Business

Saturday May 2, 2009

New deal to enhance 3G services in China

By CHOW HOW BAN


GREEN Packet Shanghai Ltd’s two-year-contract with Shanghai Telecom, a China Telecom’s subsidiary, to provide SONaccess services will come to an end in the middle of this year.

The global IT firm, listed on Bursa Malaysia, is negotiating with the telco for a new deal to enhance the existing services. The deal is expected to be finalised by year end.

“We are also talking to them about other service offerings that will complement and enhance their current services,” says Green Packet (M) Bhd senior general manager Kelvin Lee via a teleconference interview in Shanghai.

“We hope that this year, we can continue to have revenue coming from the China market.”

In 2007, Green Packet, via its wholly-owned subsidiary in Shanghai, signed the agreement with Shanghai Telecom, which was touted as the year’s top deal for the group; it had also signed several smaller deals with other telcos in China.

Early this year, the group announced another deal for an undisclosed fee with Hong Kong’s PCCW Group to provide a customised version of its InTouch product line.

The group’s revenue from China dropped from 60% in 2006 to 41% of its total revenue of RM122.84mil in 2007 following its shift to untapped markets in Middle East and North Africa.

Last year an estimated 25% of its revenue came from China. So, it’s good to keep the momentum going, says Lee.

“Our business in China is about building and maintaining strong relationships and providing quality services. From there, the trust and rapport will build up so that we can continue to provide them with more solutions and services,” he says.

Lee says that Green Packet will be looking to provide Shanghai Telecom with the rebranded and enhanced InTouch Connection Manager platform and handyphone datacard services.

“In China, we focus on developing our InTouch products. InTouch Connection Manager Platform, one of the more popular products in this range, offers connectivity solutions and services for roaming between CDMA and WiFi networks for mobile phone users,” he explains.

This will help turn mobile phone operators into a full-business service provider in China and place them in a better position to garner a bigger share of the country’s 650 million mobile phone users, he adds.

The company has a mature and results-driven team in China. Its Shanghai office in the Zhangjiang Hi-Tech Park, with a total of 40 local employees, is among the four research and development centres of Green Packet.

The others are in Petaling Jaya, Taiwan and the United States.

The teams from China, US and Malaysia develop most of the value-added service solutions for the InTouch platform while the Taiwanese team focuses on the group’s WiMAX solutions.

In January, the Chinese government issued the much-awaited third generation (3G) mobile phone licences to China Mobile, China Telecom and China Unicom.

China Mobile was granted a licence for TD-SCDMA, the domestically developed 3G standard while China Telecom and China Unicom received licences for the US-developed CDMA2000 and Europe’s WCDMA respectively.

The move opens up business opportunities and investments in the high-speed network that can handle faster data downloads and allow cellphone users to make video calls and watch TV programmes.

Following the issuance of 3G licences, the Chinese Ministry of Industry and Information Technology announced 23 regulations covering such aspects as market competition, consumer rights, user information security, telecommunication charges management and facility building.

Green Packet is hopeful of riding on the vast potential in the new 3G market in China.

Lee says: “Simply put, it means a world of opportunities to us. An estimated US$20bil (RM72.23bil) is allocated in 2009 on network roll outs by the three telco companies and this will give us numerous opportunities to pitch for more projects.”

He believes that Green Packet has what the three telco companies need to meet their new 3G subscribers.

China Telecom itself has four types of network within its network – 3G (EVDO), WiFi, PHS and ADSL. The company’s priority is to integrate all these networks to gain a competitive edge over others in the market.

“With Green Packets seamless roaming solution and InTouch Connection Manager, we can meet their needs,” he says.

Green Packet foresees an increasing demand for broadband services, especially WiMAX products and solutions throughout the region, and the firm is expected to increase its human capital.

Apart from the InTouch product line, Green Packet was engaged by ZTE Corp, China’s largest listed telco manufacturer, to develop the latter’s security applications. The firm also has cooperation with China Unicom and Zhejiang Mobile.

Green Packet made a loss of RM17.91mil for the first nine months of FY08 from a profit of RM29.88mil over the previous corresponding period. Revenue fell 35% over the period to RM62.91mil.

But Lee is unfazed. He describes it as a “technical loss” which was a direct result of the group’s increased investment cycle covering human capital development, R&D and infrastructure.

“All of these are in our business plan and fully expected. The investment cycle today puts Green Packet in a solid position to harvest in the upcoming period,” he says.

“The recession is hurting everyone in the world. What we are certain of is that Green Packet will still focus on investing in the China market, given that it’s the third largest economy after US and Japan. We have also identified India, Middle East and Latin America as potential markets.”


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