By Josh Long

Vonage Holding Corp., the Internet-based phone provider, on Tuesday reported the lowest fourth-quarter churn in four years and said its number of lines grew for the first time in more than two years.

Revenues of $218 million fell from the year-ago quarter ($224 million), but Vonage said its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose to $41 million from $34 million year over year.

Including one-time adjustments of $58 million related to refinancing, Vonage posted a net loss of $42 million, or $0.19 per share. In the same quarter a year ago, Vonage posted net income of $4 million or $0.02 per share.

Vonage said its churn the percentage of customers who leave the company fell from 2.8 percent to 2.4 percent, the lowest fourth-quarter churn in four years, partly due to improvements in the end-to-end customer experience.”

The company generated annual positive free cash flow ($154 million) for the first time in Vonages history, Chief Executive Marc Lefar said.  Vonage defines free cash flow as net cash provided by operating activities minus capital expenditures, intangible assets, and acquisition and development of software assets.”

Vonage finished the year with 2.4 million lines in service as the company zeroes in on growth initiatives to increase its market share in the international long distance market, increase its customer base outside the United States and offer products to mobile users, Lefar said. In December, Vonage announced the 1.2 release of a mobile application for Facebook that works with the iPhone and other Apple products, allowing users to make free mobile calls worldwide to their Facebook friends who also have the app. 

Investors were apparently pleased with Vonages earnings. Shares rose to a near four-year high, Reuters reported Wednesday, and were trading at $4.70 late Wednesday morning on the New York Stock Exchange.

For the year, the company reported annual operating revenues of $872.9 million and a net loss of $84 million, or $0.40 per share. Vonage said several factors drove its loss, including $118 million in adjustments related to debt refinancing, $12 million in non-cash charges related to convertible notes and debt prepayments.