bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Georgina Lee

Network pioneer Datang Mobile sells bonds worth US$25m to three foreign funds before its listing

In a vote of confidence for China's untested homegrown 3G technology, a consortium of three foreign private equity investors has invested US$25 million in TD-SCDMA pioneer Datang Mobile by subscribing to its convertible bonds before its overseas listing.

It is Datang Mobile's second round of private equity fund-raising but its first to attract pure financial investors.

The investors are Korea Development Bank's private equity arm, Korean venture capitalist STIC Investments and SeaBright China Special Opportunities, a fund co-owned by US Seagate Global Advisors and China Everbright.

Datang Mobile's previous investors include French telecommunications equipment giant Alcatel which, according to a source, has ploughed an amount 'similar in size to that US$25 million' since the group was established in 2002.

The Beijing-based  company would soon announce further rounds of private equity investment, aiming to raise up to US$100 million by end of this year, said William Liu Guoyi, the director of investment and finance.

'With the funding, Datang will promote the standard overseas to make it an internationally adopted 3G standard. Broadening our shareholder base now would also prepare us for an eventual IPO,'  Mr Liu said.

He said Datang Mobile  planned to list either in Hong Kong or on the Nasdaq Stock Market in 2008 and was in talks with investment banks on the share sale.

Datang Mobile is controlled by the China Academy of Telecommunication Technology under the State-owned Assets Supervision and Administration Commission of the State Council. It is also a sister company of A-share firm  Datang Telecom Technology.

The Datang Telecom group worked with German giant Siemens in developing the TD-SCDMA technology in 1998, which was accepted by the International Telecommunications Union as one of the three worldwide 3G standards in May 2000. It  operates alongside the more widely deployed WCDMA, and Korea and Japan-based CDMA2000 1x EV-DO.

A Korean-based source said potential private equity investors from Korea and the US were in talks with Datang Mobile to subscribe to  its convertible bonds.

'Convertible bonds would give them the flexibility to redeem [the bonds] if the company underperforms,' the source said. 'But if they do perform then, of course, these private equity investors would convert the bonds into equities and look for an exit at the IPO.'

The investment will be the first in China for the Korea Development Bank's private equity arm.

The source said the bank aimed to boost its China private equity investment due to the limited number of high-growth companies in Korea that could gain a listing.

The  central government has not yet set a timetable for issuing 3G licences, although analysts expect Beijing to license three operators in the second half of this year.

At least one of the two major  operators - China Mobile and China Telecom - is expected to be given a TD-SCDMA licence.

Meanwhile, system trials  have  begun, with China Telecom, China Netcom and China Mobile test-driving the technology in Baoding, Qingdao and Xiamen.

The government is expected to base its licensing decisions on the trials, market watchers say.



Homegrown 3G gains investor favour