Caixin
Sep 25, 2020 04:47 AM
BUSINESS & TECH

National Broadband Company Debuts to Lead Cable TV Consolidation

China Broadcasting Network Corp. Ltd. (CBN) is the majority shareholder of Unified National Network
China Broadcasting Network Corp. Ltd. (CBN) is the majority shareholder of Unified National Network

China’s first national cable TV provider and newest wireless carrier was officially established to carry on a decade-long, state-driven restructuring to consolidate the country’s fragmented cable TV industry.

Unified National Network (UNN) debuted Thursday in Beijing and unveiled its top leadership. With 101.2 billion yuan ($14.9 billion) of registered capital, the company is majority owned by China Broadcasting Network Corp. Ltd. (CBN), which itself was formed six years ago with a goal of consolidating many of China’s regional cable TV companies.

UNN also counts 45 other shareholders, including e-commerce giant Alibaba Group Holding Co. Ltd., electric grid operator State Grid Corp. of China and regional cable TV operators.

Plans to consolidate China’s various regional cable networks date back to 2012 when the State Council green-lighted the formation of CBN with that specific mission. The company was officially set up in 2014 but has struggled since then because of the complexity of its mission.

The drive to complete the consolidation gained extra urgency recently as cable TV companies lose market share to more nimble private-sector rivals like iQiyi and Youku that deliver TV over the internet and have national reach. China had 212 million cable TV subscribers as of the third quarter of 2019, down 7% from a year earlier, according to third-party research. Of the 10 publicly listed companies in the industry, six recorded revenue and profit declines that quarter.

Earlier this year, the plan to create UNN led by CBN came into the spotlight. Several sources told Caixin in February that multiple broadcast-related government agencies were giving an extra push to create the new company that would finally consolidate cable TV operators into a single company that would also offer 5G services.

Song Qizhu, chairman of CBN, was named chairman of UNN, the company said Thursday. CBN general manager Liang Xiaotao became the new company’s vice chairman, and Liang’s deputy Lu Jianjian was appointed UNN general manager.

A CBN executive told Caixin recently the business registration of UNN will be completed as soon as Friday and its commercial operation is set to start in mid-October.

According to the plan, UNN’s business will cover nationwide cable network construction and operation. It will offer a wide range of services like home-based broadband, pay TV and 5G wireless phone and internet service.

CBN will put its 5G wireless service license and assets with 32 cable TV business licenses into the new company, according to Lu.

CBN last year received China’s fourth license to offer cutting-edge 5G telecom services alongside the nation’s three major wireless carriers. In August, one of those carriers, China Mobile, said it would jointly build its 5G network with CBN, providing CBN with a way to quickly get into the capital-intensive business.

There is still a long way to go for UNN to complete consolidation of cable assets. Broader efforts at asset integration will start next year, Lu said.

CBN will put up 10 billion yuan of assets and cash for its stake in UNN, with the remaining 40 billion yuan to be delivered in the next 10 years, Lu said.

Units of Alibaba and State Grid each agreed to contribute 10 billion yuan and receive 9.88% stakes. Guangdong’s network operator will receive 6.15%, and Beijing’s, 3.85%. Three publicly listed regional network operators, including ones from Shanghai and adjacent Jiangsu province, will provide 500 million yuan each for 0.49% stakes. Four other operators will provide 200 million yuan each for 0.2% stakes. Other investors will provide assets and receive stakes in exchange.

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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