Keep closer eye on FCPG at .77 / Cannabis play CANA recent breakout in 3 range monitor

Jun. 01, 2011 2:14 PM ET
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Colorado Mountains Native Mark Chacon is founder and editor in chief of . Greenbackers is a Nationally Recognized source for tracking the Fastest Growing Stocks under 5. We relay on both fundamental and technical analysis. We specialize in short and intermediate term swing trading strategies. We also focus on strong trending / outperforming situations. Greenbackers provides daily newsletters to our subscribers at that provides information on exceptional earnings reports, panic-oversold situations, breakout patterns, unusual price/volume activity, sleepers about to awaken, undiscovered technologies that have the potential to revolutionize an industry, compelling situations, etc.
Best strength from prior mentions: 
Cannabis proxy CANA breakout from recent basing in upper 2 we'd been discussing.....part has to do with large bid/ask spread...
Last Trade: 3.52
Trade Time: 11:15AM EDT
Change: Up 0.52 (17.33%
Chart forGeneral Cannabis, Inc. (CANA.PK)

FCPG climbing back......Keep in mind the upbeat status of yesterdays acquistion confirmation / resulting breakout.....we expect the acquisition to up revs 2-3fold accret annually...
Chart forFirst China Pharmaceutical Group, Inc. (<a href='' title='First China Pharmaceutical Group, Inc.'>OTC:FCPG</a>)
GAME best response to earnings
GAME 7.37 +0.23 +3.22
Updating on NTWK...last weeks bullish news unable to build upon, however.ongoing support around 1.50.....attractive risk/reward at present levels...
NTWK 11:49AM 1.59 Up 0.05 Up 3.25% 300,017 668,383  
NetSol Technologies, Inc. (<a href='' title='NetSol Technologies, Inc.'>NTWK</a>)
First time mention COBI earlier pickup worth noting
Day's Range: 0.18 - 0.27
52wk Range: 0.03 - 0.46
Volume: 863,792
Avg Vol (3m): 74,508
Notice similiar run about a month ago.....suggests to keep on watch list once the dust settles...perhaps a higher low around .15

XDSL volume pickup
XDSL.OB 11:36am EDT 0.0084 Up 0.0002 Up 2.44% 994,099 894,727
CHTL continues to base in .14 range......upcoming name change as business growing increasingly outside of China......VelaTel
recall candid, upbeat interview yesterday..(see below)
CHTL - monthly newsletter      1-Jun-11 10:59 am    
Go to chinatel website - investors - and May 31 Newsletter. A lot of good information. All I can say - this stock worth a lot more tan it is trading now.



Earlier EDWY pr a non event...
EDWY.PK 10:05am EDT 0.0002 0.00 0.00% 5,064,477
CHTL interview:
Interview with George Alvarez, CEO of ChinaTel
Date Published: 31 May 2011

Mr. George Alvarez

George Alvarez was appointed a Director of ChinaTel in March 2008 and Chief Executive Officer in June 2008. He was Chief Executive Officer of Trussnet Delaware, an architecture, engineering and construction management firm, from 2004 until December 2007 and was Co-Founder of VelociTel, Inc ., VelociTel, LLC and their predecessor companies in the wireless network service industry ("VelociTel"). Mr. Alvarez served as VelociTel's President and Chief Operating Officer from 1987 to 2002. He graduated with honors from Airco Technical Institute in Fullerton, California. Mr. Alvarez provides expertise in all aspects of the design, deployment and operation of broadband wireless telecommunications networks.

Frost & Sullivan: We view ChinaTel as one of the disruptive and pioneering companies in the broadband services world especially in the emerging world where broadband can really make a difference. That said we feel that many people's awareness of ChinaTel isn't where it should be. I think a good starting point would be for you to introduce us to who ChinaTel is.

George Alvarez: ChinaTel is a public company on the OTC. We own broadband assets in different parts of the world, with China being our primary market. We have 3 relationships there. The first with a company called Chinacomm. Our second is with a company called Golden Bridge. The third is with a company called Sino Crossings. Sino Crossings is a fiber company, we acquired that asset in the 4th Quarter of 2010. Our intent there is to light up the 34,000 kilometers of dark fiber they own. We are in the process of lighting up the first 9,000 kilometers to provide the interconnection and transport for our wireless last mile solution which is Golden Bridge and Chinacomm.

So basically this is going to act as the central nervous system for your organization?

