Growing hi-tech firm Pace Micro Technology has bought a company which will put it ahead of the game in developing the home of the future.

And Mike Hafferty, the boss of Vegastream, is predicting that the two firms' technological expertise will help moves to make phone calls free within the next ten years.

Pace is buying Vegastream for an initial £20 million and is raising an extra £20 million through a shares issue which it will pay at a later date.

Mr Hafferty, Vegastream's managing director, said the Ascot-based firm, which employs 14 top-level engineers, allows television viewers to use the Internet to make phone calls and is particularly suited to small to medium businesses.

A Pace spokesman said: "The significance of this company is that this technology is going to become very important. We will be able to provide more services to customers in our set-top box. By acquiring this company we are buying Vegastream's expertise which keeps us ahead of the game in this technology."

Vegastream is an award-winning company which was set up in January 1998 with venture capital. Mr Hafferty said: "We are a key player in this new world of telephony because our gateways enable the integration of new communications with traditional systems.

"Pace is a major industry player and joining their team provides the large company infrastructure important to our enterprise customers. In just over two years we have made inroads into the USA market, which can now be accelerated to win market share in the international market."

Malcolm Miller, Pace's chief executive, said: "To continue growing the Pace business we look to acquire 'best of breed' technology skills, such as those at Vegastream."

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