Skype expects to be in profit this year

Niklas Zennstrom told a European audience last week that 39 million people worldwide use the Skype system . Picture / Reuters

PARIS - Internet telecommunications software provider Skype expects to see a profit this year and plans to launch video-conferencing, corporate services and a dedicated Wi-Fi phone, says its chief executive.

Niklas Zennstrom, the Swedish head of the private Luxembourg company, said 39 million people were using its free software to make internet-based calls worldwide at no cost.

An estimated 40,000 of those are New Zealanders.

He said the company was attracting 150,000 new clients a day without advertising.

In addition, 1.4 million of those 39 million were now using Skype's pre-pay service to call people outside the company's system, Zennstrom told a telecommunications conference in Paris.

Zennstrom, whose business is worrying traditional telco firms - Telecom has called it a "competitive threat" - said takeup of the company's pay-services was progressing as expected.

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

"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.

Although subscribers paid just a few dollars, the revenue would help the two-year-old startup to become profitable this year, he said.

Skype said in October that it might become cash-flow positive this year, but stopped short of saying that was its forecast.

Zennstrom would not give any details on revenue or profit.

He said that of the 1.7 euro cents (3c) a minute the company charged for calling Europe or the United States, about 1c covered the cost of the call and an undisclosed amount was related to payment processing.

Skype would not need more funding after a US$19 million ($26.5 million) cash injection in January last year, which lifted its total fundraising to US$24 million, said the 38-year-old entrepreneur.

"We don't need to raise any more money. Maybe we will raise money to expand faster into other areas."

Zennstrom also co-founded Kazaa, the file-sharing software.

He said Skype was not planning to go public or sell out, but did not exclude a share float at some point.

"We have institutional investors in this company, and employees have stock, and everyone is looking at some point to get some liquidity. We don't exclude doing [a float], but we do not have any plans yet."

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

The company planned 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 firm to have one invoice for several accounts.

Also this year, Skype said it would introduce its own handset that connects to wireless networks at home, the office and hotspots in airports, hotels and railway stations. It would probably be sold via its website.

In an effort to boost its customer base, the firm said it would also offer software for video-conferencing over the internet of better quality than existing web-based products.

Skype said its software would be compatible with cellphones using Symbian and Microsoft operating systems.

- REUTERS