Over-the-top (OTT) players including some of the messaging app companies have started eating into revenue and profit of China Mobile, the world’s number one telecom operator.
China Mobile, which has a mobile user base of 755.19 million, has reported a marginal increase in the third quarter revenue to $26.23 billion (RMB 159.904 billion) from $26.16 billion (RMB 159.473 billion) in the second quarter of 2013.
OTT players have already made their mark in the Indian telecom market as well. Recently, Line free messaging and voice app posted significant growth in user base in India that could impact telecoms such as Bharti Airtel, Reliance Communications, Idea Cellular, etc.
The role of free messaging apps in the Chinese telecom market reflect China Mobile balance sheet.
China Mobile SMS volume dipped to 188.6 billion in Q3 from 189 billion in Q2.
Wireless data decreased to 459.6 billion MB from 508.8 billion MB.
Out of wireless data traffic, mobile data traffic dipped to 142 billion MB from 119.4 billion MB.
WLAN data traffic decreased to 389.4 billion MB from 317.5 billion MB.
The other silver lining is in China Mobile’s mobile user growth. China Mobile user base rose to 755.19 million in Q3 from 740.15 million. Out of this, net mobile addition was 15.03 million against 13.85 million in second quarter.
3G user base reached 169.5 million from 137.88. Out of this, 3G net addition was 31.62 million against 23.51 million.
China Mobile profit dipped 9 percent to RMB 28.367 billion from RMB 35.249 billion.
Its third-quarter net profit fell to 28.37 billion yuan ($4.65 billion) from 31.1 billion yuan in the same period last year.
Main OTT products like Tencent Holdings’ WeChat social messaging app and those from other mobile carriers are impacting China Mobile.
OTT products like WeChat, which has 236 million active users, are disrupting the traditional business model of network carriers as smartphone penetration rapidly increases.
China Mobile is betting its future growth on rolling out an expanded 4G network to reinvigorate its business after its slow, domestically-developed 3G standard compared unfavourably to faster offerings from China Unicom Hong Kong and China Telecom, Reuters reported.
The company said in March it is investing 41.7 billion yuan ($6.84 billion) to upgrade its home grown 4G network, the licenses for which China’s government is expected to give out by the end of the year along with those for the other 4G standards used by China Unicom Hong Kong and China Telecom Corp.
China Mobile’s January-to-September average revenue per user (ARPU) fell to 66 yuan from 67 yuan a year earlier.