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VisionChina Media, Inc. (NASDAQ:VISN)

Q3 2010 Earnings Conference Call

October 27, 2010 8 PM ET

Executives

Helen Plummer – IR Officer

Limin Li – Chairman and CEO

Stanley Wang – Senior Financial Controller

Analysts

Philip Wan – Morgan Stanley

Dick Wei – JP Morgan

Thomas Chong – Bank of America/Merrill Lynch

Chenyi Lu – Cowen and Company

James Lee – CLSA

Steve Zhang – Macquarie

Ming Zhao – SIG

Sam Lon [ph] – Oppenheimer

Operator

Good evening and thank you for standing by for VisionChina Media third quarter 2010 earnings conference call. At this time all participants are in listen-only mode. After management’s prepared remarks, there will be question-and-answer session.

Today’s conference is being recorded. If you have any objections, you may disconnect at this time.

I will now turn the call over to your host for today’s conference, Ms. Helen Plummer, Investor Relations Officer for VisionChina Media.

Helen Plummer

Hello everyone and welcome to VisionChina Media’s third quarter 2010 earnings conference call. The company’s third quarter earnings results were released earlier today and are available on the company’s IR website at www.visionchina.cn as well as on Newswire services.

Today you will hear from our Chairman and Chief Executive Officer, Mr. Limin Li, who will talk about our industry, our company’s strategy and business operations; and Mr. Stanley Wang, our Senior Financial Controller, who will take you through our financials and key operating metrics.

After their prepared remarks, Mr. Li and Mr. Wang will be available for your questions.

Please note that today’s discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties will be included in our Annual Report on Form 20-F and other documents filed with the U.S. Securities and Exchange Commission. VisionChina Media does not assume any obligation to update any forward-looking statements except as required under applicable law.

As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on VisionChina Media’s Investor Relations website at www.visionchina.cn.

I will now turn the call over to our CEO Mr. Li.

Limin Li

[Interpreted]

Hello everyone and thank you for joining us today.

In the third quarter, we achieved total revenue of $37.9 million, a year-over-year increase of 23% and quarter-over-quarter increase of 19%. Our non-GAAP net income reached $1.1 million, beating our company guidance by 35.5%. The diligent efforts of our sales force has allowed the company to return to a more stable growth trajectory that began at the start of the second quarter. VisionChina is strong and committed to the market and we have set goals for profitability in the fourth quarter.

As always, VisionChina Media participates in and promotes large social events in China. During the Shanghai World Expo, which drew a cumulative audience of 71 million, VisionChina Media’s exclusive subway mobile TV network provided real-time information to our subway passenger population as large as 7.5 million commuters on a single day. These mass audiences allowed our networks to be the product-promotional platform for many advertisers wishing to reach Expo visitors.

Our Expo success raised advertiser’s awareness of the highly effective dissemination capability of our platform. Moreover revenue contribution from our subway network once again approached 50% of total revenues in the third quarter, becoming an even more stable revenue source for VisionChina Media.

Another important upcoming event is the Guangzhou Asian Games next month and we recently confirmed that the sporting events will be played in real-time on our platforms in Guangzhou. While we take a conservative outlook on this event, we will be the only outdoor daytime television operator with access to this content and we hope to see a driving sales of the advertising minutes associated with those 25 days of broadcast beginning November 12.

In the third quarter, VisionChina Media took an important strategic step in successfully signing a memorandum of understanding for a strategic partnership with CCTV. The partnership is expected to provide CCTV’s clients with more expensive and comprehensive services by combining the advertising platform for CCTV and VisionChina Media to create a specialized media operation model. This partnership represents the first time CCTV has brought outside media resources into its annual advertising auction. Our ability to form this partnership is a sign of VisionChina Media’s a daytime outdoor expansion of traditional TV with significant network scale and influence has gained the recognition of CCTV, the leader of China’s TV industry.

In the time since signing, we have participated in several joint roadshows with CCTV across the major cities in China. Through this event, we have gained access to many new high quality potential clients, establishing a base of revenue growth beginning 2011.

In the third quarter, former CFO Scott Chen departed due to personal reasons. Upon his departure, our Senior Financial Controller long-term employee Stanley Wang assumed the responsibilities to lead our well-developed financial department and daily financial operations. He also began working with our Investor Relations department to continue effective communications with our investors and analysts. In addition, we were honored to have James Mark [ph], Former KPMG Audit Senior Manager join us as a VP in September. James brings over 10 years audit experience and is familiar with U.S. listed Chinese companies. Meanwhile the company continues in our effort to find qualified internal and external candidates for the CFO position.

