ChinaTel Group, Inc. was founded in May 2008 through a reverse merger between Mortlock Ventures, Inc., a publicly traded Nevada corporation with no operations, and Trussnet USA, Inc. Trussnet USA was incorporated as a Nevada corporation on April 4, 2008, for purposes of becoming a vehicle for the reverse merger. Through Trussnet USA, ChinaTel has substantial experience designing and building cellular and broadband Internet networks for major U.S. carriers, such as Sprint Nextel and T-Mobile International AG. As a result of the reverse merger, ChinaTel became the surviving parent company and Trussnet USA its wholly owned subsidiary.
ChinaTel Group, Inc. provides engineering, deployment, and operations services related to the development of wireless broadband telecommunications networks. ChinaTel’s engineering team has provided architecture and engineering services for telecommunications companies since 1987 in countries including China, Singapore, Taiwan, and Hong Kong. Collectively, this team has been involved in the design, construction, and deployment of more than 20,000 wireless projects. The Company’s services include radiofrequency (RF) engineering, site acquisition, preparation and approval of architectural and engineering drawings, equipment installation, and network architecture and engineering. Either directly or through joint venture partners, ChinaTel also plans to handle post-deployment operations, including marketing, billing, and customer service. The Company has further established strategic agreements with third parties that enable it to provide a number of next-generation wireless broadband-based applications, such as movies on demand, Internet protocol television (IPTV), traffic camera systems, and RF identification, among many others.
ChinaTel’s present operational focus is on the deployment of telecommunications networks that use Worldwide Interoperability for Microwave Access (WiMAX) technology to supply 3.5 gigahertz (GHz) wireless broadband access to 29 cities in the People’s Republic of China (“China” or “the PRC”). To implement WiMAX in mainland China, the Company is working with CECT-Chinacomm Communications Co., Ltd., a basic telecommunications service (BTS) operator that holds licenses from the Chinese government for the construction and operation of a 3.5 GHz wireless broadband system in the Company’s 29-city coverage area (known as the “Chinacomm Network”).
CECT-Chinacomm is one of four BTS license holders in the PRC and, to ChinaTel’s knowledge, is the only operator exclusively focused on the wireless broadband market segment. China’s other primary telecommunications operators include China Mobile Ltd. (CHL-NYSE), China Telecom Corp. Ltd. (CHA-NYSE), and China Unicom (Hong Kong) Limited (CHU-NYSE). The Company believes the PRC government is unlikely to approve any other entrants into this segment of the country’s telecommunications market.
ChinaTel is pursuing an aggressive project schedule in order to establish high-speed telecommunications in each of CECT-Chinacomm’s 29 allocated Chinese cities. Full 3.5 GHz wireless broadband deployment is continuing in Beijing, Shanghai, and Shenzhen, and is also in progress in nine other cities, including Qingdao, Guangzhou, and Nanjing. CECT-Chinacomm has a government mandate to build out the first 12 cities by June 2011, and procurement and engineering has commenced on all such sites.
In addition to penetrating the Chinese wireless broadband sector, ChinaTel seeks to establish a worldwide presence in this industry. The Company has acquired 95% of Peruvian telecommunications company Perusat S.A., which holds licenses to a 2.5 GHz spectrum covering multiple cities in Peru. While the Peruvian operations are not the chief focus of ChinaTel at this time, Perusat is an active business supplying local and international long distance telephony, including fixed-line service and voice-over IP (VoIP) in Peru. The Perusat footprint allows ChinaTel to capitalize on Peru’s expanding economy and telecommunications market. Since 2002, Peru has achieved consistent annual economic growth rates of more than 4%, with 9% growth in 2007 and 2008 (Source: the U.S. Central Intelligence Agency’s [CIA] The World Factbook 2009). ChinaTel also seeks to acquire spectrum in other Latin American countries, such as Argentina and Chile, through acquisitions from existing owners and government auctions, and the Company is investigating options to enter markets in Russia, India, Singapore, the Philippines, Albania, countries in the Caribbean Islands, and countries in the Middle East and North Africa.
