How will Yang Jie take the helm of China Mobile when the net profits of the two operators differ by 5 times?

It is not easy to "steer" China Mobile. Telecom experts believe that there are at least five gaps that Yang Jie needs to overcome, and the difficulty is not small:

• ***, we must continue to implement the requirements of "speeding up and reducing fees". How to maintain good revenue under this background is a challenge.
• Second, we must continue to consolidate China Mobile's position as the "biggest voice" among global operators. It took more than a decade and 900 million users to establish its leading position, which must not be abandoned.
• Third, we need to improve and strengthen the company's profitability and open up new business growth points for China Mobile, including the development of emerging industries such as cooperation with Internet companies.
• Fourth, 5G has risen to the level of a "national policy", and we must lead China Mobile to break through and establish a leading advantage in the 5G era. How to formulate 5G networking strategies, 5G construction progress and 4G marketing models are all worthy of attention.
• Fifth, we must build China Mobile into a world-class enterprise, which is also an important measure for the SASAC to create a new situation in the reform and development of state-owned enterprises.

Mixed reform is imperative.

Breaking the BAT encirclement and rewriting the broadband landscape

There has always been a tradition in my country's telecommunications industry: senior management must be rotated every three or four years.

Before Shang Bing, the helmsman of China Mobile was Xi Guohua. In 2015, the Organization Department of the CPC Central Committee announced Xi Guohua's retirement at the age of 64. On the other hand, Shang Bing was born in December 1955 and is also 64 years old this year, which means he has reached the retirement age early. The past two years should be regarded as "overtime service".

There is no doubt that Shang Bing is an authentic telecommunications person.

According to his resume, he joined China Unicom in August 1998, served as vice president of Unicom Group in March 2001, served as director and vice president of Unicom Group in September 2003, and was promoted to president the following year.

In May 2008, Shang Bing's job content was significantly adjusted. He "switched" from China Unicom to China Telecom, where he served as the Party Secretary and Deputy General Manager of Telecom. On the day of his appointment, Chang Xiaobing, then General Manager of China Unicom, personally saw Shang Bing off to China Telecom.

In 2015, Shang Bing underwent another major job adjustment and he succeeded Xi Guohua as the third chairman of China Mobile.

That year, the three major operators were suffering from the impact of BAT: instant messaging products such as WeChat were accepted by the public, and the monthly active users of WeChat had exceeded 500 million, which seriously affected the interests of the operators.

Looking at the financial reports of the three major operators in 2015, the data shows that the three operators performed mediocre in terms of revenue and profit, and lost the strong growth momentum of previous years. At that time, the three operators all expressed their views on the lack of growth, attributing it to the increasing impact of the Internet on the traditional communications industry and changes in regulatory policies.

Under the influence of many factors such as "BAT impact, user saturation, speed increase and fee reduction, business tax reform and value-added tax", the slowdown or even decline in operators' growth has become the norm.

At that time, Shang Bing began to lead China Mobile in its transformation. That year, its data business revenue exceeded its voice business revenue, accounting for 52% of its communication service revenue, while voice business revenue fell by 16.5% year-on-year.

More importantly, he also rewrote the landscape of wired broadband at the time. At that time, although China Mobile led in the number of mobile users, it was behind China Telecom and China Unicom in the number of broadband users.

Shang Bing launched a price war and attracted a large number of users by offering low prices. In just one year, the number of China Mobile broadband users surpassed that of China Unicom, and two years later, it surpassed that of China Telecom.

Sina Technology checked the entry-level broadband charges of the three major operators: China Mobile's 20M broadband single service charge is 880 yuan/two years, China Telecom's 30M broadband service charge is 650 yuan/half year, and China Unicom's 20M broadband charge is 1,200 yuan/two years.

It is not difficult to find that the battle for low-cost fixed-line networks led by Shang Bing has achieved remarkable results.

His contributions don't stop there.

Independent telecom analyst Fu Liang told the author that in addition to the above-mentioned "achievements", under Shang Bing's leadership, China Mobile has maintained healthy growth in revenue and profits despite four years of speed increases and fee reductions. More importantly, he has also actively promoted the development of emerging businesses, such as Migu, Internet companies, and Internet of Things companies. "In the early days of 4G, China Mobile expanded its leadership in mobile communications and became the operator with the most voice in the world in 4G and 5G. It can be said that Shang Bing has done a good job in the transition task."

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Lowering the threshold for 4G has quadrupled the number of users

Yang Jie is an old colleague of Shang Bing. They both served as deputy general managers at China Telecom. In 2018, China Mobile was rumored to be changing its leader, and Yang Jie was the successor.

