Microsoft closes in on £5bn Skype deal

The proposed acquisition would be the biggest in Microsoft’s 36-year history and could close as early as today, the Wall Street Journal reported.

Skype, based and founded in Luxembourg, allows its 663 million users to make voice or video calls over the internet and is privately-owned by among others auction site eBay.

The deal would mark another move by Microsoft to take on internet rivals such as Google and Facebook while the reported value would see the deal overtake Microsoft’s successful bid for online advertising agency aQuantive in 2007 for 6 billion US dollars (£3.6 billion).

A spokeswoman for Microsoft said the company “does not comment on rumour or speculation”, while Skype was not immediately available for comment.

Skype is popular for its free calling services, which can be made to other Skype users, and has around 8.8 million paying customers per month.

The amount of call time on Skype’s network totalled 207 billion minutes last year, according to regulatory documents.

The popularity of the free calls has made it difficult for the company to make money since it was founded by entrepreneurs Niklas Sennstrom and Janus Friis.

City analysts have questioned the size of the rumoured bid price as the company made a 7 million US dollars (£4.2 million) loss last year on revenues of 860 million US dollars (£525 million).

A Skype sale has been speculated upon for weeks, with Google and Facebook also rumoured to be interested.

Skype was bought by eBay for 2.6 billion US dollars (£1.5 billion) in 2005 but it sold a 70% stake to private equity firms Silver Lake and Andreessen Horowitz for 2 billion US dollars (£1.2 billion).

Other major shareholders include tech-firm Joltid and the Canada Pension Plan Investment Board.