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Tencent Invests RMB 50 Mln in Internet TV Technology Provider Huan Tech

Sohu IT, 5/08/15

Chinese consumer electronics manufacturers Changhong (600839.SH) and TCL Corporation (000100.SZ) have both issued announcements that Guangzhou-based internet TV technology provider Huan Technology, in which each owns a minority stake, has secured RMB 100 mln in funding from internet and mobile services firm Tencent (0700.HK) and Tianjin Chengbo Investment Management.

Changhong and TCL each currently own a 31.96% stake in Huan Technology, but after the new investment, those shares will be diluted to 27.394% each. Tencent and Chengbo will each invest RMB 50 mln for 7.143% stakes. Chengbo's total stake in Huan Technology will increase to 20% with the additional funding.

Tencent's investment in Huan Technology may be a move to develop partnerships for Tencent's smart hardware operating system, according to an industry analyst. Currently, Tencent has only announced Tencent OS service for smartphones, smart watches, virtual reality hardware, and gaming consoles. Based on Huan Technology's position and potential in the Internet TV industry, Tencent may be able to expand its OS to OTT television and set top boxes (STB). After which, Tencent OS may find its way onto a portion of the television sets manufactured by Changhong and TCL.

From another perspective, Tencent is adjusting its strategy for competing with rivals Alibaba Group (NYSE: BABA) and Xiaomi. E-commerce conglomerate Alibaba has pushed its mobile operating system, formerly known as Aliyun, through pre-installation deals and subsidies to handset manufacturers. Alibaba has similarly adapted the OS for smart televisions and STBs under a "television e-commerce" business model. Beijing-based Android device maker Xiaomi has also pursued a long term strategy of investing in content and smart hardware to carve out its own business ecosystem.

Editor's Note: Huan Technology is an internet TV technology firm that provides R&D and services for connectivity between televisions, mobile phones, personal computers, set-top boxes, and other terminals.

Keywords: M&A television Tencent Internet TV Changhong operating system TCL Corporation 000100.SZ 0700.HK 600839.SH smart TV OTT Huan Technology Tencent OS TV set set-top box

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