We are confident that VisionChina Media will enter a period of stable development in 2011. With this in mind, we have started to evaluate ways to optimize our media platform, bus and subway network platform structures, advertising product design and team incentive structures.

We thank our shareholders for their continued belief in the company and we look forward to updating you on our progress in the creation of long-term shareholder value.

I would now hand over the call to our Senior Financial Controller, Mr. Stanley Wang to discuss our financial operating metrics in more detail.

Stanley Wang

Thank you, Mr. Li. In the third quarter of 2010, we saw strong momentum that was driven by our strong growth across our business. We recorded a sequential increase in our advertising revenue and saw significant improvement of our margin.

Our mobile market television platform continues to attract new and national and international advertisers. We are also delighted to see continuous improvement on pricing and utilization across on our bus and subway media platform.

Now turning to our third quarter operating results. Our network capacities, which is measured by total broadcasting hours was 50,019 hours in third quarter of 2010, representing 4% increase as compared to 47,928 hours in the second quarter of 2010. Average advertising revenue per broadcasting hour rose to $727 in the first quarter compared to $636 in the second quarter of 2010. On average the company sold 6.69 advertising minutes per broadcasting hour as compared to 6.34 advertising minutes per broadcasting hour in the second quarter of 2010.

During the third quarter, 612 advertisers purchased advertising time on the company’s advertising network compared to 615 advertisers in the second quarter of 2010. In the third quarter of 2010, the company sold a total of 334,000 864 advertising minutes in our network compared to 303,812 minutes in the second quarter of 2010.

Now turning to our third quarter financial results. Advertising service revenue and total revenues were $37.9 million in the third quarter of 2010, which was within company’s revenue guidance range of $36.7 million to $39.7 million. This represented an increase of 19.3% from $31.8 million of our advertising revenue in the second quarter of 2010. Media cost, the most significant component of our advertising costs, was $25.1 million in the third quarter of 2010, representing 80.8% of the total advertising service costs; that’s consistent with 81.2% in the second quarter of 2010.

Gross profit in the third quarter of 2010 was $6.8 million as compared to $3.1 million in second quarter of 2010. Advertising service gross margin was 18% in the third quarter of 2010 compared to 9.8% in the second quarter of 2010. The increase in gross margin was due to increase of our advertising service revenue during the third quarter.

Selling and marketing expenses was $6.2 million in third quarter of 2010, a decrease of 11.9% from $7 million in the second quarter of 2010. Such increase is primarily due to decrease of amortization of intangible assets in connection to three advertising agencies acquired in 2008. In the second quarter of 2010, we recorded a write-down of the carrying value of such intangible assets.

General and administrative expenses was $2.5 million in the third quarter of 2010, an increase of 6% from $2.4 million in the second quarter of 2010.

Gain from equity method investments amounted to $20,000 in the third quarter of 2010, compared to $90,000 loss in the second quarter of 2010.

Operating loss was $1.8 million in the third quarter of 2010, compared with an operating loss of $95.5 million in the second quarter of 2010. If the impact of one-off non-cash, non-recurring impairment charge in the second quarter of 2010 was excluded, the operating loss would have improved by 71% quarter-over-quarter in the third quarter of 2010. The decrease of operating loss in the third quarter of 2010 was primarily due to significant improvement of our gross profit.

The company recorded net interest expense of $0.7 million in the third quarter of 2010, remaining flat with the second quarter of 2010.

Net loss attributable to VisionChina Media shareholders, referred to as GAAP net loss, was $1.9 million in the third quarter of 2010. Basic and diluted net loss per share, referred to as GAAP EPS, attributable to VisionChina Media shareholders in the third quarter of 2010 were both $0.02.

Net income attributable to VisionChina Media shareholders, excluding share-based compensation expense and amortization of intangible assets referred to as non-GAAP net income in the third quarter of 2010 was $1.1 million and exceeded our guidance.

The company had cash and cash equivalents of $67.1 million as of September 30, 2010. The company’s net cash used in operating activities during the third quarter was $6.9 million.

