Telecom firms getting into online wealth management products

Chinese telecom carriers are actively carving out territories for their own online wealth management platforms, though the sector has been cooling down recently.

On June 9, the Guangdong branch of China Unicom, the country's second-largest telecom operator by subscribers, started to sell a monetary fund product, provided by Shanghai-based Fullgoal Fund Management Co, to users of its online wealth management platform, dubbed "Wobaifu."

The company inked a partnership with leading Internet company Baidu, expecting to take advantage of its promotional expertise and user base on the mobile front.

A staff member with the Guangdong branch who asked to remain anonymous told the Global Times Wednesday that the product has gained preorders from 100,000 residents in Guangdong in three days before the official launch.

Kong Xiangbin, general manager of the marketing department with the Guangdong branch, said in a press release obtained by the Global Times that the parent company is paying a lot of attention to Wobaifu and it is only a matter of time before it will popularize the service around the country.

China Telecom entered the market much earlier. The third-largest telecom operator in China by subscribers rolled out a similar platform, dubbed "Tianyibao," at the beginning of 2014 to sell the monetary fund product, which is offered by China Minsheng Bank, and has been promoting the service since May with free data services packages.

The country's telecom leader China Mobile is also reportedly undergoing negotiations with Shanghai-based China Universal Asset Management, intending to tap the Internet financing market. The country's biggest carrier could not be reached for comment on this by press time.

Analysts said that China's telecom operators expect these online fund management platforms to enhance their users' loyalty and then expand business into promising sectors such as mobile payment beyond their weakening telecommunication services with the advantage of the user base, but their Yu'ebao-like platforms may hardly live up to such expectations.

Yu'ebao is one of the country's mostly preferred online wealth management platforms, launched by Alipay under domestic e-commerce giant Alibaba Group on June 13 2013. On Friday, Yu'ebao said on its official Weibo account that its daily active users on the mobile front was 20 million.

Yu'ebao told the Global Times Sunday that it has amassed over 100 million users as of Sunday, but according to analysts, its growth rate is slowing down due to the decreasing yields.

As of Sunday, Yu'ebao's seven-day annualized yield was 4.742 percent, down from its highest rate of 6.763 percent on January 2.

Seeking new ways

"The sale of monetary fund products can bring little revenue to the three carriers, so, as a result, they will not rely on this segment to cope with challenges it faces in the mobile Internet era," Xiang Ligang, chief executive of telecom industry portal cctime.com, told the Global Times Wednesday.

"The wealth management service is a measure to figure out a new way of making money."

Xiang's opinion is echoed by Kong, who said in the press release that the launch of Wobaifu is aimed at helping the innovation and transformation of the company's business model from a traditional one that mainly focuses on telecommunication services.

Business transformation is very necessary, as telecom carriers' traditional services such as voice and short messages is weakened by booming OTT (over-the-top) services like instant messaging (IM) platforms, said Ma Jihua, an industry expert at Beijing Daojing Consultant Co.

China Mobile, for instance, said in its annual report posted on the Hong Kong bourse in March that its voice services fell 3.4 percent from the previous year to 355.7 billion yuan ($56.9 billion) in 2013, "due to the impact of the substitution effect brought on by mobile Internet."

A report issued by the Ministry of Internet and Information Technology in May shows that during the four months ending April, China saw 250.86 billion short messages sent via phones, down 18.8 percent year-on-year, attributing the slide to the emergence of increasingly popular IM services including WeChat.

In addition, the more flexible virtual telecommunication services offered by scrappy Internet companies also present a big threat to the three carriers, said Ma.

Currently, 19 virtual telecommunication operators have been approved to rent the three State-owned telecom carriers' networks and resell mobile telecom services to end-users.

The Guangdong branch of China Unicom appears to be betting on the heated online to off-line market to offset current losses. Kong said that now Wobaifu only provides asset management services but once the platform amassed enough loyal users, the company would gradually add services like film ticket ordering to the platform.

In contrast, China Telecom intends to target the country's mobile payment segment, Ma told the Global Times Wednesday. It allows users of Bestpay, its third-party online payment service, to invest in and redeem monetary funds, in an attempt to boost its online payment operation.

Mobile payment services in China could prove to be a promising market. In the first quarter of 2014, 659 million transactions were completed via mobile devices, valued at 3.89 trillion yuan, up 232.2 percent and 255.37 percent year-on-year respectively, according to data from the People's Bank of China, the central bank.