China Mobile Customers Making Fewer Phone Calls, Telecom Companies At Risk

China’s major telecoms are having a rough week. Yesterday, a MIIT spokesman announced that the Chinese government won’t force Tencent’s WeChat to compensate telecoms for all the business its siphoning away. At more or less the same time, China Mobile announced a minuscule 0.3 percent profit growth over the first quarter of this year and a rather terrifying 2.98 percent drop in monthly average calling compared to the same period last year.

China Mobile is China’s biggest telecom and has been one of the country’s fastest-growing state-owned enterprises. But the numbers coming out of the company over the past few months have made it clear that it and China’s other major telecoms face a grave threat from new mobile apps like WeChat. We already knew that Chinese people were texting less than they used to, and now it seems they’re calling less as well. With barely any profit growth over the past quarter and uses of its traditional services falling, China Mobile will likely have to up what it charges for internet services like 3G just to keep from posting losses. (That is, unless its own version of WeChat somehow takes off).

Interestingly, the company is still growing steadily by other measures; it picked up more than 26 million new 3G subscribers this quarter, for example. The problem is that it doesn’t make as much money from 3G subscribers using web services for calls and messaging as it would if those users were using traditional calling and texting. And as wifi becomes more common both in public places and in people’s homes, more and more 3G subscribers are actually using wifi to do a lot of their mobile chatting, which means that telecoms make no money off them at all.

So far, none of China’s telecoms have a good answer for how they can continue to flourish in a China where wifi is widespread and WeChat and services like it have taken the place of texting and calling.

(via Sina Tech, Image source)