of competition, including cable companies which are just cranking their sales machine and pushing VoIP like crazy. Skype, Yahoo, Microsoft and Google�s Voice-over-IM offerings are going to put some if not a lot of deflationary pressure on the prices. Price pressure is going to be rampant. Good time, to re-read my Telecom Death Spiral essay…

Question: Will the big institutional investors, including the large mutual fund companies that so many regular mom and pops rely on, buy into this?

And, Techdirt adds, there’s the Citron problem.