Bottom line: China Mobile’s retirement of its Internet-based texting and video services reflect its inability to compete with private providers of such services, and underscores its growing position as a slow-growth network operator.
China Mobile shutters Internet text, video services
In a move that was long overdue, leading wireless carrier China Mobile (HKEx: 941; NYSE: CHL) has thrown up the white flag with a symbolic surrender to WeChat, Youku and the many other private companies that have steadily stolen its new business opportunities. In this case the surrender comes in the form of formal retirements for China Mobile’s Internet-based Fetion texting service, and also its lesser known mobile video product.
Fetion was once hugely popular in China, allowing users to send SMS text messages for free by routing them over the Internet. China Mobile was an early innovator in creating that kind of “over the top” (OTT) service that took advantage of the mobile Internet. But more recently it has rapidly lost that position to more nimble private companies like Tencent (HKEx: 700) and Youku. Read Full Post…
The following press releases and news reports about China companies were carried on May 11. To view a full article or story, click on the link next to the headline.
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Some 4 years after disappearing from the headlines, a fourth telecoms carrier formed from China’s numerous regional cable TV companies is finally making a formal debut with its receipt of an official license to offer telecoms services. That means the new company, China Broadcasting Network Co (CBN), could theoretically shake up China’s laggard telecoms services industry that has been monopolized for years by the trio of state-run giants, China Mobile (HKEx: 941; NYSE: CHL), China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA).
But anyone hoping for big change shouldn’t get too excited, since CBN is cut from the same cloth as the existing 3 state-run telcos. What’s more, the new company is likely to be plagued with internal power struggles, at least initially, since it was created from a patchwork of provincial cable TV companies whose former stakeholders may still try to exert some influence. Read Full Post…
Bottom line: Beijing should take more aggressive steps to ensure true competition between China’s 3 telcos, to prevent collusion like their current resistance to ending domestic roaming fees.
China telcos resist end to roaming fees
The latest sign of collusion in China’s telecoms sector was in the headlines last week, as the nation’s big 3 carriers appeared to band together to counter new calls for an end to domestic roaming charges. A number of arguments were put forth for maintaining such fees, but the bottom line is that carrier costs of providing such service are negligible and the fees themselves remain an important revenue source.
The US market, which is most similar to China, eliminated such fees more than a decade ago due to competition between 4 major carriers that emerged in the 1990s. But China’s carriers, while competitive in some areas, appear to be acting together in anti-competitive fashion to resist the change, a common occurrence due to close ties between the companies. Read Full Post…
Bottom line: China Mobile’s latest results show that its business is starting to pick up after years of stagnation, which could provide some upside for its stock over the next 1-2 years as it steals share from its two smaller rivals.
China Mobile posts solid results
Profit growth of 0.5 percent may not sound like anything to boast about, but at least it’s growth and not contraction. That’s the message that telecoms giant China Mobile (HKEx: 941; NYSE: CHL) hopes to send with its latest results, which show the company returned to profit growth in the first quarter of this year after a sharp drop in last year’s fourth quarter.
China Mobile’s return to profit gains was fueled by strong revenue growth, as the company took advantage of its early entry to 4G and aggressive promotions to build up its customer base and steal market share from its 2 smaller rivals, China Unicom (HKEx: 763; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: 728). The trend certainly looks positive for China’s largest telco, since its profit growth is likely to accelerate now that the most aggressive spending on its new 4G network is in the past. Read Full Post…
Bottom line: The naming of a technocrat as chairman of China Telecom ends speculation of an industry shake-up, and indicates China’s big 3 telcos will continue as big state-owned companies that lag their global peers.
Beijing continues old ways with new China Telecom chief
It’s been quite a few months since I last wrote about China’s 3 big telcos, so the naming of a new chairman of China Telecom (HKEx: 728; NYSE: CHA) seems like a good chance to revisit this lifeless trio that were a hot topic last year due to rumors of an industry shakeup. The naming of a new technocrat as head of the carrier implies that it’s business-as-usual at China Telecom and for the broader trio of state-run caarriers, and that a shake-up that many of us were hoping for isn’t coming.
