Opinion | China Mobile 3G stable, weighs Fetion move

China's 3G market is stabilising in terms of market share, with a more balanced field among the 3 major telcos emerging as Beijing gets set to issue 4G licences.

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A man talks on a mobile phone featuring a Chinese flag near Tiananmen Square in Beijing on November 13, 2012. Photo: AFP

Published: 12:15pm, 21 Nov 2012

The rapidly changing mobile landscape is creating some interesting challenges for China Mobile (0941.HK; NYSE: CHL), which is finally seeing its 3G market share stabilise as it reportedly may be weighing a bid to buy out the partner for its fading Fetion mobile messaging service.

The 3G news is clearly the more important in this pair of news bits, and probably reflects a combination of factors that should bode well for China Mobile as Beijing gets set to issue new 4G licences. Meanwhile, the latter rumours involving Fetion is probably more wishful thinking from Fetion's current owners, who would like to get some money for their instant messaging platform which is rapidly being overtaken by newer smartphone applications, most notably Tencent's (0700.HK) WeChat.

Let's look at the 3G picture first, which comes with the latest monthly subscriber data from China's 3 major telcos, China Mobile, China Unicom (0762.HK; NYSE: CHU) and China Telecom (0728.HK; NYSE: CHA). The latest data show China Mobile continued to lead in 3G with 37.4 per cent of the market's total 212 million users at the end of October. It was followed by Unicom with 33 per cent share, and China Telecom with 29.6 per cent.

These numbers represent a much more balanced situation among the 3 companies in 3G than we saw about 2 years ago, when China Mobile had about 45 per cent share compared to Unicom's 30 per cent and China Telecom's 25 per cent. But the rapidly shifting situation we saw for much of 2011 have slowed considerably this year, with the result that the current market share for all 3 telcos in 3G have been largely stable.

The stabilisation in market share is probably due to a number of factors, including better promotion and performance for China Mobile's 3G network, which is based on a homegrown and problem-plagued technology called TD-SCDMA. At the same time, Unicom and China Telecom have scaled back their aggressive promotion for 3G, which included generous handset subsidies that eroded their profits as they sought to rapidly gain share.

Stabilisation at these levels could be significant, because it could indicate how the market will ultimately look going forward -- a sharp contrast to the past when China Mobile controlled more than two-thirds of the country's mobile market. If that's the case, look for a much more balanced and competitive market when China ultimately issues 4G licences as soon as early next year.

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}China's 3G market is stabilising in terms of market share, with a more balanced field among the 3 major telcos emerging as Beijing gets set to issue 4G licences.

China's 3G market is stabilising in terms of market share, with a more balanced field among the 3 major telcos emerging as Beijing gets set to issue 4G licences.