Jiuding Capital Invests 50 Million Yuan in Juntong Communications

2009-11-16

 Jiuding Capital signed an investment agreement with Chengdu Juntong Communications Co., Ltd. to invest 50 million yuan via its subsidiary, among which, 35 million yuan has been paid.

Before, Jiuding Capital has invested Gifore (300022) and Geeya Technology (300028), two of the first 28 companies listed on the GEM. Jiuding Capital’s Executive President Zhongyi ZHAO said in an interview by China Securities Journal that Jiuding Capital was focusing on investing in mature Chinese enterprises in consumption and service sectors.

Chengdu Juntong Communications Co., Ltd. has specialized in network commission maintenance (NCM), meaning that communications operators outsource their network maintenance tasks to third parties because the maintenance cost will be very high. NCM has become very common among the industry and major Chinese telecommunications operators have begun to outsource the business to professional commission companies since 2002.

After years of development, several private NCM companies have appeared. After setting foot in NCM market in 2002, Juntong has maintained tens of thousands of base stations and over 50,000-kilometer communication lines in Sichuan, Guizhou, Tibet and so on, an 10-fold increase, becoming one of the biggest private NCM enterprises in China and one of the few NCM companies with the qualifications of base stations and communications lines.

It’s believed that NCM is still in start-up stage now. In future, powerful NCM companies will expand their market shares and engage in high-end businesses like network optimization and achieve full commission, namely networks’ planning, construction, maintenance and optimization to be done by specialized companies, which requires higher requirements on size, technology and administrative abilities of NCM enterprises.

Communications outsourcing has become the priority of VC and PE nowadays. The construction and implementation of 3G networks of China’s telecommunications operators have attracted huge investments in telecommunications infrastructures and speeded up the expansion of NCM markets. 

 “Juntong Communications is an industrial leader which can realize its fast increase among increasing communications outsourcing markets”, Li Weijin, Chief of Communication Project of Juntong, explained to reporters. He said that Juntong has developed into a provincial NCM provider in network construction, network maintenance and the planning and optimization of networks, demonstrating good market adaptability and progressive spirit.