SHANGHAI, Aug. 22 -- CHINESE wireless service providers experienced a tough second quarter in their financial performance amid tighter regulations and fierce competition.

Linktone Ltd, a Shanghai-based wireless SP, announced yesterday it made a net loss of US$3.2 million in the second quarter versus a net profit of US$3.1 million a year ago. Nasdaq-listed Linktone's revenue also tumbled to US$11.7 million in the period, half of last year's level.

Kong Zhong Corp, another Nasdaq-listed Chinese SP, posted a 98-percent plunge in net profit to US$40,000 in the second quarter from a year ago. Its revenue of US$16.96 million was also a 98-percent plummet year on year.

"Like most wireless providers in China, we continued to face a challenging regulatory environment for our wireless value added services business during the second quarter," Linktone's chief executive Michael Li said.

Sina.com and Sohu.com also posted a drop in their wireless revenue in the period. Even Hong Kong-based Tom Group's online business revenue, which mainly comprised wireless SP services, dived 70 percent year on year in the first half, the firm said yesterday.

Tighter regulatory efforts by mobile phone carriers were partly to blame. China Mobile has mandated that SPs migrate to its-own IVR platform and raised the IVR (interactive voice response) revenue sharing from 15 percent to 30 percent.

The SPs have also seen a drastic drop in income from their previous goldmines, including subscribers' short message, multimedia message and audio-related services like customized ringtones, said Tiger Hou, an analyst at iResearch Inc.

Videos, games on handsets, wireless advertising income and interactive TV short message services have boomed in the industry, insiders said.