Telecom & Wireless

Telstra's New China Investments Eye China's Growing Mobile Market

Australia-based Telstra is hoping that it does not repeat the multiple mistakes of other companies venturing into China's overcrowded wireless value-added services market with new investments in two Chinese companies.

Telstra has acquired a 67% interest in both China M and Sharp Point. China M is one of the hundreds of Chinese suppliers of consumer mobile content, and it is only serving 350,000 customers daily. Sharp Point provides technical services for China Mobile's mobile music platform.

"Today we've added consumer mobile content and music to Telstra's online real estate, automotive and digital device businesses in China, expanding our position in the world's fastest-growing online market," said Telstra's Chief Executive Officer Sol Trujillo.

China is already the world's largest online market, as well as being the world's largest mobile phone market with over 500 million mobile phone users. However, Chinese WVAS rivals KongZhong, Linktone, and Hurray can probably all attest to the difficulties of navigating China's latent mobile content laws, poor revenue from mobile-driven content, and various intellectual property problems. In December 2008, Linktone warned investors that it expected lower gross revenue in the year's final quarter, and KongZhong's chief financial officer, Sam Sun, suddenly announced a few weeks ago that he was leaving the company. KongZhong's net loss during that last reported quarter was USD21.57 million.

While Telstra has not formally stated how much it paid for the stakes in the companies, media outside of China are reporting that John Stanhope, Telstra's chief financial officer, said the deals would cost a total of AUD302 million and be funded with cash.

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