Skype to sell first cell phone through 3: source

NEW YORK (Reuters) - EBay Inc's (EBAY.O: Quote, Profile, Research, Stock Buzz) Skype is expected to announce a deal soon with wireless service provider 3 to sell the Internet telephony company's first mobile phone, a person familiar with the matter said on Friday.

Skype plans to introduce the phone in the countries where 3 operates, the source said, without giving a timeframe or saying where the phone would be sold first.

3 is the mobile venture of Hong Kong's Hutchison Whampoa Ltd (0013.HK: Quote, Profile, Research, Stock Buzz) and operates in Australia, Hong Kong, Indonesia, Austria, Denmark, Italy, Ireland, Sweden and United Kingdom.

Skype spokesman Chaim Haas confirmed that 3 and Skype "are working together on a new product to make Skype completely mobile," but declined to give full details.

Skype is expected to reveal its plans in the last week of October, the source said.

The company's software, which allows users to make free phone calls over the Internet to other Skype users, already works on some phones sold by 3.

But the new phone is the first that Skype is having manufactured itself, and will be easier to use than existing cell phone models that support Skype, the source said.

According to its Web site, 3 has more than 10 million customers including more than 3.5 million in the United Kingdom. Representatives for 3 UK could not be reached for comment.

There are about 246 million registered Skype customers around the world, with about 10 million people using the service at any given moment, Haas said.