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IRG Technology, Media and Telecoms Weekly China Market Review
HONG KONG, Sep 22, 2009 - (ACN Newswire) - The following is the China excerpt from IRG's TMT Weekly Market Review Sept 14 - Sept 20. IRG is a financial advisory and investment firm focused on the core growth sectors in Asia with particular focus on the telecommunications, media and technology (TMT).
Internet
- Taobao.com will record transaction volume of 200 billion yuan (US$29.3 million) in 2009. The company will break even this year. Transaction volume was up by 97 percent year-on-year, having a 80.9 billion yuan (US$11.8 billion) in the first half of 2009.
- A total of 63 million Chinese were running Internet businesses at the end of June, as traders turned to the Web due to its low cost and wide reach amid the global crisis. The number of new Internet shops has jumped by at least 5,000 a day since a year ago. China has at least 338 million Internet users, more than any other country in the world. 11 million people opened online shops or sold goods on the Internet last year. A total of 74 million people were shopping on the Web in 2008, up 60 percent from 2007. 30 percent of China's white-collar workers had run an Internet shop and 60 percent were interested in starting such a business to make extra money amid the crisis.
- Alibaba Group's business-to-business (B2B) e-commerce site Alibaba.com will have negotiations for an Indian joint venture (JV) to be complete in a few months and that the company hopes to unveil the JV within a year.
Mobile/Wireless
- Sales of 3G cell phones in the Chinese mainland market numbered 600,000 units from January to July of this year, accounting for 0.64 percent of the nation's total cell phones sales. Of the three types of 3G-standard terminals, accumulative sales of mobile phones of CDMA EV-DO model took the lead to grab 45.3 percent market share. During the reporting period, world's leading cell phone manufacturers Samsung Electronics, LG Electronics, and Sony Ericsson respectively snatched 21.3 percent, 20.3 percent, and 18.7 percent market shares in China, ranking top three.
- TCL Communication will have sales of handsets and accessories increase by 24.55 percent year-on-year to 1.38 million total units in August, while the sales total for these products in the first eight months of 2009 fell 11.93 percent year-on-year to 7.97 million units. TCL Multimedia sold 807,561 LCD TVs in August, up 176.3 percent year-on-year, and 563,395 CRT TVs, down 39.1 percent year-on-year. The company sold 2.6 million A/V products in August, up 49.8 percent year-on-year, while A/V sales in the first eight months grew 18.8 percent year-on-year to 13.83 million units.
Media, Entertainment and Gaming
- Shanda Interactive and its subsidiary Shanda Games will have a combined 63 million American depositary shares between an estimated price of US$10.50 and US$12.50 each. Shanda Games will offer 13 million ADS. Its parent company will offer 50 million ADS to take 78.1 percent of the unit's outstanding Class A and B shares and 97.3 percent of the voting rights. Shanda Games has applied to list on the NASDAQ Global Select Market under the symbol "GAME."
- Anhui Satellite said satellite TV stations will increase ad charges by more than 10 percent following the publication of the State Administration of Radio, Film and Television's (SARFT) new TV and radio ad regulation. The new regulation, which forbids satellite TV stations from running TV shopping ads between 6 p.m. and 12 p.m. will impact TV stations in China's western regions heavily. Many western TV stations air TV shopping ads after 10 p.m. and that TV shopping advertising accounts for around 50 percent of their total ad revenues.
Software
- CDC Software has signed a framework agreement to acquire 51 percent stake in enterprise resource planning software provider Beijing Hejia Software Technology. Hejia will be CDC Software's major strategic partner in China, said the report. Under the partnership, the parties will jointly develop software products, promote Hejia's software globally via CDC Software's international network, and sell CDC Software products in mainland China via Hejia's network. The acquisition will be conducted in phases and paid for in cash.
- Kingdee International Software has granted 30 million share options on 17 September 2009, with an exercise price of HK$1.37 (US$0.18) apiece. The validity period will commence from September 2009 to September 2019. The grantee is not a director, chief executive or substantial shareholder of the company, nor an associate of any of them.
Taiwan
- TSMC expects revenue in the fourth quarter to grow compared to the current three-month period. The chip designers Qualcomm and Nvidia had visited contract manufacturers such as TSMC recently. Chang's estimates would be better than market expectations, with analysts polled by Reuters expecting revenue in the fourth quarter to slip about 10 percent to NT$81 billion (US$2.5 billion). TSMC has been ramping up production of new chips this year by using more advanced, efficient technology. It is also benefiting as major chipmakers in the U.S., Europe and Japan increasingly outsource production to foundries.
- Qualcomm Inc. and Cheng Uei Precision Industry Co. jointly set up a company in Taiwan in July with the aim of providing mobile phone-based television services after the Taiwan government starts issuing licenses for such services next year. Qualcomm hasn't invested money in the new company due to regulatory restrictions on foreign investment, but has appointed some of its high-ranking officials to the venture's management team.
- Carlyle Group LP is swapping control of Taiwanese cable television operator Kbro Co. for a minority stake in Taiwan Mobile Co., betting it can tap cross-selling opportunities on the island with the deal. The deal puts a roughly US$1 billion equity value on Kbro and includes Taiwan Mobile assuming a further US$800 million in debt. Carlyle, the private-equity fund, will take a 15.5 percent stake in Taiwan Mobile, becoming its second biggest shareholder after the controlling Tsai family under the deal. Carlyle will have two seats on Taiwan Mobile's board. Exploiting cross-selling opportunities between Taiwan Mobile's wireless users and Kbro's cable subscribers would follow a global industry trend. In recent years, the telecommunications and cable industries have become increasingly intertwined, with service providers seeking to sell customers package deals that bundle telephone, cable and Internet service.
Hong Kong
- CITIC 1616 has granted a total of 35.825 million share options on 17 September 2009, with an exercise price of HK$2.10 (US$0.27) per share. The 1ST 50 percent of the options is exercisable from September 2010 to September 2015; and the remaining 50 percent options is exercisable from September 2011 to September 2016.
- Hutchison Telecommunications International Ltd. said its minority shareholders approved the company's plan to sell its Israeli unit for US$1.38 billion in cash and debt. The company would sell its 51.3 percent stake in Partner Communications Co., Israel's second-biggest cellphone provider by subscribers after Cellcom Israel Ltd., to Israeli mobile handset importer Scailex Corp. Hutchison Telecom, which is 60.4 percent-owned by conglomerate Hutchison Whampoa Ltd., expected to book a pretax gain of about US$1 billion from the sale.
- Telkom SA Ltd. is in talks on cooperation with Hong Kong-listed pay-TV and telecommunications company PCCW Ltd. The negotiations could result in an agreement similar to one Telkom reached earlier this year with AT&T Inc. Telkom and AT&T in April agreed a deal allowing each firm to tap the other's network and explore opportunities in areas such as technology data centers in sub-Saharan Africa. Telkom Chief Executive Rueben September wouldn't confirm or deny talks with PCCW were taking place.
- Tencent Holdings Limited participated in the latest round of financing kicked off by U.S. online game publisher Riot Games with US$8 million. The other two investors include Benchmark Capital and FirstMark Capital, which injected US$7 million into Riot Games last year. The investment is believed to boost the latter's leading status as a next-generation online game company adopting extra charging systems. Although extra charging just emerges in the European and North American markets, where time billing is more popular, it has been widely accepted by Asian online game operators. Riot Games is among a few companies in the U.S. that attempts the business model.
Source: IRG
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