GA: That is correct for China. Golden Bridge is a 3.5 GHz licensed spectrum holder in China where there are only two active (Chinacom and Golden Bridge). The other 3 are the primary cellularincumbents (China Mobile, China Telecom, and China Unicom). The nice thing about what we do is we are building a BWAN (Broadband Wireless Access Network) which has the full support of the Chinese Government. The three incumbents are still rolling out 3G, so we have about a 3 to 5 year window in which no one is playing in our sandbox so to speak in China.

So BWAN gives you a three-year advantage? Can you explain to the layperson what the difference between these networks is?

GA: I think the easiest way to go is to understand that the current networks are all centered on voice and voice is the primary function in really all incumbents around the world. What we are deploying is a full data network. So there are a thousand different terminologies about what constitutes 4G and that is really a moving target. For us 4G is a true data networks where voice is data, video is data and obviously data is data. So when you have that triple play in that environment that is what I consider 4G. Voice going into LTE which is a facilitation of adding data to that incumbent spectrum is what, maybe 3.9G? 4G continues to be a moving target and it really depends on the current marketing schemes.

Why did you select China as the go-to market?

GA: The answer is easy, it has the highest potential growth, we have great relationships there and the ability to launch green-field networks from the inception with the potential for a huge number of POPs seemed to make it the most logical place.

What are some of the key growth challenges that ChinaTel faces in the communications market and what steps are you taking to overcome them?

GA: Over the past five years it has changed radically. Five years ago if you were to talk about broadband and distribution for high quantities of content like movies over the Internet or television over the Internet people would have thought you were on drugs. The migration of the path to where people see the value of what it is to have one device that can offer all those solutions of voice, video and data is relatively new, probably within the last year. So for us when you look at the challenges of deploying these things, it is a new technology, so you are learning in the field. You are not really calling on somebody else's expertise. You have to create your own solutions from scratch. On top of that you have the terminals or the Customer Premise Equipment. Those end user devices are now being created whereas even a year ago they were not. This offers a great solution to us. Now in addition to dongles and things of that sort (little USB drives and little cards that convert Wi-Fi to WiMAX and back, WiMAX to Wi-Fi) you now have pads that offer everything within your broadband spectrum allocation, voice, video and data.

A lot of people have not been to China, Is this going to resonate with the Chinese populace?

GA: It already is. Like the rest of the world, the Chinese, when they see technology that is innovative, everyone wants it. They want the solutions that a company like ours is offering. With the connectivity that we are offering you have a lot of applications that up and till now were not available.

Ultimately will you add voice and video and other value added services to your offering or will it be better to step back and continue to play that agnostic role?

GA: Well, the devices now are allowing that. To us now, voice is data, it's Voice over IP. Video is data: you know having a solution where you can communicate freely, view the person you are talking to, those kinds of convergence solutions are happening now. Those are the things we are offering in China and we are offering the solutions in South America in places like Peru. Again it is about what the consumer wants. As a carrier, our job is to deliver what the consumer wants.

Service Providers would like to deliver mobile video and wireless broadband video, but it seems to have failed as a business model "per se". That said things like Hulu and Netflix and delivering corporate content has seen dramatic uptake. Can you talk about your network and how you are going to be able to handle that?

GA: We have chosen a company from China called ZTE as our infrastructure equipment provider. They are quite innovative with regards to their platform. The platform that we have at the carrier level is 4T8R WiMAX Solution, an 802.16e solution that is software upgradeable to LTE. Alternatively, we could do a dual WiMAX and LTE (WiMAX M, 16M or LTE). We have the flexibility to go either way; it is the same protocol. So you have 85% of the infrastructure is not going to change: we won't have to redeploy equipment—all we have to do is a software upgrade to offer those types of completive solutions.

You mentioned ZTE as a partner. Have you selected any other partners?

GA: We are sticking with them as a primary partner. We have a worldwide relationship with them. They provide us with product. They also give us very attractive financing terms to deploy those networks. But, at the same time, we think that they have the best solution for what we are doing, namely the protocols. They have a common denominator platform where going one direction within their networks is relatively easy with regards to upgrading solutions by software. More importantly the support that they give companies like ours is pretty good with regards to carrier support services, operational support, AAA support things like that. We are sticking with them.

We have heard some great things about ZTE and their support. I understand that you have done some innovative things from a financing standpoint with ZTE that allows you to limit your CAPEX.

GA: Keep in mind that they are in China and our primary market is in China. Our solution for China was met and resolved with them and we are very happy with the package we got from them. I guess the primary reason for them doing business with us is what I discussed when we first started. We have the three incumbents that are really focused on upgrading their networks to 3G and we are responsible for deploying broadband access in these cities and these locations so we are the only game in town when it comes to those broadband solutions so I think that is why they agreed to work with us and give us the financial support. They finance 85% of our total CAPEX.

