China Telecom's YiChat takes aim at Tencent's WeChat

China Telecom is moving into the mobile instant messaging space with its own app that will compete against WeChat, the rival product from Internet giant Tencent that’s become a hit in China.

China Telecom on Monday launched the YiChat app in partnership with NetEase, an Internet portal and game operator in the country. YiChat comes as a free download for both Android and Apple’s iOS, and allows users to send free text and voice messages.

A major selling point of the app is that it can also send free messages to handsets or phones on fixed lines without the need for YiChat to be installed on the receiving device. China Telecom customers who use YiChat will also have access to additional free data services.

YiChat marks China Telecom’s attempt to expand into China’s social networking arena at a time when the company’s profits have been charting a bumpy trajectory. Although the demand for mobile phone and data services in the country continues to grow, the rise of social networking and messaging apps from local Internet firms has threatened to take away lucrative revenue from mobile operators such as China Telecom, according to analysts.

One of those apps is WeChat, a product also known as Weixin, that allows users to send text messages, recorded voice notes and pictures via smartphone. Mobile phone users in the country view the app as a free alternative to sending SMS messages over a carrier’s network.

The app has become so popular that WeChat boasts 236 million monthly average users, according to its developer Tencent, one of China’s largest Internet companies. To further expand WeChat, Tencent has begun marketing the app in 15 foreign markets, and is also working on ways to generate revenue from the service.

WeChat’s prominence led to reports earlier in the year that the country’s mobile operators were unhappy with the service. They demanded Chinese regulators intervene and force Tencent to share the revenue earned from operating the app. But regulators have steered clear of the matter, and even said they supported WeChat remaining a free service, according to local state media.

China Telecom wants to make YiChat a top messaging app among young people. But it won’t be easy. Tencent’s WeChat app was launched in 2011, and already has over 300 million registered users. 100 million of those users are in foreign markets.