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China Mobile fee change to hurt content providers

(Reuters)
Updated: 2006-07-10 09:21

China Mobile's Hong Kong-listed arm, China Mobile Ltd., declined comment.

Analysts said they would downgrade revenue outlooks for companies likely to be affected, and expected shares of those companies to come under pressure.

Sina confirmed that there would be significant policy changes, but declined to elaborate. A spokeswoman said Sina would issue a statement later on Friday.

The move is part of a campaign begun by China Mobile and its chief rival, the parent of Hong Kong-listed China Unicom, to clean up content-providing services offered over their networks.

Sina, Sohu, Linktone and others have been fined or punished over the past two years, as mobile carriers try to eliminate abusive billing practices and controversial content such as spam and pornography.

Tom Online said a new rule required subscribers to wireless content services to manually confirm their subscriptions a month after signing up, meaning that users would no longer be billed indefinitely for services they seldom used.

"We believe service providers would likely see significant revenue volatility over the next one to two quarters," JP Morgan analyst Dick Wei wrote in a research note.

"We expect roughly a 10 percent to 20 percent revenue impact across the second quarter of 2006 to the third quarter of 2006."

Piper Jaffray analyst Safa Rashtchy also expected "major impact" on wireless service providers.

"We believe the total impact of these services will be severe and could reduce revenues by 20 percent-30 percent in 2007, with potentially much more near-term impact."