LONDON (Reuters) - Media mogul Rupert Murdoch's News Corp. is understood to have held talks with Skype to buy the Internet telecoms software provider for around $3 billion, but the talks broke down, the British newspaper The Independent reported Sunday.

The newspaper, citing unnamed well-placed sources, said the talks between Skype Technologies and News Corp. (Research) fell apart last month, just before Murdoch's son Lachlan quit his father's empire.

The paper said privately-held Luxembourg-based Skype had denied it was for sale, but industry sources had told it that they expected the company to be taken over shortly.

Officials at News Corp. and Skype were not immediately available for comment.

Run out of London, Skype was founded by Niklas Zennstrom, a Swedish businessman who also co-founded Kazaa, the file-sharing software provider and rival of Napster that enables users to download music from the Internet for free. Skype's free software allows users to make Internet-based calls worldwide at no cost and is seen as a threat to traditional telephone companies. The company's free software is used by over 42 million users, with 150,000 new users signing up daily.