Microsoft will provide China Telecom, the nation’s biggest Internet service provider, with a Web search service to try to raise the carrier’s share of the Chinese Web market, the companies said Tuesday.
Microsoft will provide its Live Search service to China Telecom’s 25 million broadband customers and more than 80 million Internet users, the two companies said at a briefing in Beijing.
The agreement will allow Microsoft to tap into “China Telecom’s strong broadband subscription base,” said Jenny Szeto, an analyst at Daiwa Institute of Research. Szeto has an “outperform” rating on China Telecom’s stock.
Microsoft is working with China Telecom to raise its share of the Internet market in China, whose users are expected to double in five years, according to the market researcher IResearch. The world’s biggest software maker has invested hundreds of millions of dollars on its search engine to lure customers away from Google. Microsoft trails Baidu.com, Google and Yahoo! in China.
Before entering into the agreement with Microsoft, China Telecom terminated its cooperation with Yahoo! in search services in August.
China Telecom has also instructed its provincial branches and portals to adopt Microsoft technologies and terminate cooperation with other search engines.
Earlier media reports said the cooperation would last till 2008,and that China Telecom would share revenues of the search engine service with Microsoft on a 70-30 split in 2007 and 50-50 in 2008.
In addition, Microsoft will pay 21 million U.S. dollars to China Telecom as a base income.
Both parties declined to confirm the report.