In the fourth quarter of last year, Focus Media's mobile ad business hit $16 million, an increase of 356 percent over 2006.

Liu Bin, an analyst from research firm BDA, estimates that China's short message-based ad market last year reached nearly 700 million yuan ($99 million), with Focus Media taking more than half of that pie.

"I think about 60 to 70 percent of Focus Media's mobile advertising revenue last year is coming from spam messages," he said.

Some analysts blame China Mobile for indulging ad firms short text messages, a segment which has become a cash cow for the operator.

According to the Ministry of Information Industry, the country had 547 million mobile phone subscribers by the end of last year, together sending more than 592 billion short messages in that time.

China Mobile also said it had received about 4,000 complaints each day over spam messages before March 15.

A statement from the company reported the number of daily complaints has now decreased to 2,000, but did not provide details on the reduction.

However, many see the lack of regulation and effective measures as major obstacles to effectively curb spam messages. Similarly, there are concerns that ad companies could continue to take advantage of legal loopholes to flood cell phone users with unsolicited messages.

Still, Daniel M. Wu, Focus Media's CFO, said in earnings conference calls on Wednesday that the company's mobile business in the near future will be hit by the incident.

"We expect our mobile handset advertising business to be affected in the next quarter, given that we will put in place very strict control, in terms of what good business conduct we need to carry out for Focus Media," he said.

Established in 2003, Focus Media runs China's largest out-of-home advertising network, with revenue reaching $185 million last year. It entered the mobile advertising market in 2006, helped by a slew of acquisitions.

(China Daily March 21, 2008)