Light Reading
Planned spin-off is another sign of change in the Chinese telecom industry.

China Mobile to Form Content JV

Robert Clark
News Analysis
Robert Clark
8/27/2014
50%
50%

China Mobile is planning to spin off its content businesses into a new joint venture (JV) partnership with a private company, signalling the latest in a series of changes to the country's tightly controlled telecom sector.

It's not the first such "hybrid" JV in Chinese telecoms -- China Telecom Corp. Ltd. (NYSE: CHA) established one with Netease a year ago -- but it's the first for the giant China Mobile Ltd. (NYSE: CHL), which now has more than 790 million customers, making it a bellwether for the Chinese industry.

China Mobile will tip its reading, games, video, animation and location-based services into the new entity once it has found a partner. Combined, these yielded more than 1 billion Yuan Renminbi (US$162 million) in revenues in 2013.

While that's just a fraction of the company's total business -- it generated RMB325 billion ($52.8 billion) in revenue in the first six months of this year -- the move is just one more sign of reform of non-core telecom services in China.

China has just three state-owned operators to serve its 1.3 billion population. The government holds them close -- senior executives are Communist Party appointees and hold the equivalent rank of vice-minister. Since taking office nearly two years ago, the Xi Jinping administration has set about making the state sector more efficient, while still maintaining ownership and control.

The biggest telecom reform has been the issue of 25 MVNO licenses to private companies, including online retailers Alibaba, Gome and JD.com. Despite high wholesale rates and stringent targets, there's no shortage of enthusiasm, with 200 companies applying for licenses.

The industry regulator, the Ministry for Industry and IT (MIIT), has also talked of introducing private investment into wireline broadband access, though so far it has made no firm decisions on the matter.

The MIIT has also persuaded the three operators to put their mobile basestations into a single company, a cost-saving move for telcos facing revenue erosion and rising network costs. (See Chinese Operators Form Tower JV.)

Additionally, the MIIT has relinquished control over retail pricing. It will still hold the final say, but operators will be allowed to adjust prices without first needing permission.

While these moves are unremarkable elsewhere in the world, they amount to a minor industrial earthquake in China, where consumers complain frequently about high prices, slow data speeds and the generous salary packages of telco executives.

Despite the reforms, there is no sign that authorities will lift the effective ban on foreign direct investment. Rather, the current scare over NSA snooping, and the apparent targeting of US IT firms by regulatory agencies, make such a move even less likely.

But China Mobile will be hoping that its public-private JV will be more successful than China Telecom's effort. Its partnership with Netease to offer an OTT-style messaging service has had no success at all in stemming the loss of business to WeChat. (See China Catches OTT Fever.)

— Robert Clark, contributing editor, special to Light Reading

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Interviews
The New Wave of IP + Optical Integration

11|21|14   |   04:29   |   (7) comments


At the Alcatel-Lucent Technology Symposium, Heavy Reading senior analyst Sterling Perrin talks about how SDN has reshaped the discussion around packet and optical integration.
LRTV Huawei Video Resource Center
Huawei Highlights at BBWF 2014

11|20|14   |   3:40   |   (1) comment


Broadband World Forum is one of the world's largest telecoms, media and technology events with over 7,800 senior executives from across the globe converging on Amsterdam every year to identify the Next Big Thing. BBWF is an exciting place to meet the entire industry under one roof and identify the latest in network innovation, service optimization and customer ...
LRTV Huawei Video Resource Center
How Will BCMS Stimulate Margin for Broadband Operators?

11|19|14   |   6:52   |   (0) comments


In BBWF 2014, Liu Shuqing emphasizes the value of FMC 2.0 based full service experience by throwing light on the BCMS solution. The underlying principle of this innovative technique is to create network robustness and driving network from connection oriented to ACE – BAND oriented infrastructure, in which applications, cloud, and user experiences will be an asset ...
LRTV Huawei Video Resource Center
SingleFAN3.0: Better Connected Experience

11|19|14   |   3:06   |   (1) comment


At the BBWF 2014, David Hu, the VP of Huawei Access Network Product Line, talked about the future of access networks – SingleFAN3.0: faster broadband, wider coverage, and smarter connection.
LRTV Interviews
Basil Alwan Interview: The Road to Cloud

11|19|14   |   09:09   |   (0) comments


Alcatel-Lucent's head of IP and Transport talks about the migration towards a web-like networking environment, the impact of the cloud, SDN and NFV, and the yet-to-be-announced FP4 chip.
LRTV Documentaries
FairPoint Makes a Fair Point About Analytics

11|19|14   |   1:56   |   (1) comment


The US-based communication service provider gets to grips with advanced analytics, tackling data and breaking down the silos within its own business.
LRTV Documentaries
Analytics Lets C Spire Get to Know Subs

11|19|14   |   3:01   |   (2) comments


It's all about the data for US operator C Spire as it uses analytics to personalize its customer service down to individual subscribers.
LRTV Interviews
Nuage Branches Out With SDN: CEO Interview

11|17|14   |   9:32   |   (0) comments


Sunil Khandekar, CEO of Alcatel-Lucent's SDN-focused unit Nuage Networks, talks about the opportunities and challenges of breaking out of the data center into wide-area networks.
Light Reedy
Telecom Analytics Grows Up

11|14|14   |   1:15   |   (4) comments


The big data analytics debate has moved on from a year ago, with some experts suggesting it's no longer a technology challenge.
LRTV Huawei Video Resource Center
Huawei Compass

11|14|14   |   3:17   |   (1) comment


At OpenStack Summit 2014, Shuo Yang, Huawei Principal Cloud Infrastructure Architect introduced Huawei Compass, the software tool for solving customers' problems on the journey of OpenStack Cloud.
LRTV Huawei Video Resource Center
Huawei's Cloud Strategy in European Region

11|14|14   |   2:56   |   (1) comment


At OpenStack Summit 2014, Dr. Gotz, CTO of Huawei IT in European Region introduced Huawei's cloud strategy in European region.
LRTV Huawei Video Resource Center
Huawei's Contribution on OpenStack

11|14|14   |   5:58   |   (0) comments


At OpenStack Summit 2014, Dennis Gu, Huawei Chief Architect of Cloud Computing introduced the relationship between OpenStack and cloud computing, and Huawei's contribution on OpenStack.
Upcoming Live Events
December 2, 2014, New York City
December 3, 2014, New York City
December 8-10, 2014, Reykjavik, Iceland
February 12, 2015, Atlanta, GA
April 14, 2015, New York City, NY
May 6, 2015, McCormick Convention Center, Chicago, IL
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
Irish Telecom outlines the rise of VoIP technology, including its adoption within businesses and their perception of its quality.
Hot Topics
Bell Labs Chief Slams 'Toy' Networks
Robert Clark, 11/19/2014
$38.3M: Ain't That a Kik in the SMS
Sarah Reedy, Senior Editor, 11/20/2014
Do You Have a 2020 Vision?
Dennis Mendyk, Vice President of Research, Heavy Reading, 11/21/2014
The New Wave of IP + Optical Integration
Ray Le Maistre, Editor-in-chief, 11/21/2014
Google, AT&T, BT Unite on Network Data Models
Carol Wilson, Editor-at-large, 11/20/2014
Like Us on Facebook
Twitter Feed