Staff Report | DFW Newsflash | January 2018
BEIJING, — AMCN announced the withdrawal of its privatization offer. Guo Man, Chairman and CEO of AMCN , said, “the decision to withdraw our privatization offer is in line with our long-term interests in development at the present stage. As we make breakthroughs in mobile internet access for airlines and railways, the move will produce sustained returns for the investors.”
Guo Man said, AMCN announced the suspension of its privatization campaign and its decision to invest more resources in mobile internet access for airlines and railways because it has noticed the surging network traffic from long-distance travelers in China in the last few years, as well as the incentives offered by the departments concerned in China for providers of mobile internet services for airlines and railways. It was a strategic decision based on such grounds. In the long run, AMCN’s decision to suspend privatisation and remain in the U.S. Stock market, a more established market, will turn out to be a positive for both the company and its shareholders.
The new development of Mobile Internet in long-distance travel area
In recent years, with the burgeoning national economy and improved transport infrastructures, including railways and airlines, the number of long-distance travelers in China has been swelling. According to the statistics of the Ministry of Transport, the number of airline passengers across the country in 2016 reached 488 million while the number of railway passengers reached 2.815 billion.
As the public has been accustomed to staying connected all the time, there is a huge demand for mobile internet access in enclosed carriages or cabins during long-distance travels. Predictably, it will generate huge profit margins on mobile internet services for long-distance travelers.
AMCN, a visionary player in the market, has been expanding to the industrial chain of mobile internet for long-distance travelers since 2015. As of now, it has established in-depth partnerships with a number of airlines and ten railway bureaus in China to offer its users a full range of multidimensional and diversified mobile internet services based on mobile internet access.
Airline Internet-within reach
In September, 2017, the Civil Aviation Administration of China lifted the ban on using mobile phones and other mobile devices on airplanes. Airlines can decide what portable devices can be used on their planes in accordance with their assessment results. So far, all the airlines have defined on-board mobile internet access as one of their most important strategies and are taking initial steps to launch it.
In early 2017, AMCN teamed up with China Unicom to establish a joint venture called Unicom AMCN Network Co., Ltd. As a dedicated service provider in the airline market for years, AMCN boasts sophisticated business models and philosophies and exclusive on-board copyrights to more than 90% Chinese films released theatrically and shares enduring strategic partnerships with more than ten Chinese and international airlines. The partnership between the two giants will give full play to China Unicom’s leading edge in communications and Unicom AMCN’s expertise built up in the past years and unique and superior resources.
At present, Unicom AMCN has extended the coverage of its satellite network to all domestic and global airlines and offers them integrated technical solutions for on-board satellite communications across two bands (Ku/Ka) and three frequency ranges (Ku/HTS Ku/Ka). Based on their individualized demands, it can modify their cabins, provide maintenance services for their mobile internet portals, formulate web portal access standards, and deliver customized on-board software operation platform systems.
Based on the total airline passenger volume in the annual report of civil aviation and the survey of the passengers’ demand for on-board Wi-Fi access, the Chinese research institutes concerned predicted that on-board Wi-Fi service for domestic airlines has the potential to grow into a 10-billion yuan market. Derivative third-party services, including e-commerce, video & audio entertainment and on-board advertisements, will also generate considerable revenues.
The lift-off of SJ-13, a KA-band communications satellite independently developed by China, will prove to be a major boon for on-board mobile internet access service as it significantly improves the bandwidth capacity and reduces the traffic cost per unit. Also, it offers powerful hardware support to the in-cabin internet service upgrading of domestic airlines. Based on that, Unicom AMCN moved up its development and launch of related satellite connectivity technologies.
As a corporation, its vision is to offer airline passengers diversified and high-speed connectivity services identical to on-ground services as a way to improve the overall services of airlines and the travel experiences of passengers.
Railway Internet is taking shape
In terms of railway transport, AMCN has signed up with ten railway bureaus in Beijing, Shanghai, Guangzhou, etc. to help them build and operate the mobile internet access for railway passengers.
As of now, AMCN has installed on-train mobile internet devices on more than 12,000 general-speed trains to offer mobile internet access to railway passengers. Its services cover nearly 90 percent of the railways in developed coastal cities and 60 percent of the general-speed train passengers every year. Moreover, it also signed up with the railway bureaus of Beijing, Shanghai, Guangzhou and Jinan as the provider of internet access services for their high-speed rail lines which account for 50 percent of the whole market of high-speed rails.
With strengthened support for its business of “connectivity on-board and on-ground” and a rebound of the American capital market, AMCN is set to usher in greater opportunities by suspending privatisation and staying in the U.S. stock market. At this point, its business of “connectivity on-board and on-ground” has shown tremendous potential beyond any doubt and will definitely produce more enduring returns for the investors. At a time of expedited convergence of internet and traditional industries, it will set off an epoch-making change in the long-distance travel industry.