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China Mobile Ltd. (CHL): A Small Yet Critical Step for This Giant Telco

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7 Reasons Why Investors Should be Afraid of ChinaA new VoIP and mobile instant messaging offering is now available. China Mobile Ltd. (NYSE:CHL), the world’s largest mobile operator, has developed a new application called Jego to challenge Skype, which was acquired by Microsoft Corporation (NASDAQ:MSFT) in 2011. Jego, launched on June 1, mainly serves overseas customers, allowing them to make free or low-cost calls to mobile phones and landlines.

What does Jego do?

Jego, available on Apple Inc. (NASDAQ:AAPL)’s iOS and Google Inc (NASDAQ:GOOG)’s Android platforms, can allow customers to bind their China Mobile Ltd. (NYSE:CHL)numbers as well as to subscribe to Hong Kong online numbers, whereas customers’ call numbers can be displayed and seen by the receivers. Jego also provides instant messaging functions, as well as video calling and multimedia-sharing functions

Jego is a small step for big trends

Although most of the functions are already provided by other mobile instant messaging software, such as Tencent‘s WeChat (former known as Weixin), LINE, and WhatsApp, Jego is an important step for China Mobile Ltd. (NYSE:CHL) to counter the trend shifting toward mobile instant messaging. However, Jego’s real competitor is Skype, offering VoIP services.

Jego’s rate is competitive as compared to Skype. Whereas Jego will cost $0.022 per minute while Skype’s pay-as-you-go costs $0.023 per minute (excluding tax) plus a $0.049 connection fee. Although Jego is priced competitively, it still needs to show it can beat Skype’s value offerings, enabling clear and reliable VoIP communication functions with strong integration capabilities. In essence, with Jego, China Mobile Ltd. (NYSE:CHL) is trying to create its own presence in the mobile instant messaging and VoIP market instead of being consumed for its own traditional carrier services.

What now?

While telecom operators worldwide have been negatively impacted by growing challenges from instant messaging and VoIP services, carriers are finding ways to counter and capitalize these trends. Jego is a small yet important step for China Mobile Ltd. (NYSE:CHL) to explore and adjust itself from the traditional telecom market. Skype, on the other hand, was acquired by Microsoft Corporation (NASDAQ:MSFT) to expand its enterprise collaboration market and to increase the competitive offerings of Windows Phone. Microsoft needs to stay competitive against Google Inc (NASDAQ:GOOG)’s Voice and Apple Inc. (NASDAQ:AAPL)’s Facetime. Microsoft Corporation (NASDAQ:MSFT) continues to integrate Skype into its platform and offerings, including Outlook.com (formerly known as Hotmail), as Skype’s revenue continues to grow.

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