Telstra in Chinese media push

Australia’s incumbent telco Telstra is pushing ahead with its expansion plans for the Chinese media sector, buying controlling interests in two mobile content and online music businesses.

Telstra has bought 67% of both China M, a supplier of consumer media content serving 350,000 customers, and of Sharp Point, which provides technical services for China Mobile’s central music platform. The businesses enjoy “strong commercial and contractual links with the country’s mobile telecoms providers.

The acquisitions, which will be funded from existing cash facilities, accelerate Telstra’s plans to achieve A$1 billion in revenue with strong cash flow and margins from its Chinese media assets by 2013.

Sol Trujillo, Telstra’s CEO, said: "Our success with the Telstra Next G network shows that Telstra knows how to offer customers a compelling mobile data experience. We are now exporting that expertise to China.
"As I said last August, we expect Telstra's Chinese online and content businesses to generate A$1 billion of revenues within five years, generating strong returns. Today's acquisitions will make significant progress towards that aspiration."

Both businesses are EBITDA positive and pro forma revenues are expected to amount to A$100 million in 2009.

China has over 600 million mobile phones, with penetration at only 50%. Telstra also hopes to gain from the move to 3G from 2G systems, starting later this year.

Telstra Media managing director Justin Milne said: "Telstra is now well positioned to benefit from China's predicted near-term economic growth of 6-8 per cent, as well as the expected rapid increase in the penetration of mobile phones and personal computers, and the imminent shift of Chinese consumers from 2G to 3G handsets."

Since 2006 Telstra has purchased majority interests in SouFun, China's number one real estate website; Norstar Media, operator of popular Chinese auto and digital device sites and; and Autohome/PCPop, operator of the country's leading automotive online sales site and popular digital device site