China Mobile

China Mobile to branch into internet business

Telecoms giant confirms forming internet venture amid saturated mobile-phone market

PUBLISHED : Thursday, 06 December, 2012, 12:00am
UPDATED : Thursday, 06 December, 2012, 3:16am

China Mobile, the world's biggest wireless network operator, has confirmed it is working on setting up an internet company, ending months of speculation.

Chief executive Li Yue verified the move in Guangzhou yesterday, but did not elaborate.

The traditional mobile-telephone market is reaching saturation on the mainland with more than one billion subscribers, according to official statistics.

Internet companies are nibbling away at the market of telecommunications operators because some services China Mobile offers can be replaced by internet technology. For example, online mobile messaging has made the short message service costly and old-fashioned.

Independent industry analyst Xiang Ligang said the move showed China Mobile's determination to tap into the fast-growing mobile internet industry.

"Mobile internet is the trend and will bring lots of benefits for everyone involved," Xiang said. "But I'm not so sure about China Mobile's adventure here."

He said the major advantage China Mobile had was the huge user pool it had gathered from its business. However, it would be a tough task for a telecommunications operator to adjust itself to the internet business. "You have the genes in you [to run a telecoms business] that won't change," he said.

China Mobile had 698.5 million subscribers at the end of September - more than twice the population of the United States.

You Tianyu, a senior analyst at iResearch, said the company could transform subscribers into users of mobile internet services, especially in the fields of music-sharing, online games and mobile reading.

"In fact, China Mobile has launched some mobile services in the past several years, for example Feixin, a mobile instant messaging service," You said.

He said the carrier had also set up a base in Guangzhou to develop internet products, with other bases around the country. It has been reported that the China Mobile internet company will include the operator's internet bases. Currently, the bases operate under the provincial offices of China Mobile.