Alcatel, TCL Team on Handsets

TCL and Alcatel form 55-45 joint venture company from Alcatel's mobile handset business

April 26, 2004

3 Min Read

PARIS -- TCL Communication Technology Holdings Limited ("TCL Communication"), the intended holding company of Huizhou TCL Mobile Communication Co., Ltd. ("TCL Mobile"), a leading mobile handsets manufacturer in China, and Alcatel (Paris: CGEP.PA and NYSE: ALA) a worldwide leader in telecommunications network equipment, applications and services, today announced the signature of a memorandum of understanding ("MOU") to form a joint venture company for the research and development, sales and distribution of mobile handsets and related products and services.

The two groups have decided to join together their respective strengths in the mobile handset industry:

  • In the mobile handset marketplace, TCL Mobile is one of the leading players in China with its highly recognized TCL brand, extensive sales and distribution network, large and flexible manufacturing base and fast-growing business in Asia

  • In the mobile handset marketplace, Alcatel is a major player in Europe and Latin America, with its world-renowned brand, extensive sales coverage through its established relationships with global carriers and distribution networks, and comprehensive R&D capabilities

    Commenting on the partnership, Dr. Wan Mingjian, the Chief Executive Officer of TCL Mobile, said, "This is an exciting partnership which will provide TCL Mobile with a platform to rapidly grow our international business. We believe this will help us to quickly achieve our objective to become one of the leading global mobile handset manufacturers. Furthermore, the joint venture company and TCL Mobile will be able to create significant synergies to deliver a profitable business going forward."

    Philippe Germond, President and COO of Alcatel said, "with this operation, we are making another important step in our strategy to focus on communication solutions. As part of this strategy, Alcatel will maintain end-to-end mobile solutions capabilities for its customers. And for its mobile phone business, the newly created Joint Venture will benefit from an extended geographical reach, an improved product portfolio together with large economies of scale. Synergies created by the complementary nature of both shareholders' businesses will increase competitiveness and financial performance. "

    The Joint Venture will be 55% owned by TCL Communication and 45% owned by Alcatel

    Under the terms of the MOU, TCL Communication will be the major shareholder in the new company, with an equity stake of 55%, while Alcatel will hold the remaining equity stake of 45%. Alcatel will have the option to swap its ownership in the joint venture company into shares in TCL Communication and TCL Communication will have the option to swap Alcatel's entire interest in the joint venture company into shares of TCL Communication 4 years and 5 years after the formation of the new company, respectively.

    The formation of the joint venture company involves contributions from both shareholders, of Euro 55 million by TCL Communication and Euro 45 million by Alcatel:

    • TCL Communication will contribute cash

    • Alcatel will contribute cash and its mobile handset business. This business pre-dominantly includes customer relationships and associated goodwill along with intellectual property and fixed assets. The transfer includes also around 600 R&D professionals and sales and marketing executives, and an experienced handset business management team.



    The estimated net asset value of the joint venture company at closing is expected to be Euro 100 million.

    The formation of the new venture is expected to be completed during the third quarter of 2004, subject to the signing of definitive agreements and necessary approvals by shareholders and regulatory authorities.

    Alcatel SA

    TCL Mobile Communication Co. Ltd.

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like