For a man betting $100 million (€83.8 million) that sponsorship of the World Cup will make his firm, if not a household name, then at least one at the forefront of business people's minds, Don Peterson seems perfectly at ease.

Wearing an open necked shirt in a sweltering briefing room, the chairman and chief executive of Avaya is frank with journalists about the costs to the firm of joining the likes of McDonalds, Gillette and Budweiser in becoming an official partner of the World Cup which will be held in Germany next summer.

"We're spending $50 million on our relationship with Fifa and will spend a similar amount in supporting activities to get the value to our customers," says Peterson. "We decided that if they wanted X we needed to be prepared to spend 2X."

US communications and technology company Lucent spun off the loss-making unit which sold directly to business customers as Avaya in 2000. Avaya now concentrates on selling technology to contact and call centres and providing hardware and software for the emerging Internet Protocol (IP) telephony market.

The company has subsequently invested heavily in advertising in the US but the World Cup sponsorship is key to building its brand in Europe and Latin America.

"We were looking for something that was simple... you do it once and it would work in a lot of places. As we looked for those things, someone came up with the idea of a World Cup sponsorship," says Peterson.

Despite the large sums involved, Avaya shareholders must be confident that it is a good move. After all, Peterson has overseen a staggering turn-around in Avaya's finances.

In 2000 the company was saddled with debt of $395 million and had negative revenues of $967 million. In 2004 it reported revenues of $323 million and had more than $1 billion in the bank at the end of the year.

According to various independent surveys Avaya is now market leader worldwide for call centres, voice messaging and IP telephony.

The crucial market for Avaya is IP telephony - the new breed of telephony technology. IP systems treat voice traffic just like data, breaking the stream up into smaller packets which are then routed by the most efficient route and reassembled at the other end.

Service providers like Skype are bringing voice over IP (VoIP) systems to the masses by offering low-cost calling from a PC to a landline and free calls between Skype users.

Business users are also seeing the benefits of VoIP, such as only needing one network for voice and data, simplified management and no-cost calling between branches. In fact this year more IP telephony phones will be shipped (24.6 million) than those based on the older TDM technology (22.3 million).

Avaya currently has a lead but it faces direct competition from the likes of Cisco, 3Com and Nortel Networks. It also needs to manage its relationships with major technology companies like IBM and Microsoft who are keen to support IP telephony.

Avaya's Irish presence was boosted significantly last year with the €85.7 million acquisition of Spectel. The business has been combined with Avaya's Irish sales operation. The former Spectel team is now working on integrating its products with Avaya partner Polycom to provide low cost ad-hoc video conferencing.

"If we can make it work as easily as audio conferencing, effectively everyone with a phone will have access to dial-up six-party video conferencing and if you put in the Spectel system essentially you'll have free conferencing except for your connections," explains Peterson. "These are huge savings for many people."

While Peterson can wax at length about the benefits to businesses, he is also realistic about the impact the new technology has for traditional providers and the politicians who have to legislate for the sector. "I think they are scared to death," says Peterson. "Nobody has developed a billing structure that replaces the revenue."

"Most of the regulation of the internet is screwed up, to use the American phrase. It lives on the telephony infrastructure - if the telephone companies weren't there you wouldn't have an internet and yet it's free. So we are consuming our capital plant. That's only going to last so long. In the US the politicians have been happy to ignore that. In other countries they tax it because it's a phone call, they don't treat it specially because it is an IP phone."

He believes this attitude has come home to roost in the US, where some IP telephony users were unable to summon the emergency services as VoIP providers had no obligation to provide such a service.

"There's a $3 billion industry for putting custom tones on your cell phone. But we won't pay for the infrastructure that runs the internet."