Tencent announced that it signed memorandum of understanding with China Mobile on Monternet. Tencent QQ and China Mobile’s Fetion are scheduled to realize interconnection within six months.

The announcement reveals that Tencent and China Mobile will develop interconnection technology and solutions together. After it’s put into use, China Mobile or Tencent users could apply Fetion QQ service to check their QQ friends and communicate with them through SMS. The service fee is 5 yuan per month, which is shared by both Tencent and China Mobile based on the present Monternet rule.

The person familiar with the matter believes that under China Mobile’s new rule, this move is Tencent’s only choice.

The number of QQ’s registered users is estimated to reach 549,000,000 with more than 0.1 billion users logging in on a regular basis. QQ has been taking the lead with 77% market share. Tencent CEO Ma Huateng once said: “It’s nonsense to open QQ without prerequisite, which means all IM software can gain profit by using QQ users.” However, Ma Huateng had to change his mind before strong China Mobile.

China Mobile announced in July that it will stop its cooperation with all instant message service providers in terms of Monternet chatting service. Tencent’s QQ would be the first victim.

Tencent said yesterday that Tencent’s QQ will transform to Fetion platform step by step within its six-month cooperation with China Mobile.

Analysts say as the “gold mine” of the future 3 G generation, the sale of IM market will reach 2.56 billion yuan in 2006.

At present Tencent QQ accounts for 60% of the market. Taking advantage of QQ’s large number of users, China Mobile is aimed to provide its Fetion with a good beginning while Tencent QQ may quit from the market in the future.

Analysts believe that Tencent may also reach an agreement with China Unicom which launched its IM software named “Chaoxin”.  Mobile operators’ monopoly determines their control over the IM market. That’s why Tencent chose to cooperate with mobile carriers. Otherwise Tencent’s IM service will be greatly affected by its rivals such as MSN and Yahoo Messenger. Tencent’s share closed at 27.7 HK dollars yesterday, a 3.36% increase.