Rumor: China Mobile to Establish Internet Company
China Business News, 8/09/12
An industry source reported recently that at China Mobile's (NYSE: CHL; 0941.HK) recent semi-annual work meeting, chairman Xi Guohua produced a draft plan to establish a "China Mobile Internet Company" that would begin operations in the second half of this year. The overall strategy will be to unite the operator's internet bases, with Guangdong Mobile leading the way by forming an internet company with its own board. The next step will be to split off the remaining internet bases from the provincial China Mobile operators to which they belong and integrate them under the new internet company. There is also a possibility that more internet companies might be established.
If former chairman Wang Jianzhou used the slogan "One China Mobile" to emphasize the operator's unity of culture, strategy, and operational management, "division of labor" seems to be the most frequently used phrase under Xi Guohua and president Li Yue, who took control of the operator more than a year ago. A source inside China Mobile said that the operator could become a framework for multiple dedicated companies in the future, with horizontally managed subsidiaries being set up for each of China Mobile's businesses at the group and regional levels. In addition to China Mobile's existing subsidiaries, the operator could also have dedicated IT, network, and finance subsidiaries in the future. China Mobile has already established China Mobile International, China Mobile Terminal, and a dedicated subsidiary for government and enterprise clients.
A source close to senior China Mobile management said the operator had hoped to complete arrangements for all of its subsidiaries by the end of 2012, but that progress has been limited by the degree of proactivity of each provincial-level subsidiary.
A source at a provincial China Mobile subsidiary said that if the government and enterprise client business, which contributes 20% to 30% of the subsidiary's revenues, and the data services business, which contributes 30% to 60% of revenues, were split off, leaving the operator with only its public-facing service, revenues would be a mere 20% to 30% of their current volume. China Mobile has called for all provincial-level general managers to take the broader view and to maintain a sense of proactivity, urgency, and positivity, possibly indicating stubborn intransigence at the local level. Following the establishment of China Mobile Terminal in 2011, the source said, 31 subsidiaries of China Mobile nationwide have still not completed establishment of their own terminal subsidiaries.
Keywords: strategy Li Yue Wang Jianzhou Xi Guohua Guangdong Mobile China Mobile wireless CHL 0941.HK mobile Internet
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