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China technology

Carmaker Geely and internet giant Tencent invest in Wi-fi provider for China’s high speed trains

Carmaker and WeChat operator win bid to acquire a 49 per cent stake in high speed train Wi-fi provider under mixed ownership reform plan

PUBLISHED : Thursday, 07 June, 2018, 4:08pm
UPDATED : Thursday, 07 June, 2018, 10:21pm

Wi-fi will soon be available nationwide on China’s high-speed rail network after Chinese car maker Geely and internet giant Tencent won a joint bid to acquire a 49 per cent stake in High Speed Network Technology Company for an undisclosed sum.

Zhejiang Geely Holding Group and Tencent have taken a 39 per cent and 10 per cent stake respectively in High Speed Network, the Wi-fi service subsidiary of state-owned China Railway Corporation, according to statement from Tencent on Thursday.

“Geely and Tencent will collaborate to increase the number of Wi-fi hotspots and create a platform offering value-added services throughout the high-speed rail network. It will offer ticket services, shopping, tourism and catering services from the jointly developed Wi-fi Platform,” said a separate statement from the companies. “The new platform is part of a wider move towards creating a smart and intelligent transport network across China.”

Travelling by high-speed rail is now commonplace among the Chinese population, with the number of high speed rail passengers exceeding 1.7 billion last year alone. The total cumulative mileage of China railway trips reached 127,000km up to the end of last year, 25,000km of which was on high-speed rail lines. However, business opportunities stemming from the burgeoning high speed rail network have not been fully exploited so the Wi-fi service could serve as an access point to explore the potential market.

For Geely, the investment marks a deeper push into mobility related services, and the acquisition will allow it to provide passengers with highly integrated smart mobility services to meet their diverse travelling needs, Geely chairman Li Shufu said in a statement.

“The digital era in China is undergoing a period of change and opportunity. Tencent hopes to become a digital assistant … to help everyone achieve a transformation and upgrade themselves digitally,” Pony Ma, Tencent’s CEO, was quoted as saying in a statement.

The deal represents a further move by Tencent, which operates the widely used WeChat super app, into services for the transport sector. The company’s popular WeChat Pay was last year included as one of the payment methods accepted by China Railways. The move challenged the four-year dominance of Alibaba Group’s Alipay over mobile payments in China’s multibillion-dollar train ticket booking market. Alibaba is the parent company of the South China Morning Post.

High Speed Network Technology, established in December 2017 as a subsidiary of state-owned China Railway Corporation, provides Wi-fi and technology services to high-speed rail passengers across China. As part of a new Chinese government policy to reform state-owned enterprises through mixed ownership structures, 49 per cent of the company was offered to private enterprise, with China Rail retaining 51 per cent ownership.

Besides Wi-fi coverage, the three companies will provide passengers with other value added services including entertainment, shopping and business travel.

High Speed Network Technology announced in April that a 49 per cent stake was available for bidding at a floor price of 3.049 billion yuan (US$477 million), according to the website of China Beijing Equity Exchange. The company has been offering Wi-fi services on new high-speed trains which began operating between Beijing and Shanghai last June and plans to eventually roll out the service to all high-speed trains and stations across China, according to a report from Xinhua News Agency.

Additional reporting by Sarah Dai