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TOM may lose Skype rights in China

Poor performance of Skype in China may mean current operator TOM might lose its rights, with Redmond looking to fold service within its existing products, report says.
Written by Jamie Yap, Contributor

Chinese wireless provider TOM Online may lose the local operating rights for Skype, with the latter's new parent company Microsoft planning to integrate the service into its own product portfolio.

Citing an unnamed industry source, Marbridge Daily reported on Thursday that TOM Online, which is owned by the Chinese conglomerate TOM Group, had been unable to renew its contract with U.S. VoIP (voice-over-Internet-Protocol) service provider last year. It is currently operating the TOM-Skype joint venture in China beyond the end of its previous agreement, it added.

With the relatively "dismal" performance of Skype in China, Microsoft--which bought Skype in May 2011--plans to integrate it into its other services. This means TOM could lose the operating rights for Skype in China, the report said.

Wang Zhiyong, the TOM Online executive in charge of Skype operations, said he was unable to comment as Microsoft keeps a tight rein on discussions when contacted by the report. Li Xiuli, TOM Online's marketing director for online value-added services, added she had not been informed of the matter.

Company CEO Yang Guomeng is reportedly in favor of dispensing with Skype while Executive Vice President Feng Jueli wants to keep the service, the sources added.

Marbridge Daily said other industry sources revealed TOM was not able to get authorization with handset manufacturers for Skype to be preinstalled in phones. It added that several former TOM employees said the company had begun "transformative" layoff of staff, affecting more than 100 people, with those working on Skype making up a large proportion.

TOM confirmed that talks to renew its contract with Skype are still ongoing, while the reported job cuts are part of normal restructuring and will not affect more than some 5 percent of its workforce, it reported.


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