Independent Content Business To Ease Cost Burdens

BMI View: The partial spin-off of its media services business is a good move for China Mobile. Separating the content business from the core voice service and infrastructure operations will reduce operating costs and allow greater room for innovation in product development in a field increasingly dominated by third-party applications and content.

China Mobile has outlined plans to set up a 'mixed-capital' company that will be responsible for developing and managing its non-voice mobile data services and applications. The as-yet unnamed business will cover mobile music, gaming, video, reading and comics/animation content, services and applications and, although it will continue to be overseen by China Mobile management, private investors will be inducted to bring additional expertise, creativity and financing to the business.

Although the new company will serve China Mobile, BMI believes it could also function as a one-stop shop for MVNOs looking to build their own content-based platforms. More significantly, the business could also serve content - such as games, music and video - to rivals China Telecom and China Unicom. Although the three network operators compete for customers, they are increasingly looking to collaborate in order to achieve cost savings ( see 'Towers Joint Venture: Winners And Losers', July 24 2014) and to develop compelling new services that either complement or compete with third parties' over-the-top (OTT) messaging and social networking offerings such as Tencent-owned WeChat and QQ.

Pressure On Profits
China Mobile Financial Indicators (CNYmn)

or Register now for free to read the full article

This article is tagged to:
Geography: China

Access all of our latest analysis, data and forecasts - request a trial