亚信科技

Recently, AsiaInfo Technologies Limited (known as: AsiaInfo, stock code: 01675.HK) plans to issue 182 million new shares to China Mobile International Holdings Limited (a wholly-owned subsidiary of China Mobile Co., Ltd.), accounting for approximately 20.0% of the shares of the enlarged company. After becoming a shareholder, China Mobile will be the second largest shareholder of AsiaInfo, which has attracted great attention from industry and capital circle. On April 29th, Gao Nianshu, Executive Director and CEO of AsiaInfo, accepted a joint interview with the media in Beijing on China Mobile’s strategic investment, in order to answer questions from all sectors of society.

The following is a summary of questions and answers.

(I)
Strategic synergy is the primary reason for investment

Journalist: China Mobile is the largest operator in the telecommunications industry, and AsiaInfo is a leading company in IT software, so what led China Mobile to invest in AsiaInfo?

Gao Nianshu:

China Mobile decided to invest in AsiaInfo based on its own strategy. It not only considers financial returns, but more values the strategic synergy potential between the two parties.

China Mobile has established the CHBN strategy, that is, transforming from relying on consumer market to the “four-wheel drive” of customer market (C), home market (h), business-government market (B), and new business market (N), which needs to be achieved by working with partners to establish an ecosystem. AsiaInfo is expanding from the former telecom business support system (BSS) to three new directions of network O domain (OSS), digital operation (DSaaS), vertical industry and enterprise cloud. The strategies are highly consistent with China Mobile’s strategy, which is the most important reason that facilitates the investment.

At the same time, both parties are highly complementary in terms of capabilities. Taking cloud computing as an example, China Mobile undoubtedly has strong infrastructure capability, brand advantage and customer acquisition capability, while AsiaInfo has strong capabilities in system construction (system platform construction of three domains of BOM), DICT market development, and data operation capabilities. Therefore, the cooperation between the two parties in the cloud computing market is worthy of expectation.

In addition, as AsiaInfo has formed a reliable and stable cooperative relationship with telecom operators, it performs a leading role in the industry in terms of technology, service and other capabilities, which can continue to provide operators with excellent business support services.

Journalist: What are the positive impacts of China Mobile’s investment in AsiaInfo at the capital level?

Gao Nianshu: Strategic synergy is the most important to this cooperation. About 40% of the capital obtained after the investment will be used to strengthen the research and development of new products and technologies; about 35% will be devoted to capital operations for investment or acquisition to complement the business and to match the assets and businesses of the development strategy of the company; and 25% will be used as general working capital. Overall, the investment brings greater benefits to already abundant cash flow of AsiaInfo at the capital level.

Journalist: Which areas of investment and acquisition will 35% of the capital be spent in?

35% of the financing volume will be used in the mergers and acquisitions for business synergy, for example, new directions of cloud business, digital operation, vertical industry development expansion, etc.

(II)
The investment will not affect the cooperation between AsiaInfo Technology and other telecom operators

Journalist: It is understood that in addition to China Mobile, China Telecom and China Unicom are also long-term partners of AsiaInfo, will the investment of China Mobile somehow affect the support of AsiaInfo to other telecom operators? Has AsiaInfo considered cooperating with other operators at the capital level?

Gao Nianshu:

The three major operators are both competitors and partners. At present, regardless of competition or cooperation, the relationship between operators has risen to a new height. For example, the network is regarded as a lifeline by three major operators. The networks of operators have evolved from the interconnection in the past to the current co-construction and sharing. In terms of the business, in the past, they all followed their respective corporate standards, but now, they have developed to jointly release industry specifications.

In terms of investment, the three major operators have many successful projects - BATJ (Baidu, Alibaba, Tencent, JD) participated in the mixed reform of China Unicom, but China Telecom and China Mobile have not refused to cooperate with BATJ. And the investment of operators in enterprises within the ecosystem has not affected the cooperation between these enterprises and other operators.

