How does this impact VelaTel’s 75% owned communications tower fuel cell maker VN Tech?
Since VelaTel’s VN Tech mobile tower fuel cell is
a) The ONLY one approved by both ZTE and the Chinese Ministry of Industry & Information (MIIT)
b) Fully tested and approved by China Mobile and approved as a Communications Industry standard
c) VN Tech is a PRC domiciled subsidiary of VELA
d) MIIT has “requested” that critical base transmission towers (BTSs) have off-grid power back-up without traditional short lived battery back-up…
…It is logical to assume VELA subsidiary VN Tech SHOULD see significant purchase orders from this giant deployment. China Mobile network will be the largest 4G LTE network yet seen -- the operator has more than 700 million existing customers on 2G and 3G networks. China Mobile has said it expects to install its initial 200,000 LTE base stations (BTSs) this year.
China Mobile’s ENTIRE 4G LTE budget is reported at $15 billion—so this is just the FIRST 20% of the network upgrade.
As NBT Equities Research has reported for months…Velatel’s subsidiary VN Tech is the ONLY approved vendor to ZTE for one of the key requirements of building LTE base stations in China—fuel cell back-up power systems. In our June 25th post, we said
Let’ connect some of the dots here:
#1 The China Ministry of Information and Telecommunications (MIIT) has requested that all 4G base stations have emergency back-up power that is NOT dependent on the sketchy Chinese power grid or uses lead batteries—too many black outs and brown outs to be dependent on the grid to charge batteries.
#2 China Mobile aims to build 207,000 NEW 4G base stations in 31 provinces around the country
#3 China Mobile, facing increased competition from China Unicom and China Telecom in the 3G market, is pinning its hopes on 4G to win back high-end 3G customers from the two smaller rivals.
#4 China Mobile last year carried out large-scale TD-LTE trials in 15 cities in China with about 20,000 base stations that included many VN Tech hydrogen powered fuel cells in the tests in Hangzhou, Guangzhou and Shenzhen.
With their exclusive contract with ZTE, VelaTel’s VN Tech subsidiary is clearly in the catbird seat for a share of the first 60,000 base stations now under development.
At $20,000 per base station for each there has been significant talk of subsidies from the PRC government. My guess is with this contract IF there are going to be subsidies (Federal and State/Region) of up to 30% of purchase price THESE subsidies will be announced shortly as well.
60,000 base stations at $20,000 per unit is $1.2 billion…NO one is expecting that level of sales. With large orders the pricing will come down 20%-30% or more.
We DO expect however that the HIGH volume base stations and areas in earthquake/flood and intermittent power supply will be mandated to have fuel cell coverage. China Mobile is in a huge competition to provide BETTER and more reliable service than China Unicom and China Telecom…service during power outages/brown-outs and disasters will be a BIG service factor.
$100 million+ of fuel cell sales is certainly on the table. Ballard Power is the only competition we have identified with an Asian distributor…but they are a Canadian company. Both Huawei and ZTE will follow normal protocol and buy as much of the new tower parts from PRC based companies including VN Tech.
At a $3 million market cap, $100M of sales at 25% net margin to VELA is an enormous value creator. How enormous? We will get a good idea when the first purchase orders come to VN Tech.
This China Mobile 4G build out will be a 24-36 month project. With tax credits, high volume cost efficiencies and China’s new 5 Year Plan mandating green energy solutions for its state-owned enterprises (SOEs) of which China Mobile is the largest, it appears VELA’s VN Tech is finally set to capitalize on its strategic partnership with ZTE and its CEO Mr. Luo Hongye, the CEO of its subsidiary VN Technologies, who is one of ZTE’s founders.
Is it worth a few bucks to buy a “virtual option” on the potential for $100 million+ of fuel cell business and $20M+ of profits?
When this news is widely disseminated, my bet is more than a few investors will like the risk/reward.
Disclaimer
Some also seem to be forgetting they closed on that major CM acquisition this summer also that will bring over 10mil in annual revenues....Also a related artice from NBT that better details the potentials then the news from the company...
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VELA’s China Motion Mobile Expands Coverage to Macau…The Vegas of Asia
By Tobin Smith | July 23, 2013, 5:00am GMT Jul 23 2013
VelaTel’s vision for its already cash flow positive ($1-2 million forecast in 2013) Hong Kong based subsidiary China Motion is to become the 9 SIM chips-in-one super-duper “world phone” for mainland Chinese (PRC) and Hong Kong business and consumer travelers.
This world phone vision is proprietary technology and UNIQUE to China Motion (CM): instead of buying and carrying 9 different SIM cards to avoid nasty roaming charges for both voice and data, CM customers today have only ONE SIM that gives them local non-roaming voice/data service in China/Hong Kong and Taiwan.
Now let’s add the gambling mecca of the East, Macau, to the one-SIM one world service!
Macau USED to be called “The Vegas of the East”, but with their casinos cashing in $38 Billion dollars last year (25% MORE than Las Vegas) it is now the gambling center of the world. Macau has over 25 Million visitors from China, Hong Kong and Taiwan…so it was only natural that China Motion would extend coverage to the region. When traveling between China, Hong Kong, Taiwan, and Macau, China Mobile customers avoid expensive international roaming charges making China Motion’s single GSM SIM card technology very appealing to the always cost conscious Asian masses.
This is great news for China Motion’s current 100,000+ subscribers, but more importantly, this opens up the doors for more subscribers that frequent Macau…not only for the tourism, but for the government as well since Macau is one of the two special administrative regions for China (the other being Hong Kong). “We are pleased to be able to respond to our current customers’ needs by extending our unique service to Macau,” says Peter Hung CEO of CM Mobile.
VelaTel purchased CMMobile on March 1, 2013, as part of its global expansion. "CMMobile's unique and proven multi-number cell phone service fits perfectly into our global telecom strategy. We believe this type of service has great possibilities, introducing into Macau is just the beginning as we expand this service worldwide," said George Alvarez CEO of VelaTel.
The big picture? One phone/ONE SIM Chip/9 Asian and North American SIM service without roaming charges via the China Motion MVNO (mobile virtual network). With over 120,000 MVNO customers now CM is growing, cash flow positive and in the midst of an upgrade to 4G LTE service—for which they will upgrade tens of thousands of their customers.
VELA CEO George Alvarez and President Colin Tay are working on new MVNO agreements with Singapore/Malaysia/Korea/Thailand/Philippines as well as US and Mexico deals. They are the ONLY MVNO that works in China now (they buy wholesale minutes from China Mobile and run on its network).
CAN the CM MVNO network get to one million subscribers? With over 2 billion subscribers in their fully expanded network, and the ONE proprietary technology that supports ONE SIM chip for eventually ALL the Asian world (and North America too) the CM opportunity is worth a LOT more than VELAs’ current $2M market cap.
CM cash flow ALONE in 2013 looks like $1.5-$2M –and with the upgrade to 4G in Hong Kong and then China next year…they will have the MOST price competitive “super phone” in the Asian world.
PS trading 6-10 million shares a day looks to cleaned up a LOT of the outstanding shares…we will be adding to our position here.
Source: Globe Newswire
Bottom Line: Mabye it’s time to start loading up on VELA especially at these dirt cheap prices..
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