China Mobile Bets on Call Centers, Sees 4G Delay 中移动4G网络建设延期押注新建呼叫中心

By newsdoug on February 16, 2012

China Mobile bets big on call centers China Mobile (HKEx: 941) is placing an interesting new bet on call centers, leveraging its strong telecoms infrastructure as it searches for growth. The bet looks especially strong in light of new reports that its 4G network is running into its latest series of delays, which doesn’t surprise me at all and will likely push back a commercial launch of this new network to 2013 at the earliest, or more likely 2014. Let’s look at the call center plan first, as this looks the most exciting in my view and is the latest sign that the company’s new top management is finally taking concrete steps to restart its stalled growth. Media are reporting that China Mobile will spend a hefty 4 billion yuan, or around $630 million, to build a massive call center with 20,000 seats in eastern Jiangsu province. (English article) The new center would complement other recent plans for a similar-sized center in interior Henan province. The reports are a bit vague about whether China Mobile will use these call centers for its own customers or whether it will sell capacity to other companies looking to outsource their call center services. I suspect that the massive size means it will be a combination of the two, which looks like a smart call, allowing China Mobile to leverage its huge scale and telecoms infrastructure to provide competitively priced call center services to both domestic and international clients. If that’s the case, I could easily see call centers becoming an important new revenue source in the next 2-3 years, helping to jump-start the company’s stalled growth. Meantime, domestic media are reporting new delays are hitting China Mobile’s 4G network, based on a homegrown technology called TD-LTE that is now in the testing phase. (Chinese article) The reports are rather vague, saying that China Mobile has yet to finalize results for a fifth round of contracts to build the trial network five months after announcing some preliminary results. That delay would be the latest setback for the network, following reports last October that 2 smaller vendors were running way behind schedule in providing equipment for trial networks being set up in 6 Chinese cities. (previous post) These kinds of delays aren’t really look that surprising for a new and untested technology like TD-LTE, but they also mean that China Mobile won’t realize any new business from this overhyped initiative anytime soon. Instead, the company should focus on initiatives like the new call centers and building up its neglected 3G network, which it also showing signs of doing. If it sticks with these more promising new initiatives, I could easily expect to see some concrete contributions to the company’s top and bottom lines by the end of this year.

Bottom line: China Mobile’s new call center initiative looks like a smart move to leverage its scale and infrastructure, as its overhyped 4G plans show new signs of delays.

Enjoy this blog? Please spread the word :)