Geely-Tencent Duo Wins Bullet Train’s Wi-Fi Project
A partnership formed by China’s largest private automaker and internet giant Tencent has won the bidding for the national railway operator’s Wi-Fi project, shelling out 4.3 billion yuan ($673 million).
Zhejiang Geely Holding Group Co. will own 39% in Bullet Train Networks Technology Ltd., an onboard Wi-Fi provider wholly owned by the state-owned railroad operator China Railway Corp. (CRC), while Tencent Holdings Ltd. will take another 10%, sources familiar with the matter told Caixin.
CRC in early April revealed the plan to sell a 49% stake of Bullet Train Networks, the sole operator of Wi-Fi services on select bullet trains.
Multiple technology heavyweights including Alibaba Group Holding Ltd. and Baidu Inc. had expressed interest in the bidding, according to a source from the CRC.
The concluded sale price of 4.3 billion yuan is relatively higher than market expectations, the source said. This showed the stake sale was much sought after.
By bidding for the CRC’s Wi-Fi project, Geely is seeking to expand into the “smart mobility” area, said Li Shufu, president of Geely. The automaker has ramped up efforts in the field of digitally connect transportation, such as ride-hailing.
For Tencent, the Wi-Fi business on bullet trains could provide valuable access for the social media giant to reach a larger number of users, according to Zhang Wei, vice president of Tencent’s Internet Plus division.
The sale of the partial Wi-Fi business marks CRC’s latest move to bring in private investors to reduce its immense debt. As of June, CRC had accumulated 4.8 trillion yuan in debt after years of frenzied development to build up the country’s ever-expanding railway network.
Last year, the rail operator signed a 40.9 billion yuan deal with a consortium led by private equity giant Fosun International Holdings Ltd. to build and operate the country’s first privately controlled rail line.
CRC has also been diversifying revenue sources by partnering with third parties, including mobile payment platforms WeChat and AliPay, to offer ticketing and meal services.
Contact reporter Mo Yelin (email@example.com)
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