China Mobile will not interfere with the production and operation of the company after becoming the shareholder, and AsiaInfo will continue to exert its flexible advantages in the operation of market-oriented mechanisms. The company will not relax or reduce the service qualities and standards for China Telecom and China Unicom.

Besides, AsiaInfo has always adopted an independent division model, which has a strong firewall mechanism. People, data, systems and physical mechanism are completely isolated, and there is almost no transfer of personnel between different divisions, which is the standard and norm established by us over 20 years in telecom market. We will also continue to learn from the firewall isolation mechanisms of the four major audit companies to take stricter measures to protect the rights and interests of the three major operators.

AsiaInfo is willing to further enhance the extent and depth of cooperation with China Telecom and China Unicom at the market and technical levels on the basis of the existing extensive cooperation, as well as make commitments and guarantees on technology sharing, intellectual property sharing, information security and firewall mechanism.

(III)
What are the main directions of strategic synergy between the two parties

Journalist: Last year, China Mobile said that it would work on the public cloud market. Is this cooperation inclined to the strategic synergy of the two parties in the cloud business, and will AsiaInfo help implement the China Mobile Cloud?

Gao Nianshu: Cloud business is one of the directions of the cooperation between the two parties, and more importantly, we can extensively complement each other in three major areas.

First, AsiaInfo has the capability to build systems and platforms for multi-domain integration of B, O, and M (business support, network, and management). We are exactly the partner needed by China Mobile;

Second, both parties have the demand to develop the DICT government and enterprise market;

Third, data operations. Operators have a wealth of big data resources, and AsiaInfo has business experts in many industries and masters mature model algorithms. The cooperation between the two parties can maximize the commercial value of data.

(IV)
What are the main aspects of the strategic transformation of AsiaInfo

Journalist: In our view, the investment of China Mobile is a new starting point for AsiaInfo’s transformation. What are the goals of AsiaInfo’s strategic transformation? What are the specific measures?

Gao Nianshu: We hope that under the guidance of the new strategy, the company will achieve a business scale of over 10 billion by 2024, which is equivalent to creating another AsiaInfo in five years. The realization of this plan needs new growth elements.

The first is the expansion of the business support system of the operator to the multi-domain service integration of the business domain (B domain), network domain (O domain), and management domain (M domain). The businesses of operators in future must be integrated with multiple domains, which is in line with the trend of multi-domain integration development under the guidance of 5G. This layout has been started two years ago. We have formed a team of more than 200 members led by CTO Dr. Ouyang Ye to work on the research and development of 5G network intelligent product, and we have used AI in 5G network management, with results revealed at present. In the management domain involving finance, human resources, etc., we also have already conducted business.

The second is vertical industry and enterprise cloud. We have expanded from the single telecom market in the past to the postal service, energy, transportation, finance, government and other fields; in the direction of enterprise cloud, we are the MSP of Alibaba Cloud, and we are likely to deeply cooperate with Baidu Cloud, Huawei Cloud, China Mobile Cloud, Ctyun, Wo Cloud and so on.

The third is DSaaS, that is, data-driven SaaS service. Through SaaS-based services, data can be applied to different industries to truly play a valuable role. Over the past few years, this business of AsiaInfo has almost doubled every year, and it is believed to continue such rapid growth in the future.

Journalist: With the changes in new technologies and business forms, every company is seeking for transformation. Does AsiaInfo seek to supplement its strength from the entire ecosystem, or does it use internal motivation to obtain capability enhancements for transformation?

Gao Nianshu: This requires taking various measures simultaneously. The company should also quickly enhance its capabilities by introducing professional teams and capital operation while conducting internal training.

(V)
Whether the company is underestimated

Journalist: According to your prediction for the prospects of AsiaInfo, has the company currently been underestimated?

Gao Nianshu: I think that sooner or later the company will get a return from the capital market as long as it gains sustained growth by doing well in businesses. For me, as a CEO, the first thing I should do is to lead the company to do things right, and it's only a matter of time before we get returns from the capital market.