KongZhong swings into mobile internet

China's wireless value added service firms have suffered falling revenues over the past 18 months

KongZhong, one of the largest players in China's mobile information and entertainment services sector, reported strong revenue growth as the firm continued its recovery from a market downturn.

China's wireless value added service (WVAS) firms have suffered falling revenues over the past 18 months since the government tightened regulations governing user sign-ups.

Other factors included China's giant mobile network operator, China Mobile, showing signs of competing more strongly with its smaller partners.

KongZhong earned $19.8m in revenue in the last quarter of 2007, a quarter-on-quarter rise of 16 per cent, and posted $74m for the full year.

Despite some signs of renewed growth in China's WVAS sector, KongZhong is hoping to focus more on its much smaller wireless internet business in the future.

"Consistent with the company's operational practice adopted in 2007, a major portion of the operating income generated from the WVAS segment will be invested into the development of the wireless internet business," the company said in a statement.

"KongZhong believes that this will be one of the major drivers of the company's growth in the future."

However, KongZhong earned only $0.34m from the wireless internet segment in the fourth quarter of 2007, a marginal increase from the same period a year earlier.

"We are happy that our WVAS business has regained growth momentum in Q4 2007, and expect the company to have a better WVAS business in 2008," said KongZhong chairman and chief executive Yunfan Zhou.

"In regards to our wireless internet business, we are glad that we have achieved continual growth in our mobile advertising revenues.

"We are confident about the future of our wireless internet business and will continue our efforts to develop [wireless internet portal] Kong.net in 2008."

KongZhong predicts revenues for the first quarter of 2008 of $20m to $21m.