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China Mobile

China Mobile stalls payments

PUBLISHED : Tuesday, 16 September, 2003, 12:00am
UPDATED : Tuesday, 16 September, 2003, 12:00am

Mobile stalls $140m in payments


China Mobile is withholding an estimated 150 million yuan (HK$140.56 million) in payments to Internet content providers to stop them providing pornography to its mobile-phone users.


Mainland newspaper 21st Century Business Herald said China's largest carrier had postponed paying Web portals Sohu.com, Sina.com and NetEase.com their share of fees for content downloads pending an investigation after discovering some services providers had a commercial relationship with pornographic websites. An industry source confirmed yesterday China Mobile had delayed the payments over the past two months.


'They did recognise the payments, it's just that they will delay paying us back,' said an executive at one service provider which does business with China Mobile.


Exact figures on how much was being withheld by China Mobile were unavailable. One indicator would be the size of accounts receivable at the portals when they reported third-quarter earnings.


The newspaper said the mobile carrier owed about 50 million to 60 million yuan to NetEase, more than 40 million yuan to Sohu and about 50 million yuan to Sina.


Tom.com said in a recent announcement a major customer 'engaged in providing mobile communications and related services' on the mainland owed the company $48.53 million in trade receivables at the end of July. The company was understood to be China Mobile.


China Mobile had issued warnings to its more than 100 wireless content providers, saying it was concerned about pornography being distributed to customers and asking content providers to clean up their act.


'It is a slap on the wrist ... for straying outside the lines of their business model. This is fair enough,' an executive at another affected company said.


'It's just a warning to show that they are monitoring the content, and they are taking this issue seriously.'


The executive added China Mobile's move was an attempt to bring the service providers in line. 'Of course, once they hold the payment, everybody will stop doing it.'


Sina declined to comment on the news report but said it had a very good relationship with China Mobile. NetEase executives were in Taipei for a meeting and unable to comment, while Sohu did not respond to inquiries.


A spokesman for China Mobile in Hong Kong took issue with the report, denying 'any improper postponement of payments' to its service providers.


'The company has always carried out settlement with various service providers in accordance with the terms of the relevant agreements and regulations,' the spokesman said.


A source close to the carrier said contract terms gave China Mobile leeway to not recognise payments if they were for content which violated guidelines.