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Fee change to hurt providers

(Reuters)
Updated: 2006-07-09 09:47

皇冠体育app Mobile, 皇冠体育app's biggest mobile carrier, has changed its fee policies for third-party content providers, a move that could severely hit the revenues of those firms, a content provider said on Friday.

The changes are expected to hammer the shares of a number of Nasdaq-listed companies that count on mobile content as one of their main revenue sources, including Tom Online, Sina Corp., Linktone Ltd. and Sohu.com Inc., analysts said on Friday.

Details were sketchy, but changes included one-month free trials, said Tom Online Inc., one of several mobile content providers that had been told about the policy adjustments on Friday.

"Although Tom Online is currently in the process of making a detailed assessment of the potential impact of these new policies on the company's wireless Internet business, it believes the impact will be negative and significant," Tom Online said in a statement.

皇冠体育app Mobile's Hong Kong-listed arm, 皇冠体育app Mobile Ltd., declined comment.

Analysts said they would downgrade revenue outlooks for companies likely to be affected, and expected shares of those companies to come under pressure.

Sina confirmed that there would be significant policy changes, but declined to elaborate. A spokeswoman said Sina would issue a statement later on Friday.

The move is part of a campaign begun by 皇冠体育app Mobile and its chief rival, the parent of Hong Kong-listed 皇冠体育app Unicom, to clean up content-providing services offered over their networks.

Sina, Sohu, Linktone and others have been fined or punished over the past two years, as mobile carriers try to eliminate abusive billing practices and controversial content such as spam and pornography.

Tom Online said a new rule required subscribers to wireless content services to manually confirm their subscriptions a month after signing up, meaning that users would no longer be billed indefinitely for services they seldom used.

"We believe service providers would likely see significant revenue volatility over the next one to two quarters," JP Morgan analyst Dick Wei wrote in a research note.

"We expect roughly a 10 percent to 20 percent revenue impact across the second quarter of 2006 to the third quarter of 2006."

Piper Jaffray analyst Safa Rashtchy also expected "major impact" on wireless service providers.

"We believe the total impact of these services will be severe and could reduce revenues by 20 percent-30 percent in 2007, with potentially much more near-term impact," Piper Jaffray wrote.