Spain’s Telefonica has announced that it has acquired Jajah for 145 million euros (US$207 million). Jajah is a provider of Internet-based phones service with headquarters in the United States and Israel.

According to the statement issued by the former state monopoly, the all cash deal is subject to approval by Spain’s antitrust authorities.

Jajah will allow its customers to make free calls between its customers over the Internet or very cheap calls to the fixed-line as well as mobile numbers.

The company has around 25 million clients all around the world, and has sparked interest from Microsoft and Cisco. The company was opened in 2005 by Austrian businessman’s Roman Scharf and Deniel Mattes.

Talking to reporters, CEO of Telefonica Europe, Matthew Key said, “The acquisition of Jajah broadens the scope of our communications offering and opens up new capabilities in the voice communication space.”

Meanwhile, analysts at Banesto Bolsa said, “The deal is quite surprising, given that management has never spoken about this possibility.”