(Yicai Global) June 7 -- China's internet conglomerate Tencent Holdings and carmaker giant Zhejiang Geely Holding Group have stepped in to the burgeoning Wi-Fi business on the country's popular high-speed trains by jointly buying a stake in the operator company under mixed-ownership reform. The move will extend both companies' access to massive data of urban travelers, while giving them the opportunity to offer value-added services.
Both firms acquired 49 percent equity of Bullet Trains Network Technology, on-board Wi-Fi provider owned by the country's national railway network operator China Railway, they said. In a separate statement, Tencent announced today that it will hold 10 percent stake in the company, while Geely will own 39 percent.
Apart from providing secure Wi-Fi connection, Tencent and Geely will jointly manage value-added services with China Railway and its related companies, according to social messaging app Tencent QQ. The deal would also allow Tencent to provide its mobile payment, games and social media services to millions of travelers.
"Geely and Tencent will collaborate to increase the number of Wi-fi hotspots and create a platform offering value-added services throughout the high-speed rail network. It will offer ticket services, shopping, tourism and catering services from the jointly developed Wi-fi Platform," said a statement from both companies.
Founded in December, Bullet Train Network Technology is the only subsidiary under China Railway, which undertakes the Wi-Fi business on the bullet trains. In April, China Railway officially listed 49 percent of the unit's equity on China Beijing Equity Exchange, CBEX, at a base price of just over CNY3 billion (USD470 million) as part of China's mixed ownership reform, which aims to open state-owned enterprises to private investors through mixed ownership structures to enhance their competitiveness and financial performance.
A consortium of 14 private investors, including Tencent, Alibaba Group Holding and Baidu, acquired a 35.2 percent stake in China United Network Communications, worth CNY78 billion.
Tencent's participation in the Bullet Train Network Technology equity transfer project is another important initiative of the company in mixed-ownership reform of state-owned enterprises and is a key layout for smart transport business development, said Pony Ma, chairman and chief executive officer of Tencent.
"The new platform is part of a wider move towards creating a smart and intelligent transport network across China," the statement from the companies added.
Ma's company will invest in connection, content, security, cloud computing, big data and artificial intelligence technology of the business. "The digital era in China is undergoing a period of change and opportunity. Tencent hopes to become a digital assistant, where it will share its spirit of 'digital craftsmanship' to help everyone achieve a transformation and upgrade themselves digitally," Ma said previously.
Introduction of new Bullet Train Network products will not only provide high-quality access to on-board Wi-Fi, but also further expand value-added services such as entertainment, information, business, online shopping and connecting travel arrangements.
As of last year, China's high-speed rail network reached nearly 25,000 kilometers, or over 66 percent of the world's total, with bullet trains transporting 1.71 billion passengers annually.
Editor: Mevlut Katik