Skype, the European internet telephony provider, has expanded its relationship with Chinese portal Tom Online with the creation of a joint venture designed to expand premium services.

The joint venture, which will be 51 per cent owned by Tom, formalises a the relationship which began last year with co-branded services. Neither company disclosed terms.

Since the start of the alliance, Skype has added 3.1m registered users in China to make it the Luxembourg-based company’s third-largest market after the US and Taiwan.

Skype, which distributes complimentary software that allows free calls between computer users with broadband access, has 51m registered users, of which the company says 27m are active.

Skype claimed the joint venture would lead to the development of its premium services in China, which include SkypeOut, which allows users to make relatively low-cost calls to conventional telephones around the world. But it remains unclear when such services will overcome restrictions in place in the Chinese market.

Tom was less clear about the intentions of the joint venture. Elaine Feng, executive vice-president of sales and marketing, said the decision to proceed “demonstrated commitment” from both companies.

Rolling out Skype’s premium products would require an agreement with China’s state-run telecoms operators.

Skype currently has around about 2m users worldwide who access its premium services, which is the only way the company can currently monetise its free download model.

The company does not disclose any financial information but analysts estimate that paying Skype users may spend up to €50 per year, generating annual revenues of around €100m ($125m).