Marbridge Daily

December 31, 2012

Rumor: China Mobile, Tencent Discuss Traffic Usage, Revenue Share

Sohu IT, 12/28/12

Wei Leping, director of the Chinese Ministry of Industry and Information Technology's (MIIT) Communications Science & Technology Commission, announced at the recent China Communications Industry Conference in Beijing that China Mobile (NYSE: CHL; 0941.HK) and Shenzhen-based internet company Tencent (0700.HK) are in talks to resolve issues over mobile traffic.

China's telecom operators have seen little upside in revenue from increasing mobile data traffic, said Wei, partly due to the effect of internet firms. "Currently, Tencent accounts for a single-digit percentage of China Mobile revenue, but Tencent accounts for over 40% of the operator's overall data traffic," said Wei, "how can the operator tolerate this situation?" According to media reports, Tencent's QQ applications account for approximately 40% of Guangdong Mobile's data traffic, but the operator only receives RMB 5 per 20MB of data traffic.

While unable to predict the results of talks between the two companies, Wei said there are two possible solutions: either Tencent and other internet companies reduce overall traffic, or revenue share is renegotiated. Otherwise, Tencent might risk being blocked from the network.

Editor's Note: For more background on this topic, please see "China Mobile: Tencent's WeChat Poses Threat to Telecom Operators" MD 12/06/12 issue.

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