Linktone Comments On Chinese Wireless Policy Changes

| About: Linktone Ltd. (LTON)

On Linktone's (NASDAQ:LTON) earnings conference call yesterday, CEO Michael Li discussed recent changes in Chinese wireless policies and how they will affect the wireless entertainment business:

I would like to now take this opportunity to comment on the industry policy changes which were announced in July by several mobile operators and the significance of this for service providers and the overall wireless industry in China.

First, I believe that these policy changes represent a growing trend that investors should expect as the wireless market evolves and as a small group of focused market leaders emerge. We are confident that Linktone will emerge as one of the top leaders in these rapidly growing markets. Longer term, we expect these policies will result in a fewer number of large service providers focusing on strength in content, product and distribution. We also believe this will result in a better operating environment for Linktone as well as for the overall SP market.

Recently, we have observed key trends in our own business that point towards a healthier marketplace in the future and a clear potential increase in the demand for wireless services by Chinese consumers, due to the high quality of service. Some examples include the following:

First, a significant reduction in customer complaints. Over the past year, the number of calls received by Linktone's call centers has risen from approximately 180,000 per month to 300,000 per month. However, the number of calls classified as complaints, billing errors or criticisms during this period has dropped from approximately 8% to 3%. These reductions shows an improvement in our ability to provide premium and high quality services to our customers. Our relationship with our customers is very important to us and these improvements demonstrates the positive impact of these policy changes.

Next, a stronger demand for new wireless services by Chinese consumers. Linktone believes that there is a long-term upward trend in the demand for wireless services in China, especially those representing the next product cycle. Linktone has seen consistent increases in user participation of interactive television services, growth in Java gaming and increasing usage by customers of China Unicom, China Netcom and China Telecom.

Lastly, we expect there to be an increasing number of new marketing channels. Linktone sees a wide scope for new marketing channels via satellite, provincial and city television. By way of example, Linktone currently runs approximately 450 hours of interactive television programming per month, directly marketing services to consumers in a televised, entertainment-oriented format.

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Tagged: , Wireless Communications, China
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