Depreciation and amortization in the third quarter of 2010 was $4 million and capital expenditure was $0.5 million.

Now turning to our fourth quarter guidance. The company estimates total revenue, which consists advertising service revenue only, in the fourth quarter of 2010 to be $41.1 million and $44 million. Fourth quarter 2010 net income attributable to VisionChina Media shareholders excluding share-based compensation expense and amortization of intangible assets referred to as non-GAAP net income is expected to be between $1.3 million and $3.5 million.

These estimates are based on an exchange rate of $1 against RMB6.6981.

I would like to note that our guidance is based on our current network of 23 cities that, as of the release date, has already been secured by contracts. If the company’s network expands to additional cities, either organically or through acquisitions, the company’s forecast will be affected.

Thank you again for joining us today.

Helen Plummer

I would like to remind you that we will be translating during the Q&A. And while translating, we will mute our line. It may sound as if it’s gone dead, please bear with us and we will be back momentarily.

I now open the call to questions. Operator, please ask for the first question.

Question-and-Answer Session

Operator

(Operator Instructions) The first question comes from the line of Philip Wan with Morgan Stanley.

Philip Wan – Morgan Stanley

My first question is about your fourth quarter guidance. In your press released you mentioned that fourth quarter maybe challenging. Could you please elaborate a little bit more? And are we seeing advertisers backing off from the contract or spending less than expected? And also, could you comment on the advertising demand during the Asian Games period?

Limin Li

[Interpreted] Based on our continuous improving Q1, Q2 performance, that has reflected in improved ability of our sales team. And given we are the only outdoor digital mobile television operator in the Guangzhou Asian Games that is able to connect above ground bus network and underground subway network, we look forward to an increase in the Guangzhou Asian Games period.

Additionally, VisionChina Media signed a strategic partnership with the CCTV. After signing of the strategic relationship with CCTV, we have participated in several joint roadshows with CCTV across the major cities in China. Through these events we have built up a direct communication with a lot of new high quality potential clients. We look forward to adding some of them to our Q4 client base.

Philip Wan – Morgan Stanley

My next question is about your advertising client base for third quarter; the number seems flat versus last quarter. And have the customer acquisitions slowed down, or was that due to a seasonality? Could you please give us some more color on this?

Stanley Wang

Actually our accumulative numbers of advertisers has reached 2017 in September 30 of 2010, which is representing an increase of – that means we have 285 new customers who was added to our customer base during the quarter.

So the number of advertisers who broadcast based on our network appears to be only two additions to – actually our customer base is still expanding. Hopefully this information can be helpful to you.

Philip Wan – Morgan Stanley

Just a quick follow-up. Among that 285 new customers, how much revenue does they contribute during third quarter?

Stanley Wang

They contributed $36 million to our advertising revenue, which is representing 35% of our total revenue.

Philip Wan – Morgan Stanley

45%?

Stanley Wang

35%.

Philip Wan – Morgan Stanley

35%. Thank you. That’s all my questions.

Operator

The next question comes from the line of Dick Wei with JP Morgan.

Dick Wei – JP Morgan

My first question is on the media cost. I wonder if you can give some color on the reason for increased quarter-over-quarter as well as the outlook for media cost. As well as what are the next major contracts that you need to sign over the next, like 12 to 15 months?

Stanley Wang:

Dick Wei – JP Morgan

And so for the media cost outlook for the next couple of quarters, how should we look at the trend?

Stanley Wang

The quarter-over-quarter increase of our cost of revenues basically due to two components. One is the media cost and such media cost increase was primarily due to first is the increased cost in Beijing subway and second is also derived from – due to increase of our business tax, which is mainly due to increase of our advertising revenue. And in the coming quarters, the several contracts to be renewed we are expecting, the first is the subway contract of Guangzhou and also the subway platform – the contract, subway platform of Shenzhen subway and these are two major contracts we are looking for to renew and negotiate in the coming quarters.

Dick Wei – JP Morgan

So for the media cost outlook for the next couple of quarters, how should we look at the trend?

Stanley Wang

The trend is in the fourth quarter, which is already coming soon, the media cost will not have much fluctuation. We expect less than 5% increase in our media cost. In the coming year, which is 2011, because our medic cost would normally have step up provision, and then we expect it to be 15% to 18% increase of our media costs.

Dick Wei – JP Morgan

So, roughly Q1 2011 will be 15% to 18% above the Q4 level?

