SKYPE, the company that offers free phone calls over the internet, is trying to raise cash with the help of Morgan Stanley, amid speculation that it hopes to value itself at $3 billion (£1.7 billion).

News Corporation, parent company of The Times, recently held talks about investing in Skype, which threatens to shake up the telecoms industry. However, discussions between the two are thought to have halted.

Nevertheless, Rupert Murdoch, chairman and chief executive of News Corp, is understood to have been impressed by Niklas Zennstrom, Skype’s co-founder and chief executive, and it is possible that negotiations could recommence.

Skype was advised by Morgan Stanley, suggesting that it is keen to raise money from outside investors.

Robert X. Cringely, an influential US technology columnist, said that Skype was being valued at $3 billion in the discussions with News Corp.

Skype is relatively small in commercial terms, but it hopes to be cashflow positive this year. Its technology is popular, having been downloaded 146.5 million times around the world.

News Corp’s interest in investing in Skype is less clear. However, the media group has begun to invest heavily in building up an internet presence and last month bought up MySpaces, a network of community-based websites, for $580 million.