China Mobile to face growth challenges

It is facing severe competition, declining ARPU and high churn rates in the consumer mobile market, says a report

With limited infrastructure and a lack of experience in the enterprise compared to its major competitors, China Mobile is expected to face immense challenges in 2011, finds Ovum.

According to a new report* released by Ovum, the analyst and consulting company, China Mobile is facing severe competition, declining ARPU (average revenue per user), and high churn rates in the consumer mobile market, and is seeking new opportunities in the enterprise segment.

Jane Wang, Ovum senior analyst says China Mobile has developed a more comprehensive strategy that includes integrated fixed and mobile services, however with limited infrastructure and a lack of experience in the enterprise market compared to its major competitors, it is expected to face significant challenges.

The main new opportunities for the company will be at first to approach enterprises with a large proportion of mobile users and a high demand for mobile services, but also to focus on fixed network investment to support enterprise clients.

Jane adds it would be challenging for China Mobile to attract enterprises without providing fixed services. Enterprises in China, especially large companies, prefer buying telecoms services from a one-stop shop and are relatively loyal to their main service providers. As long as China Mobile is unable to offer integrated services, it will struggle to attract enterprise customers from competitors.

Indeed, China Mobile is still a relatively new player in the enterprise market as its enterprise business still contributes only around 10% of China Mobiles total revenues, and most of these revenues come from voice services. However, China Mobile recognizes the enterprise segment as a potentially lucrative market that deserves increased focus.

The company is under threat from stronger competitors in the enterprise segment. Having obtained its mobile license, China Telecom is expected to grow quickly in mobile services. This places pressure on China Mobile to improve the competitiveness of its technology and services, particularly in the enterprise segment. What China Mobile needs to do to secure more enterprise business is to counteract this threat by contracting systems integration partnerships. Partnerships with systems integrators and ICT companies are a possible fast track to entering the large enterprise market. concludes Jane.

New Delhi: With limited infrastructure and a lack of experience in the enterprise compared to its major competitors, China Mobile is expected to face immense challenges in 2011, finds a report from Ovum.

According to a new report released by Ovum, the analyst and consulting company, China Mobile is facing severe competition, declining ARPU (average revenue per user), and high churn rates in the consumer mobile market, and is seeking new opportunities in the enterprise segment.

Jane adds It would be challenging for China Mobile to attract enterprises without providing fixed services. Enterprises in China, especially large companies, prefer buying telecoms services from a one-stop shop and are relatively loyal to their main service providers. As long as China Mobile is unable to offer integrated services, it will struggle to attract enterprise customers from competitors.

Indeed, China Mobile is still a relatively new player in the enterprise market as its enterprise business still contributes only around 10% of China Mobiles total revenues, and most of these revenues come from voice services. However, China Mobile recognises the enterprise segment as a potentially lucrative market that deserves increased focus.

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