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Rumor: Suspects in China Mobile Data Services Scandal Exceed 60, 6/01/11

An industry source recently told Economic National Weekly that the investigation of Ma Li, VP of data services at China Mobile (NYSE: CHL; 0941.HK), has grown to encompass more than 60 suspects and persons of interest throughout government, telecom operators, and WVAS providers. Li Xiaoguang, chairman and CEO of Beijing-based telecom value-added services provider Hisunsray Information Technology, also recently assisted authorities in the investigation, according to an industry source, but it is unclear whether he is suspected of any crimes.

Hisunsray was founded in 2003, and China Mobile is its key partner. Any company wishing to operate Interactive Voice Response (IVR) services billed to China Mobile accounts must do so through Hisunsray. WVAS providers Sina (Nasdaq: SINA), Tencent (0700.HK), and KongZhong (Nasdaq: KONG) all do significant business on Hisunsray's platform.

It has long been considered an "open secret" in the industry that certain executives in China Mobile's data services division were allegedly exploiting their position to participate in SP operations, own shares in SPs, and even open "affiliated companies" in order to collect illegal revenues, according to the source.

Editor's Note: For more background on this topic, please see "Rumor: China Mobile Probe Investigates KongZhong CE" MD 5/16/11 issue.

Keywords: Ma Li Li Xiaoguang Hisunsray law China Mobile mobile data scandal wireless SP WVAS IVR CHL 0941.HK

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