Carrier bets on data services

China Mobile hopes to make up for lost revenue from rise of chat apps

China Mobile Ltd, the world's biggest telecom carrier by subscribers, plans to boost its data services to make up for a drop in revenue from short message services caused by the rise of chat applications.

China Mobile and carriers across the world are being severely challenged by thriving instant messaging applications on mobile phones, such as WeChat and Whatsapp, which allow users to send text messages, images and voice clips through mobile networks.

An increasing number of smartphone users are choosing to use the applications over the carriers' short message and voice services to communicate with friends and family members as they are much cheaper.

It costs at least 100 yuan ($15.95) to send 1,000 text messages through the carriers' services, but only 3 to 5 yuan to send the same number of messages using the applications.

Xi Guohua, China Mobile's chairman, told a press conference in Hong Kong on Thursday that the company's strategy to cope with the challenge posed by the chat applications is to step up its data services, partly through building its new 4G network, in the hope that a rise in data services revenue will make up for the inevitable loss in the traditional SMS and voice services.

"Strengthening data services is our answer to instant messaging," said Xi, after remarking that China Mobile's net profit grew just 2.7 percent in 2012 to 129.3 billion yuan, on a 6.1 percent increase in revenue to 560.4 billion yuan.

Revenue from short message and multimedia message services dropped about 5 percent to 44.2 billion yuan. Revenue from voice services, mostly phone calls, was almost stagnant, increasing just 1.1 percent year-on-year to 368 billion yuan.

The weakness in the two traditional services was mostly compensated by a surge in revenue from wireless data traffic, which jumped 53.6 percent to 68.26 billion yuan. Wireless data traffic volume grew 187.6 percent to 1,039 billion megabytes, a clear sign that China Mobile's data services are taking off.

We recommend:
MediaMarkt closes all Chinese stores	Top 10 Chinese cities with highest urbanization quality	Chinese investment in Africa: Digging deeper
E-commerce changes commercial activities	Nation may limit gold to 2% of foreign reserves	Lu Zhaoxi named Alibaba's new CEO