Stanley Wang

I don’t think so, because basically some of that will take place during the year and those are – and I consider the level will be less in Q1.

Dick Wei – JP Morgan

So that’s 15% to 18% year-over-year?

Stanley Wang

Yes, that’s right.

Dick Wei – JP Morgan

Okay. So compared to the full year 2010, that is the increase?

Stanley Wang

Yes, you are correct.

Dick Wei – JP Morgan

Then help me understand, if you can give the breakdown between the subway and the bus revenue, that would be helpful.

Stanley Wang

Actually the revenue from bus components accounted for 51% of our total revenue and the subway accounted for 49% of total revenue.

Operator

Our next question comes from the line of Eddie Leung with Bank of America.

Thomas Chong – Bank of America/Merrill Lynch

Hi, this is Thomas asking questions on behalf of Eddie. My first question is can you talk about the top advertising categories in the first quarter and about their contribution to sales.

Stanley Wang

The top advertising categories still, as consistent to previous quarters, that is still food and beverage and wine and spirit kind of industry, it accounts for 30% of our total revenue.

Thomas Chong – Bank of America/Merrill Lynch

My second question is regarding the advertising mix between the domestic advertiser and international advertisers. Do they have a significant change due to the Shanghai Expo?

Stanley Wang

Actually, there is no significant change. However where we see the trend is that the national advertisers have – actually the international advertisers accounts for 25% of our total revenue in Q3 and our national advertisers revenue accounts for 50% and the remaining are the local advertisers. So what we see is we are – actually in Q3 we have a lot of marketing work in increasing the penetration in the national and local customers. So now we see the trend, now we see the figures as compared to Q2, the percentage of total revenue of international customers decrease a little bit as compared to Q2 but the local and national customers increased.

Thomas Chong – Bank of America/Merrill Lynch

My last question is regarding the contributions in tier-one and tier-two cities. Will you give some color about the mix between the two tiers?

Stanley Wang

The tier one cities, the revenue contributions to – actually in Q3 to be around 65% of our total revenue and tier two was 35%. This is fairly stable compared to Q2. That means the tier one city is very important to us, also our major source of revenue.

Operator

The next question comes from the line of Chenyi Lu with Cowen and Company.

Chenyi Lu – Cowen and Company

In the press release, the company said that the first quarter may prove to be challenging. Can you elaborate a little bit more why you think that’s a little bit challenging given that you might get some revenue benefit in the Guangzhou Asian Games?

Limin Li

[Interpreted] Given we will be the only digital mobile television operator operating on the upper ground bus network and underground subway network in Guangzhou during the Guangzhou Asian Games period, we look forward to adding a lot of new advertisers during the period.

Chenyi Lu – Cowen and Company

[Foreign Language]

Limin Li

[Interpreted] Actually, we took a lot of challenge in Q4. Actually we see that during the – the whole national economy has certain uncertainty with say, high CPI and potential inflation, which we see that – the market economy maybe has certain – so many factors, negative factors, which may affect our customers’ marketing spending. And however, we are very confident to still – as for the guidance we released, we are very confident with the growth and our sales team that VisionChina can still achieve a considerable growth and sequential in the fourth quarter of 2010.

Chenyi Lu – Cowen and Company

I’d like to know if, as Shanghai Expo is going to begin very soon, do you see the revenue would drop after the Shanghai Expo is over or will it continue or will it not have any impact?

Limin Li

[Interpreted] All these big social events that took place in China no matter it’s Olympic Game or the World Expo or the upcoming Guangzhou Asian Games, have been very excellent opportunities for VisionChina to promote our brand image to a lot of quality clients. That also encouraged a lot of clients to try out the effectiveness of our media platform during these events and realize the true value of this brand new platform. So we don’t really expect to see a drop of revenue after the ending of whatever social events like World Expo.

Chenyi Lu – Cowen and Company

Regarding your ASP and also advertising minutes per broadcasting hours, it has improved over the last two quarters, right? So I just wanted to see what’s the trend going forward over the next three to five quarters. Do you continue to see it improve quarter-over-quarter or you think it’s peaking at this level?

Stanley Wang

We will see improvement quarter-over-quarter because our strategy is very focusing on two aspects. One is we increased the penetration and expansion of our customer base and as you know that – and also, an improvement of utilization rate.

