Jan 16, 2015 06:38 PM

With Profits Down, China Mobile Opens Digital Content Subsidiary

(Beijing) – China Mobile launched a subsidiary on January 15 to run its digital content businesses, as the country's largest telecoms company operator in terms of user numbers sees fewer profits from its traditional business.

The new company, Migu Culture and Technology Group Co., will handle business that offer video streaming, music, e-books, gaming and comics. In the past, China Mobile had provincial-level branches operate these businesses. The new company's name comes from the music service, which has more than 100 million users.

Migu was registered in Beijing's Xicheng District with capital of 200 million yuan. Liu Xin, head of China Mobile's data service department, was appointed to lead it.

China Mobile's application store, called Mobile Market, is not part of the new company. The telecoms has said it plans to set up an independent Internet company to operate MM, which is similar to Apple Inc's app store and launched in 2009.

China Mobile's chairman, Xi Guohua, said in August that his company will set up independent subsidiaries to run businesses related to mobile Internet.

China Mobile is hoping digital content and mobile Internet businesses are profitable because its traditional voice and text-messaging segments have been dealt a blow by messaging apps like Tencent Holdings Ltd.'s popular WeChat.

The telecoms giant reported that its net profit over the first nine months of last year fell to 82.6 billion yuan, down 9.7 percent from the same period a year earlier.

Migu may invite outside investors to take part in the so-called mixed-share ownership reform that the government has been promoting for certain state-owned enterprises (SOEs), a source close to China Mobile said.

Last summer, the government chose six SOEs to take part in this reform. None of those companies were oil giants, but months later, China Petroleum & Chemical Corp. (Sinopec) picked 25 private backers to invest in its sales subsidiary.

(Rewritten by Guo Kai)

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