Shares in mainland mobile-phone value-added service provider jump on alliance with auction site Shares in Hong Kong-listed mainland mobile-phone value-added service provider Tom Online surged 13.91 per cent and its parent Tom Group 5.56 per cent yesterday on news that the subsidiary will create a joint venture with eBay to run the world's largest online auction site's mainland operations. In the deal due to be announced today, eBay will inject US$40 million for a 49 per cent stake in the venture and the Li Ka-shing-controlled Tom will pay about US$20 million in shares for the remaining 51 per cent, according to sources. Wang Lei-lei, the chief executive of Tom Online, is expected to head the new company. A spokesman for eBay told Reuters the company would not comment on speculation. A Tom Online spokesman also had no comment. Analysts believe the deal will help Tom Online diversify its revenue stream. More than 90 per cent of its sales were generated from mobile value-added services such as short messages and music download in the three months to September. 'Tom could leverage the alliance to strengthen its portal's traffic, bringing in more revenue, such as through advertising and reducing its reliance on mobile-related service,' a local broker's analyst said yesterday. Before being suspended yesterday afternoon pending today's announcement, shares in Tom Online were up 21 HK cents at HK$1.72 and Tom Group, which holds a 66 per cent stake in the subsidiary, rose six HK cents to HK$1.14. But for eBay - which has been struggling to catch up with domestic mainland leader Taobao.com, owned by rival Alibaba.com - joining forces with a company only tangentially involved in the internet might not be the most ideal deal. 'It would be better for eBay to partner with Tencent Holdings,' Hu Yanping, director of communication and development centre of Internet Society of China, said, noting that the mainland's largest instant messenger service provider already had an auction site, Paipai.com, that is leveraging the company's 480 million mobile users to challenge Taobao's dominance. This deal would be the second time this year that eBay has pulled back its exposure to Greater China. In June, eBay said it would form a joint venture with Taiwan's largest internet portal, PC Home Online, to operate a co-branded online auction site called Ruten.com replacing the eBay Taiwan site. According to research firm China Internet Network Information , Taobao.com holds a market share of 67.3 per cent, compared with eBay's 29.1 per cent. Taobao.com, the latecomer in the online auction market, launched in May 2003 but has more than 30 million registered users as of this month and 40 million product listings.