China Cable and Communication signs agreement to acquire a fiber optic backbone network throughout China
China Cable and Communication Inc. announced that it has entered into an agreement to acquire, in a number of phases, from Beijing Zhongminjing Technology Development Co., Ltd., through an arms-length commercial transaction, a two-core fiber optic backbone network covering 410 cities nationwide with a total physical length of 34,800 kilometers (approx. 20,880 miles) in China. This backbone network covers all 23 provinces, 5 autonomous regions, and 4 centrally administrative municipalities. Completion of this transaction is subject to due diligence and third-party determination of the values upon which the purchase price will be based.
The total physical length of 34,800 kilometers optical fiber was laid and passed the acceptance tests set out by the Ministry of Information Industry (“MII”) of the People’s Republic of China in November 2000. The acceptance license was issued by MII in the same year. This fiber optic backbone network is not yet equipped with a transmission and switching system. China Cable and Communication will undertake, or will provide leases to service providers, to fully equip systems for this backbone network in order to provide support to a wide range of communication protocols and services capabilities. The construction cost of the Network is estimated at RMB2 billion (approximately US$235 million). The final contract purchase price of this fiber optic backbone network will be based on the appraised value determined by internationally renowned valuation experts.
China Cable and Communication has also been selling “set-top” cable boxes in China. The fiber optic backbone, added to the current business model, is intended to put China Cable and Communication in a new league of convergent players.
With most of the population of China spread out, and phone and cable services not readily available to every citizen, it is critical that a cable/communication company finish what has been started. While the Company is at its infancy in market penetration, it is already being viewed as a true pioneer of the convergent communications and content delivery infrastructure of China.
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