What is your opinion of your best practices that allowed your company to make these decisive moves and share so openly what you are doing?

GA: We started two years ago as a fledgling company and I think people know that trying to raise capital in 2008 and 2009 was totally impossible. So the capital restrictions hindered our plans to build, but that's now been resolved. The vendor selection process was quite involved, we went through our own trials in China for over six months with top equipment vendors in the world and we chose ZTE. After we chose them, we entered into a worldwide agreement with them and after that we entered into the specific contracts per country. We have a worldwide MOU package but then each country has its own financing package depending on the ebbs and flows of the environments in each country. So it was a process. The fact that it was not a sharp selection created a good relationship with them which we are quite pleased with. At the same time because of our own monetary constraints means that we didn't have the flexibility to have carte-blanche checkbooks so we had to be very flexible with how we did things to make the money last and create the solutions we have now and to make the acquisitions that we did throughout the process.

You mentioned other countries as well. Can you talk a little bit about what your expansion plans are outside China and the things you are doing in places like Peru?

GA: Well China is our number one market and by the end of 2015 we should be in about 60 cities in China. That's our number one focus. Our secondary focus is in South America. We have spectrum assets there. We are currently deploying Peru for the entire country. We have already placed orders for the equipment; as a matter of fact, I think the equipment lands while we are speaking. That is a very aggressive market for us as the anchor for that continent. From Peru hope to have about three other spectrum holdings there which I cannot discuss right now. In Eastern Europe and Russia we will have spectrum holdings there also. You will likely see those announcements in Q2 or Q3.

Can you talk a little about your channel strategy or go-to-market strategy in each country?

GA: China is a little different. You start with the Government ministries: they are the low hanging fruit and are hungry for connectivity. That's your anchor tenant; let's call them the "Costco" of that "strip mall". The second tenant in our network are the corporate clients, the individual companies that are growing rapidly in China also need these solutions. Every company needs to be connected to the Internet and we fill a niche there that nobody else can deliver with regards to our distribution and our speeds. The third is the individual subscriber. That individual will buy a pad and will be connected or will buy a dongle for an existing computer or a little Wi-Fi / WiMAX card that we will be selling—it is about the size of a credit card—that provide solutions for people that have an existing Wi-Fi capacity in their existing devices. The combination of those plus some other cool new products—we are also offering Voice over IP or other new services in China. In South America, the spectrum is 2.5 GHz; we basically offer the same products as people do here in North America—it is the same solutions, same frequencies, and the same network architecture. In Eastern Europe and Russia, that is either 2.5 or 3.5 spectrum, we will bring comparable solutions as we do in China. The fiber side is a little different—that's interconnect and transport—that is really to create our own VPN. That allows us to save on OPEX with regards to paying other carriers to interconnect to their fiber and carry our data. That tends be quite a costly exercise on your operating margins. That is specifically designed to maintain as much of the capital inside the organization as possible.

Do you foresee some wholesale business with, say, a North American service provider?

GA: We absolutely see that business with North American service providers plus overflow from incumbents in China. We are paying to light it up and are starting at 10G and will take it all the way up to 100G in the next two years depending on the capacity requirements. We expect a lot of capacity in China. That is just the way of the future you have to build a big pipe to handle all the data from all these applications and distribution of content. This is especially true in China—IPTV is very big in China. A lot of people say their "Cable" to their home is IPTV and we are going to provide that wirelessly. You need a big pipe for that. That is one of our prime targets in China.

You have a lot on your plate right now. What else keeps you up at night? What's the next big thing for ChinaTel?

GA: Right now it is just implementation. I've handed off our current acquisitions to deployment. We will have the first cities up this summer in China. We will have seven cities operational in Peru.

The deployment challenges—I'm not going to say that they are easy, but it is what we do. We are engineers by trade, deploying wireless networks is our foundation. When you have time and you have a target (our target is to generate revenue by the 3rd quarter) there is a lot of pressure on operations to deliver. That is nice in a CEO role, because the pressure is off me and on them to deliver the product for our shareholders. Other than that, every day the political winds modify that so you have to be flexible enough or small enough to move depending on the changes in opportunities in market. For example, right now the opportunities in Eastern Europe and Russia are very great. They are talking about entering into the WTO and that is exactly what happened in China. When China entered the WTO the market stabilized and foreign investment increased in those territories. We have to follow those winds of change and capitalize on them when they become available. We think that we are there also to do that.

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