TelecomAsia.net is reporting China's ICT ministry could approve applications from several local companies to operate as MVNOs by as early as May, as part of its plan to open the nation's telecom sector to more private investment. The Ministry of Industry and Information Technology (MIIT) has told Chinese media that it will give the green light as soon as May, according to Shanghai Daily. 

MIIT announced in January that it is considering conducting a two-year pilot whereby private companies can apply to become MVNOs.

This is music to the ears of Hong Kong & Shanghai based Mobile Virtual Network Operator (MVNO) China Motion…the 100% owned subsidiary of VelaTel Global Communications (VELA).

#1 MIIT has stipulated that only domestic companies can apply for an MVNO license…so Hong Kong based China Motion qualifies.

#2 Prospective applicants must have telecom experience and employ at least 50 people…China Motion clears this hurdle as well.

#3 Informa Telecoms and Media has predicted that OTT players - such as Tencent with its popular messaging service - will be the most likely candidates for the MVNO licenses. Deals with OTT players could give Chinese mobile operators a chance to differentiate themselves.

So HOW would China Motion differentiate its MVNO Service?

A) Marketing their service as the “Business Person’s Mobile Service” makes a strong niche offering for China Motion in our opinion…and joint venturing with one of the main “over-the-top” or OTT business services providers makes a LOT of sense as a niche MVNO for the travelling business person.

B) With separate phone numbers for Hong Kong, Taiwan and PRC…China Motion is the ONLY company licensed by Hong Kong/PRC and Taiwan for this capability. For the traveling Chinese businessman (tens and tens of millions btw) this would be BIG time and money saver (vs. having three phones and/or 3 different SIM chips).

C) Even BIGGER money saver? LOW cost voice and text roaming with VELA’s Zapna SIM Overlay technology. EVERY China Motion MVNO SIM would have the Zapna voice and SMS text roaming technology to cut roaming fees up to 90%. Zapna’s SIM overlay cards and mobile applications dramatically reduce long distance and international roaming charges…another key MVNO selling feature.

D) Surely their partner ZTE will come up with very cool Android mobile devices for China Motion to offer—along with Samsung/Blackberry too.

But let’s not forget, MUCH bigger players are in the game. Chinese software company Ufina and home appliance retailer giant Suning have submitted applications. Industry sources expect internet giants such as Alibaba and Tencent to also apply, according to reports.
  
“Over-the-top” digital services providers…OTT for short…like Tencent (the internet portal) with its popular QQ messaging service will seek licenses surely.

Per the proposal, China Mobile, China Telecom and China Unicom will be required to reach reseller agreements with at least two MVNOs each, and must offer access to their networks at a fair price…i.e. at LEAST as low as their lowest wholesale prices between themselves or large enterprises.

Bottom-line? We look at the MVNO license for China Motion as a lottery ticket. They will have a VERY solid niche offering to the traveling business person. They reportedly already have an application in the hopper…so we should soon see how this major game plays out.

Disclosure: NBT Group, Inc. has in the past been compensated for VELA shareholder awareness and sponsored equity research. NBT believes it will be retained in the near future for similar services to NBT. NBT affiliates own 2.5 million shares of VELA acquired in various transactions. 

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Founder and Editor-in-Chief for NBTEquitiesResearch.com. Contributor and Anchor for the Fox News Channel and Fox Business Network 2000-2013. Chairman & CEO of NBT Group, Inc., a boutique private capital investment bank and investor relations organization.

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