Rumor has it that the two have a very good personal relationship, so much so that after becoming the top leaders, they often discussed transformation strategies. However, due to different resources, the development paths of the two operators are obviously different.

Similar to Shang Bing, Yang Jie is also a veteran in the telecommunications industry. Public information shows that Yang Jie has served as deputy general manager of China Telecom since 2006, was promoted to general manager in November 2011, and officially served as chairman of China Telecom in April 2016. He did not leave China Telecom until this transfer.

During Yang Jie's tenure at China Telecom, he lowered the threshold for 4G packages, driving the growth of telecom performance. More importantly, in 2016, he proposed the concept of "an ecological tree with one trunk and four branches", a decision that pointed out the direction for China Telecom at the time.

After two years of development, the "Eco-Tree" has achieved remarkable results. According to relevant data, the scale of China Telecom's intelligent connection users has exceeded 570 million, the scale of smart home users has exceeded 110 million, the monthly active users of Internet finance have reached 38 million, the scale of DICT services for various government and enterprise customers has reached 23 million, and the scale of IoT users has exceeded 80 million.

It is worth mentioning that Yang Jie also launched the Hello 5G action plan. In terms of standards, networks, applications and terminals, he put forward China Telecom’s four proposals.

The financial report shows that in the two and a half years since Yang Jie took the helm, China Telecom's mobile user base has increased from 197.9 million at the end of 2015 to 303 million at the end of 2018, and the number of 4G users has also increased significantly, from 58.46 million to 242 million. In terms of performance, the operating income over the past three years has been 6.44%, 3.88%, and 3.64%, respectively, all of which are positive growth.

Telecom "jumps" to mobile

New decisions facing the successors

Not long ago, Yang Jie said in an interview with Sina Technology and other media, "China Mobile and China Telecom are already among the top 10 telecom operators in the world."

Having said that, there is still a big gap between the two companies.

First, the two companies have different resource endowments; second, there is a huge difference in the user base; third, their positions in the domestic and international markets are not the same...

Therefore, Yang Jie will inevitably face many new issues after taking the helm of China Mobile, and how he makes decisions is worth paying attention to.

Fu Liang believes that the greater highlight that Yang Jie brings to China Mobile is finding new business growth points and capital operations.

***, "speed up and reduce fees" will continue, and it is becoming increasingly difficult for China Mobile to maintain revenue and profits through basic communication services, including voice, text messages, and Internet access. Therefore, China Mobile must find new business growth points. "At present, the achievements made do not match the rich resources it has, and many business areas do not have advantages in competing with unicorns. This must be broken through."

Second, 5G is a battleground for operators, and the application ecosystem will also accelerate its development. As a global 5G leader, China Mobile should invest more. Yang Jie previously proposed the concept of "ecological tree", which can be applied to the more abundant "soil" of China Mobile, and will bear more fruits.

Third, in terms of capital operation, China Mobile has very strong funds, so there are more ways to play with capital. For example, in investment, China Mobile currently has only a few overseas investments in companies such as Shanghai Pudong Development Bank and iFlytek, and there is little relationship between investment and main business, so the performance improvement is limited. "China Mobile has a large amount of idle funds, and it can be more active in improving the efficiency of this part of funds. This is an important means to improve the company's profitability and the competitiveness of its main business."

Fu Liang believes that using capital to leverage industry competition is actually a form of "mixed reform."

Independent telecom analyst Xu Changbin told Sina Technology that the operators chose to change their leaders on the day when 5G is coming. The transfer of senior executives can promote the consistency of 5G strategies among the operators, "complementing each other in decision-making and pace, and sharing what they have."

Telecom analysts told Sina Technology that China Telecom President and COO Ke Ruiwen has hope. He and Yang Jie have different division of labor. At the end of 2018, the division of labor between the two was adjusted. Ke Ruiwen began to preside over the company's daily production and operation management, and was newly in charge of the office and corporate strategy department.

"But his (Ke Ruiwen) promotion is not set in stone either," the person analyzed. Liu Aili resigned as president and COO of China Telecom in July 2018, and Ke Ruiwen took over in October of the same year. "All in all, he has been in this position for less than half a year, so it is unlikely that he will be promoted further."

The person speculated that in addition to Ke Ruiwen, China Mobile President Li Yue also has the opportunity to take office. Li Yue has served as the second-in-command in China Mobile for many years, and the transfer of senior executives is an opportunity for him.

"Of course, the possibility of paratroopers is not ruled out, and new appointments are expected to come soon," the person said.