China Mobile Ltd is a state-owned telecom providing mobile voice and multimedia services through a nationwide mobile network. It is listed in New York and Hong Kong and is the world's largest mobile phone operator with about 655 million subscribers as of January 2012.
Industry sources doubt China Mobile will clean up at 3G spectrum auction
China Mobile is unlikely to win the third of the 3G spectrum about to be prised away from the city's four incumbent 3G mobile network operators and put up for auction, sources close to the matter say.
Local operators have also vastly inflated the cost of reassigning 3G spectrum share from one operator to another, costs which both existing network operators and consumers would bear under the government's plan, the sources said.
There have been suggestions that next year's auction was politically motivated to allow China Mobile, the world's largest wireless network operator, to enter the local 3G market.
Industry observers have speculated that the state-owned operator, with its vast capital, would push up the price of the reassigned 3G spectrum at auction, resulting in higher service fees but poorer services.
Sources rejected the idea that China Mobile would be willing to pay any cost to outbid others.
"Some say the current operators stand no chance of winning back the 3G spectrum in an auction, but we need to look at China Mobile Hong Kong's track record," one of the sources said.
"It joined the bidding but did not win any 3G spectrum in the auction in March 2011 which saw record-breaking prices."
A Plum Consulting study sponsored by the four incumbent operators - HKT's PCCW, SmarTone, CSL's One2Free and Hutchison Telecommunication's Three Hong Kong - earlier concluded that consumers would bear the brunt of HK$15.5 billion in costs.
The sources said the estimate was "misleading" as it includes the HK$6.2 billion which operators have to pay the government anyway for keeping the other two-thirds of the 3G spectrum.
It also includes costs from conflicting scenarios, such as both the HK$3.1 million spectrum utilisation fee for reassigned 3G spectrum and the HK$853 million needed for network upgrading if operators lose their existing 3G spectrum.
Sources also dispute the inclusion of HK$5.4 billion in costs customers need to pay for upgrading phones to make them 4G compatible, citing a Chinese University study last year that said most 3G users will buy a new phone within 21 months regardless of spectrum reassignment.
In response to operators' warning that call services may be disrupted when existing 3G spectrum is reassigned, the sources said the remaining 67 per cent of 3G spectrum controlled by incumbent operators is enough to maintain the quality of voice calls - which currently use only 14 per cent of the spectrum.
SmarTone reiterated the results of the Plum Consulting study while two industry sources emphasised the study was independently conducted.