Skype plans expansion into new services

PARIS - Internet telecoms software provider Skype expects to be cash-positive in 2005 and plans to launch video-conferencing, corporate services and a dedicated Wi-Fi phone this year, its head says.

Niklas Zennstrom, the Swedish chief executive of the privately held Luxembourg-based company, said 39 million people -- roughly the size of the population of Spain -- were using its free software to make internet-based calls worldwide at no cost.

He added the company was attracting 150,000 new clients every day without any advertising of its own.

In addition, 1.4 million of the 39 million are now using its pre-pay service to call people outside the Skype system, Zennstrom told the Reuters Telecoms, Media and Technology Summit in Paris.

Zennstrom, whose business is seen as a threat for traditional telecoms operators, said take-up of the company's pay-services was progressing as expected.

Last month, it introduced a voice mail and phone access service that allows users to be reached from a handset, fixed or mobile, as opposed to only a computer previously.

Skype is different from other internet telecoms companies such as Vonage in that it does not need to be managed by a central server.

"The model we have is to get as many people as possible to use free versions of Skype - it creates a platform for value-added services," Zennstrom said.

Zennstrom also co-founded Kazaa, the file-sharing software provider and rival of Napster that enables users to download music from the internet for free.

He said Skype was not planning to go public or sell out but did not exclude floating at some point.

Skype said it had to build its user base as quickly as possible, because rivals such as Yahoo and MSN were starting to enter its market.

"The biggest threat are the portals such as Yahoo and MSN. The threat is there, it is a gradual process," he said.

Zennstrom said the company planed to target the corporate market, given that about 30 per cent of its customer base used its software for business purposes.

He said Skype was working on a service that would allow several people from the same company to have different accounts but only one invoice.

Also this year, Skype said it would introduce its own handset that connects to Wireless LAN networks found at home, the office and hotspots in airports, hotels and railway stations. It will probably be for sale on its website.

In an effort to boost its customer base, the company will also offer software for video conferencing over the internet of better quality than existing consumer Web-based products.

Lastly, Skype said its software would be compatible with advanced mobile phones that use Symbian and Microsoft operating systems.

- REUTERS