TOM Online Inc., China's leading wireless Internet company, and Skype, the pioneering global Internet communications company which makes it possible for anyone with an Internet connection to make free high-quality phone calls to anyone in the world, today announced they have signed an agreement to establish a joint venture to further cement their strategic partnership in China's rapidly growing online communication market.

Working together will allow an even deeper level of integration between Skype's award winning software and services with TOM Online's over 70 mn wireless Internet users. The joint venture will leverage TOM Online's mobile and Skype's Internet communications expertise to further develop advanced communication and community features for mobile Internet platforms.

Skype and Tom Online launched their relationship in November 2004 with a customised simplified Chinese version of Skype, which was co-developed by the companies. The co-branded software has attracted about 3.4 million registered users to date, making China one of Skype's top three markets. The latest version incorporates a TOM Online tab, which makes TOM Online's leading wireless products and the contents of its popular media portal directly accessible from within the Skype experience.

The joint venture holding structure will be 51% and 49% by TOM Online and Skype, respectively. Under the agreement, this joint venture company will develop, customise and distribute a simplified Chinese version of the Skype software and premium services to Internet users and service providers in China.

"Tom Online have already been a wonderful partner to Skype and we're delighted to now take our relationship to the next level through the formation of this joint venture. By uniting Skype's market-leading global Internet communications platform with TOM Online's wireless leadership and understanding of the needs of Chinese market we believe we have a powerful mix of skills in place to bring the Skype experience to millions of Internet users," said Niklas Zennstrom, Chief Executive Officer and Co-Founder of
Skype.

"In less than a year since beginning our cooperation with Skype, we have seen robust growth in user numbers. It indicates Chinese Internet users' readiness to take advantage of the latest communication technologies available," said Wang Lei Lei, Chief Executive Officer and an Executive Director of TOM Online. "The signing of this joint venture agreement is a testament to both companies' confidence in the tremendous business potential of the joint venture, given Skype's unrivalled technology strength and TOM Online's unique knowledge of China's market."

China is the world's largest mobile phone market by users with more than 360 million subscribers at the end of June, 2005. Its number of Internet users is expected to grow to approximately 154 million by 2007, representing a compound annual growth rate of 18% since 2003, according to technology consultancy IDC. In addition, the demand for broadband grew by more than 140% to almost 43 million users in January 2005 from a year earlier. With the convergence of mobile and Internet technologies, Skype and Tom Online's joint venture is uniquely positioned to drive even more broadband uptake and capture the growth opportunities in China's substantial communications market, which was valued at RMB 572.6 billion (or about US$70.8 billion) for the year 2004, according to government statistics. Terms of the deal were not disclosed.

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