Facing Threats From Online Messaging, Telecoms China Mobile And China Unicom Set Aside Differences To Help Smartphone App Developers

Two of China’s top mobile operators vying against each other in a rapidly growing and increasingly competitive smartphone market will set aside their differences to join forces against their common threat from Internet-based messaging providers.

On May 17, China Mobile Ltd. (HKG:0941), the world’s largest mobile operator, and China Unicom (Hong Kong) Limited (HKG:0762), the country’s second largest mobile services provider, will unveil a standard payment plugin that can be used by app developers to serve the telecoms’ roughly 200 million 3G smartphone users.

This unified plugin is designed to help developers expedite their products to market by simplifying the programming, review and approval processes for the roughly 200 million smartphone users who are use the two companies’ 3G networks.

This streamlining would help game developers such as Beijing-based CocoaChina.com, which generates millions of dollars of revenue a month from its popular Fishing Joy game, speed their programs to market. The Chinese appetite for mobile apps has doubled to $1.2 billion in just five years, according to TechCrunch.

Speaking to the Wall Street Journal, which first announced the cooperative agreement, China Unicom Deputy General Manager Shen Zhou said 60 percent of smartphone users buy apps or make payments with apps by using services provided by the telecoms, such as re-charge cards that are sold in convenience stores.

Working together with a unified payment plugin, the companies hope to see increased revenue from these transactions while striking back at the growing threat from smartphone app developers that offer Internet-based voice and text services, such as Weixin (WeChat), which is Tencent Holdings Ltd’s (HKG:0700) fast-growing mobile messaging service.

China Unicom reported an 89 percent jump in net profit in the first quarter to $308 million.

China Mobile is leading the way among the three state-owned telecoms in investing in the faster next-gen 4G networks.

In related news: On Friday, China’s National Audit Office said it found China Mobile was inflating its sales numbers, according to Reuters.

China Telecom Corporation Limited (HKG:0728), the country’s largest fixed-line provider, which bought its mobile services from China Unicom in 2008 in a government-mandated deal to restructure the industry, has yet to announce its participation in the cooperative agreement. China Telecom reported a 14.6 percent rise in profits in the first quarter ended March 31 but warned of an increasingly competitive market, uncertain regulatory conditions and emerging smartphone technologies as challenges moving forward.

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