eBay has agreed to buy internet telephony startup Skype and gain the ability to add free web-based telephone calls to its online auctions and so fuel international growth (which is outpacing domestic growth), reports Reuters. eBay will pay $1.3 billion in cash and $1.3 billion in stock and could pay up to an additional $1.5 billion by 2008 or 2009 if financial targets are met - for a potential deal value of up to $4.1 billion.

"Once we integrate communications into e-commerce, we think that (Skype) is going to remove considerable friction" from the buying and selling process, eBay Chief Financial Officer Rajiv Dutta said.

Skype has attracted 54 million members to its free internet-based voice service in the last two year and could double in size within a year. Nearly half its users live in Europe, and a quarter are in Asia. It expects revenues of $60 million this year and more than $200 million in 2006.

To bring eBay buyers and sellers closer together, eBay will encourage merchant sites to use Skype software to allow customers with sales questions to click to talk to a customer service agent. eBay and Skype executives said click-to-call services to convert shoppers into buyers is far more lucrative than advertising.

Skype also plans to add video calling and other features to its software. The telephony market is being targeted by the likes of Yahoo, Google and Microsoft.