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Skype’s CEO Lays Groundwork For IPO

Set to go public later this year, the upstart Internet calling service is expanding its services and multiplying partnerships across platforms.


By Nicolas Rauline

Gone are the days when Skype was just a feisty start-up, out to steal calling minutes from phone operators. The cheap and even free call specialist now represents 20% of international connections, up from 12% last year. It has 145 million monthly users, 7% of them using its paid-for "premium" services.

"During rush hour yesterday, at 7:30pm GMT, more than 27 million people were connected at the same time," Skype CEO Tony Bates told Les Echos. "That's up from 15 million a year ago."

The company created in 2003 is now a major communications player and could raise $100 million when it is quoted during the second semester of 2011. And in the meantime, it is establishing partnerships galore.

Monday in Barcelona, the group announced a deal with several Wi-Fi operators around the world, including BT Openzone in Great Britain and FON, for a total of more than 500,000 access points. Since the company already charges for some calls (mostly those that don't involve two Skype users) Skype credits will be convertible to pay for Wi-Fi connection. "Instead of going through several different operators, people who travel will be able to use our online wallet," says Bates.

Skype is also working on linking up directly with cell phone operators. It has already signed deals with Verizon Wireless in the US, Hutchison 3 in Europe and KDDI in Japan. This week, it made an offer to operators from emerging countries, where high-speed 3G coverage is still rare. Skype's technology is optimized in order to consume the least amount of battery and bandwidth resources.

In France, the group still hasn't reached agreements with operators, although it is in talks with Free. Orange and SFR, the two French heavyweights, have built long distance links starting in France, giving them the means to reduce the prices of their international calls. They also have their own mobile voice system on the Internet for some of their clients. And millions of French people can already call abroad for free through their "boxes', the French packs which link internet, phone and cable TV through one system.

Bates hopes to come to an agreement: "To reach a billion people on the planet we have to work with these operators, which are an important component of the ecosystem. But in the future, we'll have to give more than just voice if we want to keep charging for international calls."

Skype is banking on video, because "it will become the norm." Video connections already represent 40% of the 200 billion minutes of international calls made through Skype last year. In December, the group launched an application to make video calls through the iPhone. "We had a million calls on the first day and 10 million downloads in two weeks," says Bates. This service is free, but you have to pay $8.99 a month to be able to talk to multiple people through videoconference. Skype is also hoping to diversify its revenues with services like call storing on the Internet.

With reporting Solveig Godeluck/Barcelona

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