A recent greenbackers blog on CHTL
Tuesday, March 15, 2011
.: Examing CHTL at .18 on deployment news. 10mil deal major milestone for them :.
Monitor CHTL a little closer at .18 given 10mil 4g deployment deal in China..significant milestone for them & further secures partnership with major company.
•ChinaTel Signs Contracts for ZTE to Supply Equipment and Services for Its Wireless Broadband Network in Fujian ProvinceBusiness Wire(Tue 10:20AM EDT
Stock ran from .14 to .42 back in early Jan and has been acting up some march....Another similiar run into the spring wouldn't surprise.
Posted by: greenbackers - 4:31 PM
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ChinaTel Group, Inc. has been VERY busy and engaged over the last 60 days moving their 4G data network development projects AHEAD of schedule and as promised. We were waiting for the nine-city equipment contract with ZTE to be released to update our coverage. Today’s announcement continues to demonstrate, in our opinion, just how valuable the ZTE partnership is for both parties…but especially CHTL. The Marketing Plan for the Chinacomm and Golden Bridge Networks: Bear in mind that there is a VERY large existing distribution channel of over 1 million sales agents in China who resell cell phone and ISP service—virtually all prepaid. The reseller sales channel is DYING to get the Commercial and PRC Government Sales: There is significant pent-up demand for 4G broadband in the commercial and government markets as well. ZTE will be a significant ally is these accounts—they sell to virtually EVERY business and government agency in China. Updated Financial Forecasts for CHTL Projects: CHTL informs us they are done with their PeruSat updated financial, capital expenditure, and operation expense forecasts, and we can infer by the closing of the ZTE contract for Golden Bridge that those forecasts are complete—no forecast, no contract. Sino Crossing is very complex given the range of pricing and deals in fiber contracts—everyone is different.
CHTL management is in China for meetings with all their partners in China—CECT-Chinacomm Ltd., Golden Bridge Networks and their Sino Crossing, Ltd., team.
We will sit down with CEO George Alvarez at the end of his latest trip and get a complete update on a number of outstanding projects and issues:
Chinacomm/Golden Bridge $8-$12 a month all-you-can-eat data plans.
Here’s why: The basic monthly cell phone cards they sell are less than $5 a month—and the Chinese change plans and SIM cards like they change their clothes. The commissions on the CHTL plans will be DOUBLE what they make on selling SIM cards and non-broadband ISP deals. We expect a VERY high renewal rate for 4G broadband service—we all know that high-speed broadband is extremely addictive and once you get 4G broadband, you are hooked for life. Remember, 3G sales for China Mobile/Telecom/Unicom are less than 35 million users in a market of. 700 million wireless accounts. The reason? COST. $20+ a month for 3G service limits the market--$8-$12 a month UNLIMITED 4G broadband addresses a market an order of magnitude larger.
That said, we expect the Sino Crossing forecasts to be published shortly, with the ZTE contract for the first 9,600 km of fiber being lit this year—again: no forecast, no contract. The Chinacomm Network forecast update is by far the easiest and should be in our hands by month’s end as well.
We look forward to an extended conversation with George Alvarez upon his return from his latest China journey.
-TobinOutcome of Chinacomm Negotiations: CHTL is trying to convert the large outstanding balance of deployment contract receivables—over $120 million by our estimation—against the outstanding balance of $175 million for the JV capital contribution. We have no word on this project’s progress, and we will discuss this in our upcoming meeting with Alvarez. Issac Organisation Stock Purchase Agreement: The Issac Organization continues to perform on its stock purchase agreement of June 2010. The agreement ends this year and we assume that modified again to reflect the below $1 share price. The good news is that, based on our analysis, CHTL requires significantly less capital to complete its initial deployments in China and Peru—a LOT less. With 85 percent long-term vendor financing from ZTE (5 year 5% interest only) available for all CHTL network deployments, our back-of-the-envelope calculation is that, with a minimum of $50 million from Issac SPA, CHTL has all the capital it needs through initial Chinacomm/Golden Bridge/Sino Crossing/PeruSat deployments. AMEX/Nasdaq Uplisting: CHTL qualifies for AMEX listing today except for two easy-to-solve issues: they need to add three directors and the stock price needs to be over $2 for a 30-day period. The directors issue will be resolved shortly—if NBT ChinaTel Capital Partners LLC completes our fundraising and reaches 19.9 percent ownership of the Series A common, we will ask for two board seats. CHTL has identified a number of independent board members as well. As soon as CHTL becomes a revenue reporting company— in the 4th quarter of this year—the additional analyst and industry coverage will take care of the stock price, in our opinion.
7) Additional Network Development: CHTL has been actively courted by 3.5Ghz/2.5Ghz spectrum owners in Latin America, the Caribbean, Southeast Asia and Eastern Europe for additional network developments. They are keeping their eyes on the ball in China and Peru—but with the ZTE partnership we expect them to announce some very significant new network development deals similar to the Golden Bridge Network—100 percent reporting revenue and 51 percent control like deals with 85 percent ZTE financing and deployment services.