As you see that, our utilization rate in the past three quarters is around 7 minutes. In the first quarter it’s around 5 minutes and the second quarter, 6.36 minutes, and now 6.69 minutes, which is minutes we still have a lot of available inventory. So how to convert such inventory into revenues is our first priority. So we can see that – we will try to increase improvement of the utilization to further improve our revenue.

So in the coming quarters we will stress on this task and we will continue to work on such improvements. So our expectation is we will continue to improve the two operating metrics you just mentioned.

Chenyi Lu – Cowen and Company

So, basically, for utilization, that’s for sure going to improve, right?

Stanley Wang

Yes.

Chenyi Lu – Cowen and Company

But also you think that you are going to improve ASP as well. Despite that you might see any potential challenges?

Stanley Wang

For the ASP, of course we are trying to improve. But what you see from the ASP in Q3, actually we see significant improvement over Q2. But ASP, we say that it depends on the future customer portfolio and our market strategy. And of course, we try to increase our ASP but in terms of – on a task to improve the utilization, the ASP we will try to – our best to improve or maintain, it can be two possibilities.

Operator

The next question comes from the line of James Lee with CLSA.

James Lee – CLSA

My first question is regarding the – more to follow up on media cost. You talked about renewals in Guangzhou and also Shenzhen subway system. Can you give an idea how much the concession cost or the media cost is currently contributing to your total media cost of these two subways systems?

I also noticed that you are also discussing on Beijing renewal and you are trying to finalize this contract. Can you give us a sense of when you expect the contract to be finalized and maybe the expectation of how that might change the media cost? And last question being you also added a number of advertising slots in the third quarter. I was wondering where that came from. Is that due to network expansion? If so, can you tell us what markets they are?

Stanley Wang

For Guangzhou and Shenzhen subway platform contracts, currently we have just begun the negotiation with our subway operating partners in Guangzhou and Shenzhen. So now we do not have a number available for you to compare with the current cost. But our goal is that for these two subway platforms, we expect to keep a comparable cost to the old contracts based on our current deal.

So for the Beijing’s contracts, actually we are still in the progress to negotiate with the local partners of Beijing subway regarding those detailed contract terms, the media quality requirement and also the detailed payments schedules. Now we have received an offer from the Beijing subway but we are still negotiating with them on this offer. We are trying to gain more favorable terms. And the current offer is the cost will increase from $9 million per quarter to $17 million quarter. Since the new contract has been effective in August 2010, so we have recorded the cost based on the offer, which is our best estimate starting from August. So you can see that – our current quarter’s media cost has included the increase of cost in Beijing at our best estimate.

James Lee – CLSA

Yes, the last question is regarding you’re adding advertising slot this quarter and can you give us a sense of where that’s coming from? Is that due to network expansion? If so, what markets are you expanding into? And also going back to Guangzhou and Shenzhen subways, my question was how much of your media cost right now, as of this quarter, is coming from these two subways. The $9 million to $17 million number, I assume that’s not U.S. dollars, that’s RMB figures. Is that correct?

Stanley Wang

Actually we are selling more advertising minutes during this quarter and actually these minutes are selling from our current inventory, which is – and actually we have 15,000 broadcasting hours on our network in this quarter and actually we have 7 minutes available for ourselves to be fixed. So the increase of the numbers of minutes, we are selling actually indicates the improvement of our utilization rate. Actually we did not enter into new cities or enter into new exclusive rights agreement during this quarter.

Actually the new broadcasting hours is actually coming from the two additional new lines in Nanjing. These two lines are actually from a contract we acquired from DMG. So we don’t think that should be a new area we enter into. Actually we acquired this contract in January of this year from an acquisition with DMG.

Operator

The next question comes from the line of Steve Zhang with Macquarie.

Steve Zhang – Macquarie

Hi. With regards to your next year outlook, you’re going to have a pretty healthy step-up in terms your cost, 15% to 18%. I’m wondering what your thoughts are on the macro environment for the next year and what that impact will have on your margins?

Stanley Wang

Actually the cost increase is 15% to 18% and actually we consider this can be – in terms of the current revenue growth trend, we firmly believe that this part of the cost increase can be covered by our additional revenue brought in by our sales force.

Steve Zhang – Macquarie

You mean that your revenue can increase more than the 15% to 18%, that your margin will still be healthy?

