UTStarcom, CRI Partner on Internet TV
PR Newswire Asia, 10/22/10
Chinese network solutions provider UTStarcom (Nasdaq: UTSI) today announced a strategic partnership with Beijing-based Cristar Media, a subsidiary of China Radio International, to provide Internet TV services in China and abroad.
UTStarcom will provide technology and service platforms to Cristar through entities affiliated with Stage Smart Limited, in which UTStarcom is acquiring a 75% stake for USD 30 mln. UTStarcom will pay USD 20 mln in cash, to be used as working capital, in exchange for preferred stock, as well as USD 10 mln in UTStarcom common stock, to Smart Frontier Holdings, the sole owner of Stage Smart. UTStarcom will become the majority shareholder of outstanding shares and own all preferred stock in Stage Smart. Revenues from the partnership with Cristar are expected to come from technology and software licensing fees, subscription fees, and advertising. Although investment is expected to dilute UTStarcom's earnings for the initial 1-2 years of operation while the subscriber base and advertising fees are ramped up, it is expected to be accretive to earnings thereafter.
President and CEO Jack Lu also announced a new strategy that sees three shifts in UTStarcom's business model. The first is a "return to China". With the move of the operational headquarters to Beijing, UTStarcom will be able to increase focus on the Chinese and Asian markets that drive its business, while improving internal communications and lowering costs.
The second is "the pursuit of telecom and cable network customers in parallel." Because UTStarcom's core-IP technology can be applied across different kinds of networks, UTStarcom can pursue opportunities with operators of other networks, the most promising of which are in China's cable space.
The third and final shift is "equipment AND services." Because of network convergence in China and UTStarcom's expertise in building and operating the technology and service platforms for IPTV and Internet TV, UTStarcom will see new opportunities to sell more end-to-end solutions to service providers in this space.
Keywords: Cristar Media M&A Stage Smart convergence Internet IPTV television Internet TV CRI business model UTSI UTStarcom Jack Lu
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