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QTL - 50,000 new subscribers for GWT China network

  1. 56 Posts.
    Quadtel today released the following news regarding an agreement for an
    additional 50,000 business clients to be connected to the GWT network in
    Ningbo, China.


    - China Investment Update -

    Sydney: 2nd May 2002: As previously outlined to shareholders, Quadtel has
    made a significant 7.5% equity investment into a Chinese telecommunications
    venture operated by Ningbo GWT Network Communications Co.Ltd (GWT). GWT has
    reached agreement with a government owned enterprise which will result in
    50,000 business clients being immediately connected to the GWT network.
    These clients are currently clients of an enterprise network that will be
    merged with the GWT network. Formalisation of this agreement is expected
    within 14 days and integration of the client user base to be initiated by
    month end. To meet this increased demand for bandwidth, negotiations are
    underway with a second major China communications carrier to supply
    bandwidth until the GWT infrastructure is fully deployed.

    The new agreement for the servicing of the 50,000-client base is in addition
    to the 200,000 business clients that GWT intends to connect as a result of
    the previously announced agreements. The strategy of providing all users
    with access to an internet gateway, then providing high bandwidth
    connectivity as a first stage is still the principal focus of the company.
    Because of the expanded relationship with China carriers GWT will as a
    second stage provide ADSL and VDSL connectivity to all high end user
    clients. The third stage will be the systematic rollout of an integrated
    fixed wireless / fixed wire high bandwidth network which will be implemented
    based on original plans.

    The addition of the 50,000 established client base will provide additional
    and earlier opportunity for Quadtel to supply ADSL and VDSL equipment to GWT
    in accord with the exclusive supply agreement between GWT and Quadtel as
    previously advised to shareholders.

    Ningbo is a vibrant city of over 5 million people and the Ningbo region has
    an estimated population of over 8 million. GWT is based in the Ningbo
    Economic & Technical Development Zone (NETD), which was established in 1984
    and is one of the largest and oldest economic trade zones in the region
    covering 29.6 kilometres. Second stage plans are for expansion of the
    network throughout the Zhejiang Province, which has a population of more
    than 80 million people and 23 cities.

    Over 2000 businesses have now been connected. Businesses pay an initial
    joining fee and monthly connect fees. The 50,000 new business clients are
    expected to be integrated into the network beginning in the month of June
    and plans for an expanded Network Operations Centre are well advanced and
    will be implemented within the next 30 days. The remaining 195,000 plus
    clients will be connected progressively over the next 3 years as previously

    Revenues for the communications company (prior to the acquisition of the
    additional 50,000 business clients) are forecast to be:

    Year 1 US$ 23,000,000
    Year 2 US$ 92,000,000
    Year 3 US$ 105,000,000

    Revenue forecasts incorporating the expanded client base are currently being
    developed and details will be provided in a subsequent release.

    Supply Agreement

    Quadtel as previously advised have been awarded the exclusive
    telecommunications supply agreement to the Ningbo project. The supply
    agreement provides Quadtel with an avenue for supply of product to the
    project and preferential pricing for GWT. Quadtel has agreed to fix margins
    at 20% versus the 50% plus margins that foreign companies have historically
    charged in China, due to the fact that the contract calls for no marketing
    and ongoing support outside of standard warranty issues Quadtel envisage
    this agreement will be highly profitable and add significant shareholder
    value over the next 3 years.

    Given the current strategy of GWT to migrate subscribers from initial
    internet connectivity to ADSL technology utilising the existing copper
    infrastructure in the short term with a medium term goal to further upgrade
    customers to a high bandwidth wireless solution where demanded, Quadtel will
    have significant opportunity to supply xDSL equipment in the short term
    along with the supply of wireless equipment in the medium term.

    New Opportunity

    Many of the new 50,000 and previously identified 200,000 business
    subscribers will require the supply of hardware and software to meet
    internal systems requirements and to further maximise the potential of the
    high bandwidth connectivity being supplied to them by GWT. In order to take
    advantage of this opportunity, a plan is currently being developed between
    GWT and Quadtel to cross sell a range of communications products and
    services to the GWT client base. Many of the current products that Quadtel
    supplies into the Australian Market will be offered to the Chinese market.

    The Board of Quadtel are satisfied with developments in China and look
    forward to the continued strengthening of the relationship with GWT. China
    is an enormous opportunity and Quadtel look forward to delivering
    substantial results through the equity investment and the attached supply

    About Quadtel Limited

    Sydney-based Quadtel Limited is a leading distributor of broadband products
    and services to the corporate, government and SME sectors. Through the
    company’s fully owned subsidiary Marketing Results Pty Ltd, Quadtel is also
    Australia’s premier distributor of home and business technology products to
    the retail and mass merchandise markets.

    With a focus on best-of-breed product lines, Quadtel has formed enduring
    distribution relationships with many of the world’s leading technology
    vendors including Symantec, Alcatel, D-Link, Australian Windows Publishing,
    Network Associates, Intuit, Scan-Soft, ACCO, PowerQuest, Castlewood Systems
    and Maxtor.

    Quadtel is listed on the Australian Stock Exchange (ASX: QTL)
    and the Canadian Venture Exchange (CDNX: QTL) and has offices in Australia,
    Singapore, Malaysia and Canada. For further information visit
    www.quadtel.com or phone Quadtel’s head office on +61 2 9899 5888.

    Denis Orrock
    Quadtel Limited
    Ph +61 2 8852 4600
    [email protected]
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