Vonage investors refuse to pay £20m

Vonage, the pioneering internet telephony service, is trying to quell a rebellion from small investors who are refusing to pay for $20m (£10.6m) of shares they agreed to buy in the company's Wall Street flotation.

As the fiasco escalated, Vonage's stockbroker was this weekend calling customers who requested stock in the $531m offering, to encourage as many as possible to pay up. But recalcitrant investors are using financial bulletin boards to argue that the flotation was botched, and the company is unlikely to pursue them for the money.

Vonage won 1.6 million customers by offering cheap calls over a broadband internet connection, but cable companies are now launching rival services. Some analysts fear it may never turn a profit. Vonage offered its customers the chance to buy shares, but the stock still collapsed by 13 per cent on its first day of trading. It now stands at 30 per cent below its offer price.

Employees at Vonage told some angry callers that they would not be pursued if they no longer wanted the shares, and the company said it was inconceivable it would sue its own customers. But a later statement that Vonage "reserved the right" to sue has failed to halt the "won't pay" campaign. It is believed a third of the estimated 10,000 customers are refusing to take their shares.

Vonage is making no further comment, but customers who pledged to buy shares reported receiving "a friendly call" from Smith Barney saying their payments were now overdue.

Some members of the independent Vonage-Forum.com website are debating whether to pay up. One posted a message saying: "You better not pay so these crooks will learn their lesson and never push another flawed IPO on suckers like us again." Another wrote: "This is too funny. At the end of the day, if they make me pay I will. But at least for now I plan on sitting back and watching."

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