Tom Online / Skype Agreement (TOMO)

As mentioned earlier today Chinese wireless value added service provider Tom Online (ticker: TOMO) announced a partnership with (privately-held) instant messaging and voice-over-IP company Skype.

Agreement. The joint venture will build on the relationship the two companies forged in November 2004 to develop and distribute a simplified Chinese version of Skype software. The companies will also offer fee-based premium services.

Broadband Growth. This agreement with Tom Online allows Skype to gain traction in China where broadband growth is increasing fast. According to the Ministry of Information Industry (MII) households with broadband access rose 27.3% this year through the month of June to reach 31.65 million.

Premium Services. The Chinese government only allows voice-over-IP services between PC users. Premium services such as SkypeOut (allows users to call fixed-line numbers) and SkypeIn (allows fixed-line callers to make calls to Skype users) are not allowed and would require permission.

Comment: Tom Online is a favorite of David Riedel who was recently featured in Barron's.

TOMO chart.