TOM Online Ltd said it expects a "significant adverse impact" on its wireless value-added services (WVAS) business in the second quarter to June and beyond due to the recent changes in operational practices introduced by China Mobile Communications Corp.

In a statement, the company did not specify what sort of impact it would have and said it was still completing its damage assessment.

However, TOM Online said China Mobile has begun displaying service-fee reminders to WAP (wireless application protocol) service users when they request WAP downloads onto their mobile handsets and seeking confirmation from users before processing the request.

Additionally, China Mobile also started to place links to only its own WVAS offerings on the embedded menus of mobile handsets with customized software for China Mobile users.

Such embedded menus on handsets feature links to all the popular products on China Mobile's networks, including TOM Online products, the company said in a statement.

TOM Online said it is assessing the potential impact of these changes adopted by China Mobile and it expects them to have significant adverse impact on the company's WAP business and WVAS business in the second quarter of 2007 and beyond.

The provision of WVAS over the mobile networks of China Mobile and China Unicom is one of the company's principal businesses and revenue from such services accounted for 90.6 percent of TOM Online's total revenue for the year to March 2007.

Meanwhile, the company said its 51 percent owned TOM Eachnet joint venture recorded a loss in the quarter to March and that losses have continued.