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.
NINGBO TELECOMS VENTURE SECURES FURTHER 50,000 SUBSCRIBERS.
- 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 advised.
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 agreement.
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.