Vonage Announces Settlement with AT&T

Vonage (VG) shares are higher Thursday morning after it announced a tentative deal to settle the patent suit that had been filed against the company by AT&T (T). The company said terms of the deal would require Vonage to pay AT&T $39 million over five years. Vonage previously announced patent litigation settlements with Verizon (VZ) and with Sprint (S)

Meanwhile, Vonage Thursday also announced third quarter revenue of $211 million, a bit ahead of the Street estimate of $210 million. The company reported a loss excluding charges of 10 cents a share, a few pennies less than expected.

Vonage said it added 78,000 net subscribers in the quarter, increasing the total to more than 2.5 million. Some other metrics for the quarter were less positive. Average monthly revenue per line fell slightly, to $28.24, from $28.32 in the second quarter. Direct cost of telephony service rose to $7.30 per line, from $7.21 one quarter earlier. Marketing costs in the quarter fell to $206 per gross subscriber added, the lowest in two-and-a-half years, but the company warned the total would climb in the fourth quarter to the $225-$250 range. Average monthly churn in the quarter rose to 3%, from 2.5% in the second quarter.

Vonage Thursday is up 35 cents, or 16%, at $2.54.