Telefonica to buy Jajah for $207 million

AP News
Posted: Dec 23, 2009 2:46 PM

Spain's Telefonica SA said Wednesday it is paying 145 million euros ($207 million) to buy Jajah, a communications startup that lets customers bypass long-distance fees by connecting their calls over the Internet.

Founded in Austria in 2005, Jajah offers Internet calling known as Voice over Internet Protocol, or VoIP. Users can go to the Jajah Web site and enter two phone numbers _ their own and the number they want to call. The company calls both numbers. If the calls are answered, Jajah connects them, making it a high-tech version of the long-distance calling card. Callers use their own phones, instead of computer headsets that other Internet phone services can require.

Jajah says its users can save up to 98 percent on their bills. Calls are free between Jajah users in many countries. To call Brazil from the U.S., for example, two Jajah users can talk for free. If only one of the callers uses the service, the call costs 5.4 cents per minute.

Jajah also connects the calls of Yahoo Messenger users. It is also integrated into Twitter, and the dating site, letting users call each other through the sites without revealing their phone numbers.

Telefonica said the "opens up new capabilities in the voice communication space" for the company.

"People using social networking sites such as Twitter now have an even wider range of communications channels available _ and have the option of speaking directly to each other as well as communicating by text or keyboard," said Matthew Key, Chairman and CEO of Telefonica Europe, in a statement.

As part of the acquisition, Jajah will continue to operate under its own brand and report to Telefonica Europe.

American Depositary shares of Telefonica rose $1.05 to $85.05 in afternoon trading.