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

Tencent, as one of China’s largest Internet service providers, remains competitive in the mobile instant messaging market with its WeChat. Tencent continues to leverage its high traffic and strong content to boost its presence in the mobile end. Tecent’s success with its QQ, which provides a total solution for Internet-based instant messaging, is further expanded with its WeChat offering.

WeChat has grown rapidly since its launch in January 2011, reaching more than 300 million users. WeChat is viewed as a gateway to mobile Internet, creating various opportunities for third parties, as said by Guan Peng, the CEO of China35.com.

With WeChat’s success, mobile operators, such as China Mobile Ltd. (NYSE:CHL), China Telecom Corporation Limited (NYSE:CHA), and China Unicom (Hong Kong) Limited (NYSE:CHU) are arguing that WeChat uses a lot of network resources and affects the quality of other services. WeChat is also eating into the revenue of text messaging and traditional voice services offered by telecom operators. It is easy to see why China Mobile is launching Jego to counter all these trends.

Bottom line

Jego may not have much financial impact on China Mobile Ltd. (NYSE:CHL) yet, however, it is a sign that telecom operators are fighting back with fast growing VoIP and mobile instant messaging market. While China Mobile is investing heavily into 4G infrastructure, it is also crucial for this telecom operator to find ways to counter or adapt to these growing mobile communication trends. Jego is a good sign that China Mobile is waking up.

The article A Small Yet Critical Step for This Giant Telco originally appeared on Fool.com and is written by Nick Chiu.

Nick Chiu has a long position in China Mobile Ltd. (NYSE:CHL). The Motley Fool owns shares of China Mobile and Microsoft Corporation (NASDAQ:MSFT). Nick is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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