Republic Wireless will spin out from its parent company and become an independent entity, a sign that cheaper, Wi-Fi-based cellphone services are able to stand on their own in a hotly competitive wireless market.

David Morken, chief executive of Republic parent Bandwidth.com, said in an interview that spinning off the Wi-Fi cell unit made sense, as more of Bandwidth.com's customers have become direct competitors to Republic, and as Republic itself became more viable.

Bandwidth.com, which sells voice and data services to businesses, provides phone numbers and telecom services to rival Wi-Fi first cellular services like Alphabet Inc.'s Project Fi, as well as to Microsoft Inc.'s Skype and Google Voice.Raleigh, N.C.-based Republic Wireless, which began selling service in 2011, has more than 300,000 subscribers and annual revenue of more than $100 million. It offers monthly mobile phone subscriptions starting at $15 a month.

Republic Wireless sends most of its voice, text and data traffic over Wi-Fi hot spots. When Wi-Fi isn't available, Republic taps into the network of a national wireless carrier, such as Sprint Corp. or T-Mobile US Inc.

After the spinoff, Mr. Morken will pass the role of Republic CEO to co-founder and operating chief Chris Chuang while keeping his role as chairman.

Mr. Morken said he is considering taking Bandwidth.com public with an initial public offering in late 2017. Bandwidth.com rival Twilio Inc. went public earlier this year and now has a market value of roughly $3 billion.

Write to Ryan Knutson at ryan.knutson@wsj.com

(END) Dow Jones Newswires

December 01, 2016 09:05 ET (14:05 GMT)

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