20 February 2019
China Mobile is offering an Apple package that is 64 percent cheaper than those in the market. Photo: Bloomberg
China Mobile is offering an Apple package that is 64 percent cheaper than those in the market. Photo: Bloomberg

China Mobile cuts prices to win hearts and minds of HK consumers

State-owned China Mobile (00941.HK), one of the world’s largest wireless telecom operators, is trying to lower a psychological barrier that may be preventing it from gaining a bigger share of Hong Kong’s crowded mobile market.

Amid consumer concerns over how Chinese government-backed telecom firms are handling personal information and communication records of their subscribers, the nation’s biggest mobile carrier is offering the cheapest packages for users of Apple Inc.’s iPhone 5s and 5c models.

China Mobile subscribers pay only HK$140 per month for a 10 gigabyte data package with a 12-month contract. That’s 64 percent cheaper than similar packages launched by other carriers.

The firm could trigger a new round of price war in the local market as it aims to be the city’s biggest mobile operator. While its share of the mainland market is more than 60 percent, Chine Mobile remains a small player in Hong Kong, behind the city’s big three, namely HKT (06823.HK) and CSL, Hutchision Telecom Hong Kong (00215.HK) and SmarTone Telecommunications (00315.HK).

Hong Kong people have become quite sensitive about telecom services. There were reports that phones of journalists from the city were being tapped during their stay in the mainland, probably because some state factotums wanted to know if they were getting in touch with the country’s political dissidents. While there is no evidence showing that Beijing-backed China Mobile and China Unicom (00762.HK) are engaged in such activities, such fears may be a factor in their low market shares in the city.

China Mobile is taking advantage of its vast resources and well-known brand to grab market share from local rivals. It is using its vast network in the mainland to attract subscribers, especially those who frequently make cross-border calls for personal or business purposes. The company has also set competitive pricing for its voice services to lure students and ordinary workers.

China Unicom is also determined to strengthen its presence in the city. It now holds an almost 20 percent stake in PCCW (0008.HK), which controls HKT, the city’s biggest fixed line and mobile operator. The company also operates its own mobile virtual network (MVNO) services for end users.

China Mobile is not satisfied with being a small player in Hong Kong. As part of its plans, the firm insists that existing 3G operators should return their 3G spectrums once their licenses expire in 2016. That will create an opening for China Mobile to accumulate 3G spectrums through public auctions and thus boost its network capacity in addition to its 2G and 4G networks. Another way is to cut prices, which is what it did when it launched its Apple offers on Friday.

But it remains to be seen whether such strategies would enable China Mobile to build loyalty among Hong Kong consumers.

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EJ Insight writer

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