China Telecom to tip $265M into quantum firm

China Telecom is to invest 1.9 billion Chinese yuan (US$265 million) for a stake in one of China's most important quantum companies. QuantumCTek, a spin-off from the University of Science and Technology of China (USTC), has issued 24 million shares to China Telecom Quantum Group at RMB78.94 (US$11), with a total value of up to RMB1.9 billion ($265 million).

On completion of the deal, China Telecom Quantum, a fully owned China Telecom subsidiary, will hold 23% of the shares and 41% of the voting rights, QuantumCTek announced Monday.

The USTC quantum unit was founded by the national government as a "key laboratory" in 2001 and has been described as the country’s most important quantum research institution. The lab won widespread scientific recognition for its development of the technology for Micius, the world's first quantum satellite, in 2016.

Shanghai-listed QuantumCTek says on its website that it supplies large-scale quantum secure communication networks and products. It had 408 domestic and global patents at the end of 2022.

Fresh funding

But despite the promising technology, financial progress has been modest, with revenue of just RMB179 million ($25 million), RMB135 million ($18.8 million), and RMB156 million ($21.7 million) in the past three years. The company said that by bringing China Telecom onto its share register it can optimize the equity structure and bring in fresh funding to expand its business and research.

China Telecom Quantum, formed in May last year with registered capital of RMB3 billion ($418 million), says its mission is to advance the industrialization of quantum communications and computing and to develop underlying core technologies. The operator is fulfilling a role prescribed to it by the central government, which has deemed quantum to be a strategic sector, along with others such as AI and space.

China Telecom and QuantumCTek have worked on multiple projects over the past decade, including a quantum metropolitan network, the Beijing Winter Paralympics and Hangzhou Asian Games, and China Telecom's own secure quantum phone service.

QuantumCTek's Shanghai stock closed 8.2% higher on Tuesday.