Viva Las VegaStream - MBO leads to latest VoIP push

VegaStream, a voice over IP (VoIP) gateway supplier, has been spun off from Pace Micro Technology through a management buy out. The split also coincides with £4m in new investment which the company will use to expand.

Pace, known as one of the largest set-top box makers for digital television, bought the company in 2000 with an eye on integrating VoIP with home services such as cable and satellite television. However, that plan didn't work out and now VegaStream will concentrate on selling to SMEs, larger enterprises and, in the future, service providers.

Analysts In-Stat/MDR forecast the VoIP gateway market will grow 24 per cent in 2003.

Tim Burne, VegaStream CEO and leader of the MBO, said: "We are seeing people in boardrooms and buying positions starting to look at VoIP."

The spun-off company will be owned by venture capitalists MTI Partners - who get a "significant stake" after stumping up most of the new cash - its management and Pace, which will maintain a 20 per cent share.

The VoIP gateway market is dominated by Cisco but MTI noted in a statement that VegaStream is "uniquely placed to offer a dedicated business VoIP gateway that is a genuine Cisco alternative in North America, Europe and other major global markets".

VegaStream's Burne admitted the market has been hampered in recent years by carriers cutting back on capital expenditure but said the injection of funds will be used, among other things, to recruit more staff to the company's Bracknell, Florida and California offices.

VegaStream plans to sell through "educated" PBX and data-oriented resellers, as well as network equipment vendors such as Nortel and Siemens.