Internet giant Yahoo will soon add voice-over-IP capability to its Yahoo Messenger instant messaging software, according to reports published in Newsweek and the San Jose Mercury News and its affiliates.

Yahoo said it could not confirm timing for the launch. Meanwhile, Jan Dawson, principal analyst at Ovum, said in a statement that Ovum was pre-briefed on the details of the service launch. He said the company's expected prices of 1 cent per minute to U.S. destinations and 1.9 cents per minute to 30 other countries look like a direct effort to undercut Skype.

"Yahoo has traditionally seen its major competitors in the instant messaging space as AOL and MSN, but this announcement shows that Yahoo! clearly has Skype, rather than those traditional competitors, in its sights in launching the new functionality," Dawson said. "It has made a point of ensuring that not only the headline prices but also each calling rate in the new plan undercut those of Skype."

Users of the new service reportedly will be able to select phone numbers for incoming calls in the U.S., U.K. and France for $2.99 per month or $29.90 per year. Yahoo currently has about 21 million IM users.