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China's Finance Ministry Invests RMB 4 Bln in National Cable Operator

21st Century Business Herald, 10/19/12

China's Ministry of Finance will reportedly put up RMB 4 bln over the next two years as registered capital for China Radio and Television Network Co., Ltd., the national cable TV operator. The Ministry of Industry and Information Technology (MIIT) has committed to offering the new company the same considerations as other telecommunications operators in the areas of infrastructure operations licenses and international internet gateways.

After China Radio and Television Network is officially registered, its key tasks will include completing the integration of provincial broadcasting networks and operators, in addition to continuing to fund upgrades to backbone networks. The initial areas of focus could be ten cash-strapped provincial networks in the country's central and western regions that have already completed integration efforts, including the Guangxi and Guizhou provincial networks. Listed cable operators in the country's more developed eastern provinces, including Beijing-based cable and broadband operator Gehua CATV Network (600037.SH), Hunan TV & Broadcast Intermediary (000917.SZ), and the soon-to-list Jiangsu Broadcasting Cable Information Network and Guangdong Cable, will pose a major challenge to the new company, however, as their assets will be evaluated based on market prices.

Shenzhen-based cable TV operator Topway (002238.SZ) and Hunan TV & Broadcast Intermediary recently received MIIT approval to develop cable network-based internet access services, data transmission value-added services, and VoIP services. As neither company has received an infrastructure network operations license or access to international broadband gateways, however, both will rely on the new national network operator to develop their value-added telecommunications services.

Editor's Note: For more background on this topic, please see "Rumor: China's Ministry of Finance to Fund National Cable Operator" MD 8/07/12 issue, "Topway Receives IDT, VoIP License in Shenzhen" MD 10/10/12 issue, and "Hunan TV & Broadcast Wins Internet Access, IDT, VoIP License in Hunan" MD 10/17/12 issue.

Keywords: convergence television Ministry of Finance cable TV China Radio and Television Network national cable company

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