Telecoms

TELECOMS: Giddy Unicom Picks 14 Mixed-Ownership Partners

Bottom line: Unicom’s choice of 14 partners for a mixed-ownership reform plan involving its Shanghai-listed unit is far too many, and is ultimately likely to fail when those partners become frustrated and sell their shares.

Unicom puts 14 new partners into its mix

What I feared might happen has come to pass in a mixed-ownership reform plan being crafted by China Unicom (HKEx: 762; NYSE: CHU), one of the nation’s three telcos that is experimenting with selling some of itself to private investors. That’s a reference to reports in early August that the company might be planning to take on as many as 20 partners in the plan to sell a significant stake in its Shanghai-listed unit, China United Network Communications (Shanghai: 600050), to strategic private investors.

My worry was that taking on so many partners would effectively dilute the plan, since none of the partners would receive a very big stake and Unicom’s attention would be too fragmented. As it turns out, the number 20 was a bit too high, but not far off the mark. That’s the latest word, as Unicom has finally announced its mixed-ownership reform plan that will see it partner with 14 private companies in a bid to become more dynamic. Read Full Post…

TELECOMS: Unicom Plan Gaining Too Many Partner

Bottom line: Unicom’s mixed-ownership reform plan could prove a dud if it chooses too many partners, which looks likely based on the latest reports.

Unicom eyes too many cooks for pilot plan

I haven’t written for a while about a highly anticipated plan to inject some new life into perennial laggard telco China Unicom (HKEx: 762; NYSE; CHU) through a Beijing-led pilot program, even as reports build that an announcement of the mixed-ownership plan are imminent. Those reports include the latest word that an announcement could finally come later this month.

But what caught my eye in this particular report was the number 20, a reference to how many private companies could potentially take part in this plan. That number looks a bit ridiculous to me, and would completely wipe out any potential benefits that Unicom might have received from the program. But perhaps that’s what this laggard carrier wants. Read Full Post…

SMARTPHONES: Xiaomi Comeback Marches On, But Will It Last?

Bottom line: Xiaomi’s rising market share and securing of $1 billion in new financing underscore its nascent turnaround may have some legs, even as its position remains tenuous in the cutthroat market.

Xiaomi unveils latest phone

Former smartphone sensation Xiaomi is in several headlines as we head into the close of the week, all of which seem to underscore that its nascent rebound may have some legs. But as anyone in the industry will tell you, any smartphone maker is really only as good as its last model these days, meaning fortunes can quickly turn with just one misstep. The smartphone sphere is littered with such examples of such missteps that ultimately led to corporate downfalls, including Samsung (Seoul: 005930), as well as former giants Nokia (Helsinki: NOK1V) and Motorola.

That said, Xiaomi is a slightly different case from that trio, since its initial rise to fame was really almost exclusively based on hype and savvy marketing rather than any cutting-edge product. The company is trying to correct that problem now by improving its product lineup, including the unveiling of its latest phone and upgrades to its own operating system. At the same time, media are reporting the company has received a new $1 billion loan, meaning banks still have some confidence in the firm, even if investors are skeptical. Read Full Post…

INTERNET: Whatsapp Goes Spotty in China, Headed for Shutout?

Bottom line: China’s apparent partial blockage of some Whatsapp functions for brief periods is unlikely to end with a total blockage, mostly because the service is used almost exclusively by foreigners.

Whatsapp temporarily blocked in China

Foreign media are buzzing about what appears to be the blockage of some functions on Whatsapp, with the obvious implication that a full blockage of the the popular instant messaging app could be next. This particular story has a few interesting angles, led by the fact that Whatsapp isn’t used by very many Chinese and also that it’s owned by social networking giant Facebook (Nasdaq: FB).

There are a also a number of precedents to go by, none of which looks too positive for the future of Whatsapp. Just about every other major global social networking app has been blocked in China by now, including Facebook itself, as well as Twitter (NYSE: TWTR) and Japan-listed Line (Tokyo: 3938). But there are a few notable exceptions that have been allowed to keep operating in China, one of which is Whatsapp and two others being the Microsoft (Nasdaq: MSFT) owned Skype and LinkedInRead Full Post…

CHIPS: Chinese Buyer Makes Last-Ditch Effort at Lattice

Bottom line: Lattice Semiconductor’s sale to a Chinese buyer stands a 50-50 chance of getting national security clearance, benefiting from warming ties between the US and China and lack of defense-related technologies involved.

Lattice still trying to sell to Chinese buyer

More than a year after it first became an acquisition target for chip-hungry Chinese buyers, Lattice Semiconductor (Nasdaq: LSCC) is back in the headlines again with what looks like a last-ditch effort at salvaging a sale. Lattice is clearly a mid-sized maker of microchips that fits the profile of what Beijing would like to buy, with a market cap of about $840 million, as China tries to build up its own semiconductor sector that can compete with global giants like Intel (Nasdaq: INTC), Qualcomm (Nasdaq: QCOM) and TSMC (Taipei: 2330).

But western governments are wary of China’s aggressive ambitions, which include generous funds for M&A of Asian and western chip makers. A deal first announced more than a year ago saw one of the most aggressive buyers, Tsinghua Unigroup, buy a small stake in Lattice, but then fail to parlay that into an outright acquisition. Now another group, Canyon Bridge Capital Partners, is getting ready to make a third appeal for its plan to purchase Lattice in a filing to the regulator that reviews such deals for national security considerations. Read Full Post…

SMARTPHONES: Lenovo Eyeing CEO Change?

