China Mobile: Everything to Everyone

The company provides customized service for everyone from hip youth to farmers, and it's attracting lots of attention in the West

by Dexter Roberts

By almost any measure, China Mobile (CHL) is a huge success. With more than 300 million subscribers, it is the world's largest cellular service company. The value of its stock more than doubled last year, and today it has a market cap of more than $220 billion, making China Mobile the most valuable stock on the Hong Kong exchange. And it has seen enviable growth, with sales up 21.5%, to $38.9 billion, last year, and net profits of $8.7 billion, giving the company a 22.4% margin.

After being spun off from fixed-line operator China Telecom (CHA) in 2000, China Mobile has been on a growth tear. And even though it's gotten so big, China Mobile isn't slowing down. Recently the company has been adding nearly 5 million new customers every month.

Those new converts are being lured by China Mobile's focus on precise market segmentation. Go-Tone, for example, is aimed at high-income businesspeople and offers everything from VIP waiting rooms in airports to special rates on golf courses. M-Zone offers downloadable music and customized ring tones and holds rap concerts for China's hip urban youth. There is even a service aimed at China's rural masses that provides its users with farming tips—including crop prices and growing techniques—delivered through short text messages.

China Mobile's torrid growth is also drawing the interest of Western companies. The carrier has agreements with Vodafone Group (VOD), News Corp. (NWS), Viacom's (VIA) MTV Networks, and the National Basketball Assn.

And a year ago, China Mobile launched a music-download service called M.Music, joining with Universal Music Group, Sony BMG, EMI (EMIPY), and Warner Music (WMG). Google (GOOG) is working with the company by offering its search engine on China Mobile's mobile Internet.

Meanwhile, China Mobile is starting to make acquisitions. It owns a 19.9% stake in Phoenix Satellite Television Holdings, the mainland's most popular cable news and entertainment channel.

It is also looking to expand beyond the massive mainland market. Early this year it announced it was buying 89% of Paktel, Pakistan's fifth-largest cellular carrier. And a year earlier it bought People's Telephone, Hong Kong's No. 4 mobile company, with 1.1 million subscribers.

Roberts is BusinessWeek's Beijing bureau chief.