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China Mobile (Hong Kong), the world's largest mobile phone service provider by subscriber numbers, is in talks with US online search engine company Google to provide Internet search services through the China Mobile network.

"Our second round of talks with Google is under way," Wang Jianzhou, chairman of China Mobile, said yesterday, without giving any further details.

Wang said that the mainland currently has about 100 million Internet users, but the number of mobile phone users has already exceeded 400 million.

"There would be much room for us to further expand our profit margin if we can really offer the Web searching services to mobile phone users," Wang told reporters after the company's annual general meeting yesterday.

Wang said China Mobile would be able to provide third-generation (3G) services to its users shortly after receiving a 3G licence.

It's believed the mainland will issue the first batch of 3G licences this year.

"We are doing a lot of preparation for it and, for sure, we can provide 3G services to both domestic and overseas 3G users by the 2008 Beijing Olympic Games," Wang said.

As the sole mobile communication service partner of the 2008 Beijing Olympic Games, China Mobile is currently reconstructing its second-generation (2G) network.

"The reconstruction concentrates on the core network of 2G and after it is completed, the network will become compatible with both 2G and 3G and therefore will be able to provide services to 2G and 3G users at the same time," Wang told reporters yesterday.

According to Wang, China Mobile's TD-SCDMA trial, conducted at about 100 mobile stations in Xiamen of East China's Fujian Province, went smoothly. "We expect to get the final test results soon," he said.

The home-grown TD-SCDMA is one of three internationally recognized 3G standards.
Although there has been much buzz about 3G, Wang said China Mobile will continue to serve its 2G users.

"We have more than 4 million new 2G users joining our network every month on the mainland," Wang said.
To date, 2G services such as tone services and short messaging services still account for 80 per cent and 10 per cent respectively of China Mobile's total turnover.

Wang said since China Mobile's buyout of China Resources People's Telephone in Hong Kong, the venture has been running well.

"The acquisition has generated a lot of synergy between the two firms and the new venture has been able to cut its operating costs by 50 per cent," he added.

China Resources People's Telephone was the fourth-largest mobile phone service provider in Hong Kong before becoming a wholly owned subsidiary of China Mobile this March.

China Mobile saw its share price decline by 3.07 per cent to close at HK$42.6 (US$5.46) yesterday.

(For more biz stories, please visit Industry Updates)