Swedish startup Rebtel, the second largest mobile Internet telephony firm after Skype, expects sales to surge next year based on strong initial demand for its new application combining Internet calls and traditional calling.

Venture-backed Rebtel has built a clientele of 13 million users offering cheap international calls for cellphone users, and it aims to reach $100 million annual revenue rate during next year, compared with $62 million revenue seen for 2011.

It unveiled on Thursday its new application for international calls, which provides free calls between Rebtel users, and technology enabling switching between traditional voice calls and Internet calls if call quality drops too low.

Rebtel says its the second largest mobile VoIP (Voice over Internet Protocol) provider after Skype, which Microsoft is buying for $8.5 billion. Internet protocol services offer free voice and video calls routed over Internet networks.

Andreas Bernstrom, Rebtel's chief executive, said the ability to use also telecom networks and allow calling to any number, including landlines or simple cellphone models, make the offering stand out among rivals.

Operators have tried to block such services in some countries and Bernstrom forecast the battle for $628 billion voice calls market to continue.

We're kind of a friend and an enemy for operators: from wholesale perspective they like us, but from consumer perspective they don't, Bernstrom said.

Index Ventures and Benchmark Capital invested $20 million in Rebtel in 2006 and Bernstrom said there were no imminent plans to raise more capital as the firm turned profitable last year, but said this could change if launch of the new app goes well and capital markets would be better.

It might make sense to arrange Series B, he said.

(Reporting By Tarmo Virki, editing by Bernard Orr)

Software