x Abu Dhabi, UAEThursday 18 January 2018

Sale of Skype puts eBay partnership out of its misery

Opinion eBay's sale of Skype brings to an end one of the world's least successful partnerships.

One of the least successful corporate partnerships of the dotcom world came to an end Tuesday, when the auction site eBay announced it had sold off the internet telephone service Skype, which it acquired in 2005. After making the US$3.1 billion (Dh11.38bn) purchase, eBay said it would combine Skype's online communications service with its own online auction business, building a powerful new platform for electronic commerce.

But it struggled to integrate Skype into its core business and failed to build significant new services based on the combined systems. It wrote down the value of the Skype unit by $900 million in 2007 and announced earlier this year that it planned to sell off Skype, or float it as a separate public company. A consortium of private-equity investors will pay $2bn for a 65 per cent stake in Skype, with eBay keeping a 35 per cent share.

Skype lets its users make phone calls through their computer and internet connections, charging a fraction of the price asked by traditional telecommunications companies. Its service is banned by the UAE Telecommunications Regulatory Authority (TRA), which insists the right to offer internet-based calling services is exclusive to the country's two licensed telecoms operators. Neither have made an internet calling service available.

The service is legally available in Bahrain, which has one of the region's most liberal telecoms regulators. Last month, the Bahraini regulator said Skype was considering making the country its Middle East headquarters. Globally, the service has more than 400 million registered users, and is adding more than 100,000 new customers every week. Its revenues jumped by 44 per cent last year, reaching $551m.