Bottom line: Yang Yuanqing is likely to cede his CEO title at Lenovo to recently returned executive Liu Jun soon, which could be followed by more risk taking and big changes to the company’s lackluster smartphone unit.

Lenovo’s Yang set to cede CEO title?

I used to make fun of mobile carrier China Unicom (HKEx: 763; NYSE: CHU) for its never-ending management reshuffles, but now the more respectable Lenovo (HKEx: 992) is quickly taking that title with its own series of nonstop personnel moves in a bid to right its sputtering ship. What’s interesting to note is that the series of moves are gradually creeping their way to the top of the company, meaning they could eventually unseat chief Yang Yuanqing, which is what I’ve been calling for all along.

This latest move would certainly be the highest yet, and follows Lenovo’s announcement last month of the reorganization of its China region that accounts for more than a quarter of its business. (English article) One part of that overhaul saw the return of former executive Liu Jun to the company to take a top position, and if the latest reports are true Liu could soon take over Yang’s title as company CEO. Read Full Post…

INTERNET: Crisis Grows for LeEco’s Coolpad, Yidao

Bottom line: Ongoing crises being faced by LeEco-backed Yidao and Coolpad are likely to deepen in the month ahead, as each company gets abandoned by its major stakeholder and is forced to grapple with rapidly deteriorating business.

Coolpad releases preliminary 2016 results

Two companies snapped up by former online video superstar LeEco (Shenzhen: 300104) are in the crisis headlines this morning, with smartphone maker Coolpad (HKEx: 2369) and car services operator Yidao both driving rapidly towards financial collapse. The first headline has Coolpad announcing preliminary results for 2016 that look quite alarming, as an ongoing back-and-forth with its auditor adds more worries to its story.

The second story has Yidao promising its increasingly unhappy unpaid drivers they will finally get their money late this month, as it tells the world it’s in the process of raising new funds. And if you believe that one, I have a nice bridge to sell you in Brooklyn. Read Full Post…

TELECOMS: Huawei in US Hot Seat Over Iran Sales?

Bottom line: Huawei is likely to be found guilty of selling products to Iran in violation of US sanctions, and could be fined up to $2 billion but won’t face additional punishment.

Huawei being probed for Iran violations?

When word first emerged four years ago that telecoms equipment maker ZTE (HKEx: 763; Shenzhen: 000063) was being investigated for selling American equipment to Iran in violation of US sanctions, other reports also indicated that crosstown rival Huawei was also being probed over the same matter. Huawei’s name later disappeared from the headlines, though it was never really clear if the company had been cleared of suspicion in the matter. Now it appears the company may still be under investigation, meaning it could potentially be slapped with a fine even bigger than the nearly $1 billion levied on ZTE. Read Full Post…

TELECOMS: China Telecom Displays Aggression, Unicom Conservatism

Bottom line: China Telecom’s aggressive bidding for a government contract highlights its more entrepreneurial style, while Unicom’s latest announcement on its private ownership plans reflects it conservative, bureaucratic style.

Unicom mixed ownership program crawls ahead

Two of China’s trio of wireless telcos are in the news today, reflecting an effort by Beijing to breathe some life into these laggard state-run behemoths that always seem unable to realize their potential. The first headline has China Telecom (HKex: 728; NYSE: CHA), the smallest of the nation’s 3 carriers, making an aggressive bid to essentially provide services  for free to a government agency in northeast Liaoning province. The second has Unicom (HKEx: 762; NYSE: CHU), the second largest carrier, disclosing some more details on its plan to introduce some private capital to the company. Read Full Post…

SMARTPHONES: Oppo Lands in India Protest Storm

Bottom line: A mass protest against Oppo in India over a Chinese manager’s desecration of the national flag won’t impact the company beyond a week or two, and reflects cultural sensitivity issues Chinese firms will face as they expand abroad.

Oppo under fire in India

Smartphone high-flyer Oppo is quickly learning the road to India isn’t always so smooth, with word of a mass protest at the company’s local operation due to a controversy involving desecration of the Indian flag. In this case the company appears to be learning a fast lesson in cultural sensitivity, which underscores one of the more subtle lessons that Chinese firms will need to learn as they expand abroad.

I doubt this particular incident will have any long-lasting impact on Oppo, though it will be interesting to see if it might affect its recent major cricket sponsorship deal in India. (previous post) The incident could also make Oppo think twice about its other big plans for the market, namely the building of a major production base there.  Read Full Post…

TELCOMS: China Telecom Eyes 5G Network Sharing

Bottom line: China Telecom, Unicom and China Broadcasting Network could share the costs of a 5G network to lower costs, while China Mobile is likely to construct a network on its own.

China telcos consider 5G network sharing

As earnings season reaches a crescendo, wireless carrier China Telecom (HKEx: 728; NYSE: CHA) is raising an old theme by saying it might consider sharing resources with someone else in building a next-generation 5G network. This particular topic first surfaced more than a year ago when China Telecom and rival Unicom (HKEx: 763; NYSE: CHU) studied the possibility of sharing 4G resources, even though they ultimately each built their own networks. (previous post)

The interesting twist this time is that Beijing is rolling out a program to inject private capital into the telecoms sector, meaning perhaps China Telecom and the other telcos could be allowed to pick private-sector partners for their 5G networks. Another interesting wrinkle comes in the form of a fourth state-run telco that was assembled from the nation’s many cable TV companies last year and would probably like to have its own telecoms network. Read Full Post…