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P Phone (a.k.a. Asia Premium Television) Acquires Signific

时间:10-21/2020 22:49 | 点击次数:


  BEIJING, Jan. 3 /Xinhua-PRNewswire-FirstCall/ -- P Phone, Inc. (a.k.a. Asia Premium Television Group, Inc.)(Bulletin Board: ATVG)("P Phone"), a China-based marketing and ad sales company, today announced that it has acquired significant assets to enhance its mobile marketing strategy.

The Company has entered into an agreement with the China Mobile and Communications Association ("CMCA") and its wholly-controlled affiliate, Union Max Enterprises, Ltd ("Union Max") to obtain rights to operate as a Provincial Class One Full Service Operator in Jiangxi Province. Based in Beijing, CMCA is China''s leading association of Telecoms and Telecom-related companies. It is also a key business partner of P Phone.

As part of the same agreement, P Phone has also acquired a 70% stake in Jiangxi Hongcheng Tengyi Telecommunication Company, Ltd ("Jiangxi Hongcheng"), a local reseller of mobile minutes.

"Provincial Class One Full Service Operator" is the Chinese term used to describe a company that does not own its own networking infrastructure, but has the right to provide self-branded mobile services (in this case "P Phone"- branded) using the telecom operator''s network [in this case China Mobile (Jiangxi)''s network].

Provincial Class One Full Service Operators provide services similar to those of Mobile Virtual Network Operators ("MVNOs") such as Virgin Mobile (UK) in the West, but with special Chinese characteristics. They operate in partnership with the provincial Telecoms -- in this case China Mobile (Jiangxi) -- to offer an array of integrated mobile media and payment services that enhance the mobile experience of consumers.

Rights to operate as a Provincial Class One Full Service Operator are some of the highest operating rights that non-state mobile operators can receive in China, a country with over 450 million cell phone users but with only two state-run mobile carriers - China Mobile and China Unicom.

P Phone obtained its Provincial Class One Full Service Operator rights and supporting mobile operating assets in Jiangxi province from CMCA/Union Max through a three-step process procured by CMCA/Union Max. The process, which has already been completed, is as follows:

STEP 1. CMCA/Union Max procured a contract for P Phone to acquire Provincial Class One Full Service Operator rights from China Mobile (Jiangxi). The agreement includes quasi-exclusive rights:

(a) To resell China Mobile minutes to consumers in Jiangxi Province.

(b) To sell P Phone-branded (or "Kuai Yi Cong"-branded in Chinese) mobile services, including: debit-card based payments over mobile phones, content and other mobile based marketing services to consumers in Jiangxi Province.

(c) To embed software solutions into SIM cards for the purpose of distributing content and other branded-mobile services in Jiangxi Province.

(d) To distribute P Phone-branded SIM cards, phones and smart film through China Mobile (Jiangxi)''s retail outlets in Jiangxi Province.

CMCA has also agreed to assist the company to obtain preferred content portal and content aggregation status with China Mobile (Jiangxi).

STEP 2. CMCA/Union Max procured an agreement for P Phone to acquire 70% of Jiangxi Hongcheng Tengyi Telecommunication Company, Ltd ("Jiangxi Hongcheng"), a local reseller of mobile minutes in Jiangxi province. P Phone plans to use Jiangxi Hongcheng as its designated exclusive local operator in for the services listed in Step 1.

STEP 3. CMCA/Union Max procured sales access to 100% of China Mobile (Jiangxi)''s existing 20,000 retail outlets, which will be granted to Hongcheng Tengyi by China Mobile (Jiangxi) over the next three to five months. According to China Mobile (Jiangxi), the run rate of sales at these outlets is currently RMB730 million (approximately US$97 million) per year. Such revenue derives only from the resale of mobile minutes. P Phone plans to expand these revenues in 2008 by offering its additional mobile and mobile-based marketing services to mobile users and advertisers.

The aggregate consideration of the Agreement to be paid by the Company is US$6 million. The consideration will be satisfied through the issuance of 300,000 new shares of P Phone (ATVG) common stock valued at US$5 per share and a cash payment of US$4.5 million.

To generate funds for the cash portion of the consideration, the Company will divest its existing, low-margin media buying business. This media-buying business presently carries several unfavorable operating risks, including: (a) high working-capital requirements (the company has to finance the large-scale media-buying of its clients on an ongoing basis); (b) high dependence on certain corporate clients for business; (c) large accounts receivables due to long payment collection cycles common in China; and (d) reliance on key management members who maintain important client relationships.

To divest the existing low-margin media buying business, P Phone has entered into an agreement with Fanya Advertising Company Ltd ("Fanya"), an affiliate of one of the Company''s existing media-buying clients. According to the agreement, the Company will sell its media buying operations to Fanya for a cash consideration of US$4.5 million. The Company will also pay Fanya a separate one-time fee of US$300,000 to have Fanya assume all debts and payables associated with the media-buying business. The entire US$4.5 million proceeds paid to the Company by Fanya will be used to satisfy the US$4.5 million consideration of the Company''s agreement with CMCA/Union Max (see above).

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