The new chairman, Yang Jie, will assume the helm of China Telecom 4 months after his predecessor, Chang Xiaobing, abruptly stepped down last year due to a corruption probe against him. Chang himself was previously chairman of China Telecom rival China Unicom (HKEx: 763; NYSE: CHU), but switched places with China Telecom’s chief Wang Xiaochu in the middle of last year in a characteristic bureaucratic reshuffling by Beijing. Read Full Post…
Bottom line: China’s anti-trust regulators need to wake up to the growing clout of big nmes like Tencent and Ctrip in emerging industries and move more aggressively to stop them from engaging in anti-competitive behavior.
iKang accuses rival of monopoly behavior
A war of words broke out last week between two of China’s largest private clinic operators, as one accused the other of violating the nation’s anti-monopoly laws with a recent purchase. The case pitting iKang (Nasdaq: KANG) against larger rival Health 100 (Shenzhen: 002044) casts a spotlight on growing concerns about anti-competitive behavior in China’s vibrant private sector, which boasts many companies whose size is already approaching some of the nation’s largest state-run giants.
And yet despite the size of these companies and increasing cases of anti-competitive behavior, China’s anti-monopoly regulators have largely ignored the domestic private sector, focusing instead on big foreign and state-run firms. The validity of iKang’s accusations against Health 100 still need to be proven, since China’s private clinic sector is still very young and may not have the scale to qualify for monopoly consideration. Read Full Post…
Bottom line: A corruption probe against the head of Unicom could be the latest signal that Beijing plans to merge the company with China Telecom in the next 2 years to create a serious rival to China Mobile.
Corruption probe nets Unicom chief
China’s 2-year-old corruption crackdown has finally made the inevitable move into the nation’s telecoms sector, with word that the newly named head of Chinia Unicom(HKEx: 763; NYSE: CHU) is being probed for corruption. But while many are speculating that Chang Xiaobing is just the latest victim in the anti-corruption campaign, the timing of his downfall could also be the newest signal of a coming overhaul for China’s big state-run 3 telcos.
Industry watchers will recall that Chang assumed his position at the head of Unicom just 4 months ago, in a slightly bizarre but also somewhat typical case that saw him swap positions with the then-head of Unicom who is now the chief of rival China Telecom (HKEx: 728; NYSE: CHA). (previous post) That led to buzz that the telecoms regulator might be preparing the consolidate Unicom and China Telecom into a single company, a move that would have reduced the current field of 3 major telcos to just 2. Read Full Post…
Bottom line: Unicom and China Telecom are likely to strike a major new network sharing agreement next year, and could ultimately merge in 2017 if several pilot programs to liberalize China’s telecoms services market gain momentum.
Unicom studies resource sharing
Wireless carrier Unicom (HKEx: 763; NYSE: CHU) is giving the clearest signal yet of a coming shakeup in China’s telecoms space, with disclosure that it’s exploring a potential pooling of infrastructure resources with other companies. Word of the move comes in a bigger announcement from Unicom trumpeting the launch of its new 4G+ service, as it plays catch-up to archrival China Mobile (HKEx: 941; NYSE: CHL), which has been offering 4G service for nearly 2 years now.
Industry watchers are more likely to focus on Unicom’s network-sharing part of the announcement, which comes towards the end of the carrier’s brief new stock exchange filing. That’s because the disclosure marks the latest signal of a looming reorganization for China’s 3 state-run telcos, following rumors that began in the summer after a leadership shuffle within the trio. Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 8. To view a full article or story, click on the link next to the headline.
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Taiwan’s TSMC (Taipei: 2330) to Build $3 Bln Chip Plant in Nanjing (Chinese article)
Homeinns (Nasdaq: HMIN) Enters into Definitive Merger Agreement (PRNewswire)
Alibaba’s (NYSE: BABA) AliExpress to Collect Annual Service Fee (English article)
Unicom (HKEx: 763) Announces Launch of Wo 4G+, to Explore Network Sharing (HKEx Announcement)
Huayi Bros (Shenzhen: 300027) Pays 1 Bln Yuan for 70 Pct of Feng Xiaogang’s Firm (Chinese article)
The following press releases and media reports about Chinese companies were carried on December 3. To view a full article or story, click on the link next to the headline.
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P2P Lending Operator Lufax Said to Seek $1 Bln at $15 Bln Value (English article)
Qualcomm (Nasdaq: QCOM) Jumps Most in 4 Years on Patent Deal With Xiaomi (English article)
Facebook (Nasdaq: FB) Plans First Asia-Pacific Data Center in Taiwan – Govt Official (English article)
Unicom (HKEx: 762) in New Management Shuffle at Provincial Offices – Source (Chinese article)
Yingli Green Energy (NYSE: YGE) Reports Q3 Results (PRNewswire)
