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Tencent says WeChat still free

By Zhang Ye (Global Times)

08:20, March 15, 2013

Tencent Technology Co, China's largest Internet company by market value, Thursday confirmed that users of its voice messaging application WeChat would continue to enjoy free service, in response to speculation that Tencent might start charging fees under pressure from China's three telecom operators.

"Our WeChat instant messaging service is still free to users," a public relations representative told the Global Times Thursday, but would not comment on how long that will last.

Since the three telecom carriers will likely charge Tencent additional fees for the large data bandwidth required by its voice messaging service, the Internet company may have to transfer the increased costs to consumers by charging them fees, You Tianyu, an industry analyst with iResearch, told the Global Times Thursday.

The Ministry of Industry and Information Technology (MIIT) Monday convened with China Mobile, China Telecom and China Unicom to discuss ways of charging Internet service providers such as WeChat, which are out of the network operators' control, domestic news portal reported Thursday, citing an unnamed source close to the telecom carriers.

They plan to charge Tencent bandwidth fees on a per-WeChat-user basis, which will cost the company more than it is paying at present, the source said.

WeChat, which allows users to send texts and voice messages and even have Wi-Fi video chats, has attracted 300 million subscribers within two years, Tencent said on its Sina Weibo account on January 15.

This poses a huge challenge to traditional telecom carriers, as the country's largest mobile carrier China Mobile had 710 million users by the end of 2012, while China Unicom had around 242 million subscribers by the end of January, according to the companies' financial reports.

The number of China Telecom users reached 158 million by November 2012.

Li Yue, president of China Mobile, admitted at a forum in December 2012 that Internet services like WeChat are hard to compete with in terms of SMS activity, voice services and international telephone calls.

Hong Kong-listed China Mobile Thursday reported a 2.7 percent year-on-year increase in net profits for 2012, which is less than a half of the yearly growth rate of 6.3 percent in 2011.

A total of 897.3 billion messages were sent via the three telecom carriers during 2012, a 2.1 percent increase year-on-year but a four-year low in terms of growth rate, while the number of mobile phone subscribers rose by some 11 percent in 2012 over 2011, according to MIIT data released on January 24.

It is necessary for telecom operators to cope with the threat caused by the rise of WeChat, said You, adding that win-win cooperation would probably be a good choice for both sides.

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