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UPDATE 1-Jajah aims for IPO in second or third quarter '08

(Adds user target, more quotes from interview)

NEW YORK, Nov 7 (Reuters) - Internet-based phone company Jajah Inc aims to go public in the second or third quarter next year to expand its low-cost calling service globally, co-founder Roman Scharf said in an interview on Wednesday.

Jajah, based in Silicon Valley, is one of the best-known start-ups in the Web-based phone service market. Users can use its service to call long-distance at local rates from mobile or land line phones. Calls between registered users are free.

The company has attracted investment from a group led by Intel Corp INTC.O, as well as venture capital firms Sequoia Capital and Globespan Capital.

“Our plan is to go public, because we see a lot of opportunity, and with more money we could basically do a lot,” Scharf told Reuters.

Jajah's competitors include GrandCentral, which Google Inc. GOOG.O has acquired, as well as Jaxtr, Jangl and Rebtel. They use Web-based software to make calls over the Internet, inspired by the success of eBay Inc's EBAY.O Skype, which has over 200 million users.

Scharf said Jajah was using venture capital funding to develop new technology, rather than to fund operations. Such investment, however, was not enough for Jajah to play the “big game,” he said.

“We’d need $100 million to $200 million to bring Jajah within a year to a level of 50 to 80 million customers. We can do that and this would be the purpose of a possible IPO,” said the Austrian executive, who founded Jajah with another Austrian programmer and relocated to Silicon Valley.

“We want to do this next year. We believe the second or third quarter next year might have the right environment for us to go public.”

Jajah -- which signed up more than 2 million users in the first year since it was introduced -- would time any IPO cautiously, Scharf said. He said it may decide not to go public next year if there were changes in the business environment.

“When something crashes in the Valley, it crashes really hard,” he said.

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