Benefiting from the fast growing Chinese economy and its dominant position in the market, China Mobile maintains long-term rapid growth. Although it enjoys overwhelming advantages compared to its competitors, China Mobile still adjusts its strategies in line with market conditions.
Besides basic voice and SMS services, China Mobile has been devoting major efforts in developing new value-added services, including MMS, WAP, music services, location services, mobile TV, and mobile mailbox. These value-line services not only can increase subscriber ARPU but also can attract new subscribers.
In order to supply such services, China Mobile has adopted responsive strategies. Customized terminals allow subscribers more convenient use of value-added services, which is beneficial to fostering subscriber habits. Lower fee standards will raise subscriber willingness to use services and, at the same time, can increase phone and data usage. It also helps service providers in clearing up and launching new services, which in turn improves user experiences and raises product image.
China Mobile's investment in value-added services has apparently paid off. In the second quarter of 2007, revenue from value-added services increased 35.5% compared to the same period in 2006, reaching 41.915 billion RMB (US$5.99 billion). The value-added services accounted for 25.2% of the company total revenue in 2007. In the development of value-added services, China Mobile has placed some attention on music and video content. As 3G users place high demands on the value-added services than 2G users, China Mobile's control over content will further consolidate its influence in the industry chain and boost its revenue.
In regional expansion, China Mobile has made two major initiatives. The first is increase sales channels, not only including building its own operated stores, but also cooperating with 3C product retail chains. This will greatly broaden China Mobile's market reach. Second, it has made its foray into rural China, which still has low mobile phone penetration rates and can contribute significantly to the revenue of China Mobile with a large number of new subscribers.
Besides expansion plans in China, China Mobile has also actively been expanding overseas markets. The acquisition of Paktel in 2007 has been considered China Mobile's first step outside of China and the foundation for future acquisitions.
Regarding the network deployment, China Mobile is focusing on two areas, one is TD-SCDMA networks, and the other is GSM networks. Having been appointed as the leading mobile operator for TD-SCDMA, China Mobile is in charge of building the networks based on China homegrown TD-SCDMA technology in eight cities. At the same time, China Mobile has been undertaking large-scale expansion and upgrade plans for GSM networks as well, with purchase amounts being somewhat higher than those of TD-SCDMA. This is mainly because existing GSM networks cannot meet the needs of a growing subscriber base and data services. China Mobile is very likely to continue operating the existing GSM network, and the upgrade plans thus become a necessity to meet surging demand for GSM services in coming years.
The major future challenge that China Mobile will confront is the mobile network deployment, especially when China Unicom and China Telecom have acquired WCDMA/HSPA and CDMA2000 1x EV-DO networks, respectively; the technology maturity and product diversification of these networks could affect China Mobile's TD-SCDMA network deployment. China Mobile may have to wait for TD-SCDMA upgrading to 4G, known as LTE (Long Term Evolution), in order to win the battle against other telecom operators with other 3G technologies.
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Research Scope
This report examines the business strategies adopted by China Mobile and analyze in terms of its mobile service, regional expansion, and network upgrading strategies