Stanley Wang

Yes.

Operator

The next question comes from the line of Ming Zhao with SIG.

Ming Zhao – SIG

If I look at the selling and marketing expense for the third quarter, it’s well controlled even though the revenue is higher. So my question to you is how should we look at this line going forward? Do you think you can still maintain at this slow pace when your revenue ramps up?

Stanley Wang

Actually we noticed that selling and marketing expense decreased by 12% as compared to Q2. As I just mentioned, this is primarily due to decrease of amortization of intangible assets, which we have impaired in Q2. Actually, we expect the selling and marketing expense as a percentage of revenue to be between 18% to 22% in Q4, which is we will see an increase from current quarter. Because several matters we would like to draw attention in our selling and marketing activities, which is first we will continue to invest in human resources for our sales force. So our HR cost on this side will be increased. And also our marketing, we will have incurred certain more expenses in relation to obtaining the annual payment contracts with our major customers. And also, additional expense we incurred for the marketing campaign of CCTV cooperation.

So in Q4 it is very likely the selling and marketing expenses as a percentage of the revenue, we will be back to 18% to 22%. In the long run, we still aim to control this matrix at 20%.

Ming Zhao – SIG

My second question is about your plan for 2011. So the company has experienced a somewhat difficulty early this year and slowly recovered. So what’s your goal for next year in general? Is it returning to profitable or is there any new things you are looking for?

Limin Li

[Interpreted] We have been working on to optimize our current structure of the media platform, bus and subway platform structures, designing of new advertising products and also some incentive schemes. Our outlook for the whole year of 2011 will be finalized in Q4 with – in Q4 of this year we will be able to quantify a target for 2011. In general, we look forward to a profitable 2011.

Operator

(Operator Instructions) The next question comes from the line of James Lee with CLSA.

James Lee – CLSA

I just have a few follow-up questions here, one regarding DMG. Can you give us a sense of what is the revenue contribution from DMG for this quarter? And the second’s regarding earn-out payment. Is that completely done as of this quarter and also could you give us a sense of the earn-out agencies, how much of your revenue contribution coming from this quarter? My last question was not answer regarding Guangzhou and the Shenzhen subway media cost, how much is that as a percentage of your total media cost as of this quarter?

Stanley Wang

First is, the DMG’s platforms we acquired, the contribution from those platforms which has accounted for 30.7% of our total revenue in this quarter. And the second question you are asking is about the earn-out payments. Now as of the end of September, the earn-out payments we have, we have paid out most of the earn-out payments except we still have about $1.6 million to pay in relation to the earn-out of 2009. And after paying that, we will not have any further earn-out payments to pay in relation to the six agency acquisitions in 2008. And the revenue contribution of these six advertising agencies were 33.1% of our total revenue. And as for the media cost of Guangzhou and the Shenzhen in aggregate is totally 10% of our total cost of revenue. For the traffic growth, we can get back to you later.

James Lee – CLSA

A quick follow-up. How much was the earn-out payment for this quarter? You say you have $1.6 million to go in the next quarter. I was wondering how –

Stanley Wang

In this quarter, there is no earn-out payment. In Q3, no earn-out payment was paid. In Q4, we expect it to be $1.6 million at the most.

Operator

The next question comes from the line of Sam Lon [ph] with Oppenheimer.

Sam Lon – Oppenheimer

Just a quick question and I apologize if this was asked earlier, I entered the call a little bit late. I was just wondering, for next year, are there any plans for you guys to get into the high-speed rail business, and if there’s any acquisitions or concession fees we should be looking for that from you guys.

Limin Li

[Interpreted] The local stations that we are currently partnering with across the country is regional managed. It has been our long-term strategy to stick to this terrestrial broadcasting technology so that we can broadcast live content to the transit systems that we are currently operating. But most of the highway trains operate cross regional routes. So even if there is a program broadcasted on these trains and high speed subway trains, they are not live broadcasting. So without this technology, we don’t expect to enter this high speed train area in the near future.

Operator

Ladies and gentlemen, this concludes the question-and-answer session for today’s call. I would now like to hand the call over to Ms. Helen Plummer, Investor Relations Officer for closing remarks.

Helen Plummer

Thank you all for joining us today. If you have any questions, please do not hesitate to contact me at helen.plummer@visionchina.cn. Good bye.

Operator

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect.

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