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CDC Mobile Announces Intention to Make a Strategic Investment in
a 3G Content Provider in Japan
January 25, 2007
CDC Mobile, a provider of mobile value-added services ("MVAS")
in China and a business unit of CDC Corporation, announced it has
entered into a letter of intent to make a strategic investment in
BBMF Group, a 3G content provider in Japan. This will be the first
of CDC Mobile's targeted investments through its recently announced
US$100 million 3G Content Partner Program designed to provide first-mover
advantage in the anticipated 3G content market in China.
Under the letter of intent, CDC Mobile intend to invest US$20 million
in convertible bonds issued by BBMF Group Inc. and the two companies
would form a strategic alliance in operations to jointly target
3G markets in Japan and China. CDC Mobile would have a first right
of refusal to distribute BBMF's 3G products and services in China,
subject to terms to be agreed between the parties.
Headquartered in Tokyo, BBMF Group. is considered a market leader
in 3G content in Japan with one of the largest mobile comic site
and mobile online game site in Japan and one of the largest library
and fastest growing number of files and titles available for download
on any carrier. The company has licensed the right to publish mobile
versions of over 1,300 comic titles by 470 authors. BBMF was ranked
the Number One site in the Comic/Novel/Photo Book category in 2006
and won the award for best comic site as voted by the subscribers
of KDDI, the second largest carrier in Japan with 27 million mobile
subscribers, 25 million of which are 3G mobile subscribers. The
company has recently been experiencing significant growth with 30
to 40 percent month- over-month sales growth during Q3 and Q4 of
2006. Based upon revenues in December 2006, BBMF's annualized revenues
would be approximately US$20 million with gross margins of over
60%, and revenues are anticipated to grow significantly in 2007.
The company has more than 620 total employees with 120 workers in
Tokyo and the remainder located in offices in Nanjing, Hong Kong
and Taiwan.
Japan is one of the early adaptors of 3G with more than 60 percent
of mobile subscribers already using 3G handsets. The 3G content
market in Japan is projected to be US$1.2 billion by year 2008.
According to the MII (Ministry of Information Industry), mobile
subscribers in China reached 461 million, and the mobile penetration
rate reached 35% at the end of 2006. According to a published speech
from the Minister of MII, 3G services in China are expected to launch
in 2008.
"We are very impressed by the strong growth and vision of
BBMF, and their established leadership position in the 3G markets
in Japan," said Fred Wang, Chairman of CDC Mobile. "Through
this investment, we are looking to participate in this rapidly growing
market in Japan and prepare our company to capitalize on the anticipated
3G market in China as it develops in 2008. Our 3G Content Provider
program allows us to take advantage on similar opportunities with
other 3G companies, furthering our ability to seize the 3G first-mover
advantage in the largest and fastest growing mobile market in the
world."
As previously announced, CDC Mobile is investing up to US$100 million
in its 3G Content Partner Program targeting leading 3G content providers
and aggregators in North Asia and Europe, as well as the creation
of new original content for the 3G marketplace. In another move
to further expand its mobile content, CDC Mobile recently announced
an agreement with a leading South Korean mobile Internet content
provider for exclusive distribution of highly popular South Korean
mobile games, videos, music and fashion advertisements, in China.
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