China Mobile creates dedicated unit to grow its internet services revenues  

Many large mobile operators are looking to internet services to maintain their growth levels as traditional voice and data access revenues come under intense pressure. China Mobile has set up a new subsidiary, called China Mobile Internet Company (CMIC) to help diversify its business after a year which saw its profits tumble and rising competition from newly-approved MVNOs.

Despite huge ongoing investment in LTE, the world’s largest MNO by subscribers has struggled to turn that into improved financial results. Now it will create new internet products for consumers and enterprises, though it will face some of the challenges experienced by its peers, which have attempted similar moves in other countries. While China Mobile, like many major Asian operators, has higher brand recognition and platform control than MNOs in Europe, it has been losing some of that to over-the-top giants like Baidu and Alibaba, especially since the advent of MVNOs in China.

The new subsidiary will be headquartered in Guangzhou, and was incorporated on October 30, new filings revealed this week, with a registered capital of CNY3bn ($463m). Its goal, according to its parent’s official statement, is no less than to be a “leader in mobile internet” and to “help China Mobile to achieve strategic transformation”.

The unit already has a customer base of 450m, said China Mobile, an annual revenue of several billion yuan from existing services which will now be housed in a dedicated division. These include the Fexion mobile instant messaging service, converged communications, cloud offerings and the 139 email application. To build on that core base, the company is working with over 100,000 individual and corporate developers and aggregators, it said, to create new internet products. These include the big names which have started to disrupt the MNO’s model just as in other countries, including Tencent and Baidu.

In future, China Mobile may emulate companies like Telstra of Australia, Orange of France and South Korea Telecom by offering some of its services separately from its own network, in order to play a role in the over-the-top space and to reach users outside China, in an OTT way or via its partnerships with other cellcos.