Vonage has more than a million customers

The fast-growing but loss-making business hopes to raise up to $250m from the flotation (�142m) to win new customers and expand its services.

Vonage is one of a number of companies focusing on internet telephony, known as Voice over Internet Protocol (VoIP).

The firm, which enables people to make calls over the web via their home phones, has more than 1.4m users.

Exciting prospects

The proposed flotation has come as a surprise to some analysts who expected the firm to be bought by a much larger technology business.

VoIP providers have been hot property since eBay bought Skype for $2.6bn last September.

People are going to have to look at this filing carefully and not become enamoured with the technology David Menlow, IPOFinancial.com

Investors are increasingly excited at the prospects for growth among VoIP companies, which offer users phone calls at substantially lower prices than traditional fixed-line firms.

In its filing with US regulators, Vonage said it believed the number of VoIP users in the US could rise from a minimum of about one million in 2004 to eight million by the end of 2007.

"To grow our revenue and customer base and enhance awareness of our brand, we have chosen to spend significant amounts on our marketing activities and we intend to continue to do so," the firm said.

Strategic concerns

Vonage made a loss of $189.6m in the first nine months of 2005 on sales of $174m.

So far, it has raised more than $650m through private investors, the bulk of which has been spent on marketing.

Analysts said the timing of the proposed flotation was excellent but there were some doubts about the company's business model.

"There is a great rate of growth here but take a look at the bottom line," David Menlow, president of research firm IPOFinancial.com, told Reuters.