Voice over IP telephony service outfit Skype has outlined its plans for an initial public offering, seeking to convince investors it can make money out of what most users regard as a free service.
Luxembourg-based Skype was sold by eBay to a private-equity firm for about $2 billion last year. The firm said in a filing with the US Securities and Exchange Commission that it is seeking to sell $100 million in depository shares.
The only problem the service may have in courting investors is that is claims 560 million registered users, but only 8.1 million of them pay for the service.
Skype said it plans to use the money it raises from the IPO for "general business purposes".
According to its SEC filing, Skype expects to make money selling services like group video calling, while building up advertising and licensing deals.
From the SEC filing Skype said it generated $406.2 million of net revenue in the first six months of 2010, and its adjusted EBITDA was $115.8 million.
Its primary source of revenue to date has been from the purchase of credit for its SkypeOut product, which provides low-priced calling to landlines and mobile devices.
The firm said it intends to continue growing and diversifying its sources of revenue in four specific areas.
First, it thinks there is a "significant opportunity" to grow its user base. Second, it thinks it can generate more communications revenue from its users "by improving awareness and adoption of our paid products and introducing premium products such as group video calling".
The third tranche of its cunning plan is advertising and licensing as we mentioned, while the fourth is to broaden its user base to include more business users.