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Dr. Peng invests 300 million yuan in Yunnan Unicom's mixed-ownership reform, to take a share of the dividend of SOE reform and 5G development

2019-06-17

To participate in the mixed-ownership reform project of China Unicom Yunnan, and to reuse its broadband resources and marketing team in Yunnan Province, Dr. Peng recently announced that the company intended to contribute a capital increase in the form of cash to Zhejiang Xuntong Lianying Commercial Services Co., Ltd. (hereinafter referred to as "Xuntong Lianying" or "target company"), amounting to 300 million yuan. After the capital increase, Xuntong Lianying's registered capital will rise to 1.5 billion yuan, of which Dr. Peng will hold 20%.

It is reported that the reform with China Unicom Yunnan refers to a global province-wide reform. As China's largest private telecom operator, Dr. Peng's investment this time is considered to be a positive try and breakthrough in the context of SOE reform being steadily advanced. It is likely to facilitate the company's future participation in the operator's reform work and other relevant cooperation in other areas across China.

 

Expanding business layout in telecom operations and extending industrial chain

August 2018, the Leading Group Office of SOE Reform of the State Council selected 404 pilot enterprises to conduct the "SOE Reform Double-Hundred Action" in the years between 2018 and 2020. The Yunnan branch of China Unicom (hereinafter referred to as "Yunnan Unicom") is the only provincial subsidiary of basic telecom enterprise selected to implement global pilot reform of entrusted and contracted operations. Dr. Peng and Ningbo Akin Electronic Technology, in the form of joint venture, were included in January 2019 into the comprehensive reform project of Yunnan Unicom's "Double-Hundred Action" (hereinafter referred to as the "mixed-ownership reform project" or the "MOR project") as operating partners. In April this year, Akin Technology, as one of the initiators, set up Xuntong Lianying, registered capital being 1.2 billion yuan.

In May this year, Yunnan Unicom signed the China Unicom Yunnan Branch "Double-Hundred Action" Comprehensive Reform Agreement with Hengtong Optic-Electric, Akin Technology (joint bidding of Dr. Peng and Akin Technology), and Sinonet Science&Technology, and thereby officially launched its global social cooperations.

As the largest private telecom operator in China, Dr. Peng's participation in Yunnan Unicom's MOR project was considered to benefit its mobile communications business, network resources, profitability and among others.

Dr. Peng said its capital increase to Xuntong Lianying, active participation in Yunnan Unicom's MOR project, and expansion of business layout in the telecom field could help effectively extend the company's business chain, deepen its business operation in mobile communications, and package diversified and customized products for consumer and business customers by making use of mobile products, and optimize and enhance the company's products and services. The above-mentioned transaction shall benefit to improve the company's market competitiveness and influence, thus meeting the company's strategic planning and development needs.

"In addition, a private telecom operator participating in Yunnan Unicom's MOR project is groundbreaking and exemplary. The company may therefore seek further opportunities to participate in the reform of China Unicom in other areas across China, and may also explore the cooperation mode with China Mobile and China Telecom," said Dr. Peng.

 

Riding on the wind of 5G to greet new development opportunities

It is worth mentioning that Dr. Peng, by participating in the MOR, project, is also expected to greet new development opportunities on the wind of 5G.

According to Yunnan Unicom, its planned objective for 5G base station construction this year is to commence promotion of the "117" program, that is, one 5G network covering the whole province, one 5G UAV base, plus 7 5G joint labs and demonstration areas. In this respect, a province-wide 5G network means constructing a 5G communication network that covers 16 prefectures and cities throughout the province, to provide industrial and public customers with first-rate 5G communication services.

On June 6 this year, China's Ministry of Industry and Information Technology (MIIT) officially issued 5G licenses to a number of enterprises, including China Unicom, indicating the 5G era has begun in China. Analysts believed the 5G tide would help push the development of cloud computing, data center and other sectors. Dr. Peng, as Shanghai Unicom's operating partner, has extensive fiber access resources, has accumulated a great deal of experiences in communication engineering construction, broadband operation and mobile communications resale, and boasts the largest cluster of carrier-neutral data centers. Besides, it is also a member of the Edge Computing Consortium. In Yunnan Unicom's layout of 5G construction, network installation and maintenance, and edge computing, Dr. Peng is able to provide corresponding services. The successful implementation of Yunnan Unicom's MOR project signals the continual deepening of mixed-ownership reform, and provides useful experience for telecom enterprises and even SOEs, and also brings new development opportunities to private enterprises involved in MOR, such as Dr. Peng.