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Mobile Operators See Little Impact from Installation Fee Abolition
Although the abolition of connection fees for mobile phones will reduce operators' incomes, China's mobile telecom carriers said the impact will be minor.
China Mobile and China Unicom, which together control the market, are both listed on the New York and Hong Kong stock markets.
To smooth the fears of international investors that the scrapping of fees could seriously hurt their profits, the companies said on Tuesday revenues from this one-off connection fee were a very minor part of their incomes.
China Mobile, the dominant operator with 75 per cent of the market, said the income from connection fees only amounted to 1.7 per cent of its revenue.
China Unicom said its income would fall by 70 million yuan (US$8.5 million) in the second half of the year because of the move. But, at the same time, it will also stimulate demand in the mobile telecom market and ultimately increase revenue, said Li Zhengmao, a senior official with the company.
Both companies believe that the fee cancellation will lead to an expansion of the subscriber base and thereby contribute to overall revenue growth.
The Chinese Government abolished one-off connection fees for mobile phones on Sunday. The move received a warm welcome from customers.
New subscribers were 300 per cent above the average level on Sunday, according to figures from Beijing Mobile.
Mobile telecommunications has become the most rapidly developing sector in China's information technology industry.
China will soon become the top mobile telecom market and is expected to surpass the United States with 111 million mobile phone users by the end of May.
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