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Skype Offers New Service to Cell Phones, Landlines

Reuters
Monday, 21 Apr 2008 | 11:37 AM ET

Internet calling company Skype said it would offer an unlimited long-distance calling service for customers who want to reach friends and family who don't have computers or Internet access.

Skype, owned by eBay, is one of the best-known Internet calling firms which allow free calls among Internet users.

CNBC.com

Users pay to call landlines and mobile phones, but the fee is often lower than standard long-distance services.

The company said it was offering unlimited calls to landline and cell phones in the U.S. and Canada for $2.95 a month.

It also offers unlimited calls to phones in 34 countries including Australia, China, Germany, Japan and the United Kingdom, for $9.95 per month, it said.

Skype users in Europe can choose from unlimited plans ranging from 2.95 euros to 8.95 euros a month depending on the destination of calls, the company said.

Skype is one of eBay's biggest divisions.

The parent firm took a $1.4 billion write-down off Skype's $4.3 billion price tag last year due to problems in making money from largely free Internet voice communications.

Skype's new chief executive, Josh Silverman, told Reuters in an interview on Friday that he was pleased with the support it has received from eBay, and brushed off media reports that Skype might be put up for sale.

"I am delighted with the support we get from eBay," Josh Silverman, who became chief executive of Skype last month, told Reuters in an interview on Friday.

The Financial Times reported last week that eBay would think about selling Skype at the end of the year if it could not find ways to make the service aid its main online auction business.

EBay's Chief Executive John Donahoe was quoted in an FT interview as saying: "If the synergies are strong, we'll keep it in our portfolio. If not, we'll reassess it."

The company had intended for the Skype acquisition to bolster its online business through call-billing payment tie-ins between Skype and eBay's PayPal online payments service, but the union did not live up to expectations.

Silverman, who helped build eBay's classified ad business in Europe, said eBay management "has been extremely suportive and excited with our business."

Asked to comment on the media report, Silverman said: "That wouldn't be my interpretation of what John said."

He added that Skype -- which changed the way many people make calls and whose name became a byword for Internet telephony -- was working to reach its full potential.

"Synergies are not an end in and of itself, just a means to help us achieve our full potential," Silverman said, but declined to be more precise.

Skype, along with PayPal, are two of eBay's biggest divisions, but while PayPal has steadily contributed to earnings growth, eBay took a $1.4 billion write-down off Skype's $4.3 billion price tag last year to reflect problems in making money from largely free Internet voice communications.

New Flat Rates

Skype hopes to attract more users with the launch on Monday of flat rates for callers who want to reach friends and family who do not have computers.

"The price is so small it's trivial," Silverman said referring to monthly rates that range from 2.95 euros to 8.95 euros ($4.67 to $14.17) depending on the subscription chosen.

It is the first time Skype has offered a single, monthly rate for international calling to landline numbers in 34 countries, Silverman said.

He declined to elaborate on revenue targets, saying only the goal was to "increase Skype's relevance."

"We do not make forecasts," Silverman said, adding only that Skype wanted to increase user numbers which were currently at 309 million.

Silverman replaced Michael van Swaaij, who was appointed interim CEO in October.

Skype was founded by Swedish entrepreneurs Niklas Zennstrom and Janus Friis. The two stepped down as executives in October.

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