eBay has agreed a deal to sell internet phone company Skype.

Online auction firm eBay has announced it is to sell internet phone company Skype in a deal valuing the business at $2.75 billion (£1.7bn).

It will be taken over by a group of investors lead by Silver Lake including Index Ventures, Andreessen Horowitz and the Canada Pension Plan (CPP) Investment Board.

Skype is an internet-based phone company that allows people to make free voice and video calls to other Skype users worldwide. There is also a “Skype-Out” function whereby users can buy credit and use Skype to make low-cost calls to landlines or mobile phones.

eBay will retain a 35% stake in the firm it bought in 2005 for $2.6bn.

Upon completion of the sale, eBay will receive approximately $1.9bn in cash and a note worth $125 million to be paid at a later date.

eBay announced plans in April this year to separate Skype from its core business and list its shares in 2010, which many analysts perceived to be a sign it intended to sell up.

John Donahoe, eBay President and CEO, said: “Skype is a strong standalone business, but it does not have synergies with our e-commerce and online payments businesses.

“As a separate company, we believe that Skype will have the focus required to compete effectively in online voice and video communications and accelerate its growth momentum.”

In 2008, Skype had a total of 405 million registered users and the company’s revenues increased by 44% to $551m.