Yixin to fo­cus on on­line pay­ment

China Daily (Hong Kong) - - BUSINESS / COMPANIES - By GAO CHANGXIN in Hong Kong gaochangxin@chi­nadaily.com.cn

China Tele­com Corp Ltd said on Wed­nes­day that its new mes­sag­ing prod­uct Yixin marks a ma­jor step in the com­pany’s at­tempt to di­ver­sify into In­ter­net busi­ness.

The coun­try’s big­gest fixed­line and third-largest mo­bile op­er­a­tor by user num­bers hopes that growth in the new field can help com­pen­sate for an ex­pected slow­down in its in­fra­struc­ture- based broad­band, fixed- line and mo­bile busi­nesses.

“We need a new growth engine as the growth of our tra­di­tional busi­nesses will slow down,” Wang Xiaochu, the com­pany’s chair­man and chief ex­ec­u­tive of­fi­cer, said at a news brief­ing in Hong Kong. He made the com­ments af­ter re­port­ing 15.9 per­cent profit growth in the first half to 10.2 bil­lion yuan ($1.66 bil­lion).

But Wang added that China Tele­com’s In­ter­net busi­ness wouldn’t be on par with in­dus­try gi­ants such as Ten­cent Hold­ings Ltd and NetEase Inc.

In­stead, in or­der to lever­age its ex­ten­sive in­fra­struc­ture, the State- owned en­ter­prise will fo­cus on on­line pay­ment.

He added that the coun­try’s big­gest broad­band provider would main­tain a cau­tious at­ti­tude to­ward ac­qui­si­tions, and would look in­stead at co­op­er­a­tion based on the model of Yixin, which was jointly launched on Mon­day with NetEase, one of the coun­try’s lead­ing In­ter­net com­pa­nies.

The new ser­vice looks like an up­graded ver­sion of WeChat, which was de­vel­oped by Ten­cent and is cur­rently the na­tion’s most pop­u­lar mo­bile mes­sag­ing ser­vice, with around 500 mil­lion users world­wide.

Be­sides of­fer­ing text, im­age and voice mes­sag­ing like WeChat, Yixin also of­fers mu­sic and e-mail link­age ser­vices. It also al­lows users to send SMS and voice­mails to mo­bile phones with no In­ter­net con­nec­tion. A joint ven­ture has been formed to run the ser­vice.

China Tele­com has a con­trol­ling 73 per­cent stake in the ven­ture, which has reg­is­tered cap­i­tal of 200 mil­lion yuan. NetEase holds the re­main­ing stake.

More than 1 mil­lion peo­ple down­loaded the Yixin ser­vice within 24 hours of its launch. Wang said that games, which are the most prof­itable com­po­nent of China’s In­ter­net in­dus­try, would be launched in the ser­vice. NetEase is one of the na­tion’s top op­er­a­tors of on­line games.

Yixin is sup­posed to be a ma­jor com­peti­tor of WeChat, which was re­cently mon­e­tized through the ad­di­tion of games.

On Wed­nes­day, China Tele­com rose 1 per­cent to HK$4.06 (52 US cents) in Hong Kong trad­ing. The stock has dropped 5.4 per­cent this year, com­pared with a 3.8 per­cent de­cline in the bench­mark Hang Seng In­dex.

Its op­er­at­ing rev­enue grew 14 per­cent year-on-year in the first half, to 157.5 bil­lion yuan. Rev­enue was 139.2 bil­lion if sales of mo­bile ter­mi­nals were ex­cluded, up 10 per­cent yearon-year. The com­pany added 13.88 mil­lion mo­bile sub­scribers in the Jan­uary-June pe­riod, bring­ing its to­tal num­ber of sub­scribers up to 175 mil­lion.

The com­pany added 18.28 mil­lion 3G users in the first half, bring­ing the pro­por­tion of its 3G users to 50 per­cent. That sur­passed both its both its larger ri­vals, China Mo­bile Ltd and China Uni­com (Hong Kong) Ltd.

Fixed- line user num­bers de­clined 4 per­cent to 159.6 mil­lion.

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