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Rival Tech Giants Prepare Bids of US$500 million for On-Train WiFi in China
(18 Apr 2018, BWCS Staff)The gloves are well and truly off in the battle for supremacy in the World’s largest market for WiFi on trains. According to reports in Forbes Magazine, tech giant Tencent is preparing to pay a staggering US$500 million to buy 49% of EMU Network Technology Co – which currently has a monopoly on offering WiFi on board all China Rail Corp trains. However, it is likely to face competition from fellow Chinese Internet giant Alibaba, also said to be eyeing a bid for the China Rail network company.
The huge fee reflects the sizeable potential that Tencent, which is also China’s largest messaging service provider, clearly sees in offering internet access to a vast and captive audience. Furthermore, it hope to cash in on the future development of high speed rail that the Chinese government has made a priority. In 2018 the Beijing administration has ear-marked some US$112 billion to spend on the rail infrastructure, with the vast majority of that going on China’s high-speed network. At the beginning of this year there were some 25,000km of high-speed track in China.
Tencent is basing its valuation of the EMU stake on the prospect of increasing its advertising network to the throngs of Chinese rail passengers. It also has plans to use the data it will be able to harvest to better direct online sales. For example, it plans to capitalise on users' music listening habits, the phone brand they use and track their purchasing habits on Taobao.
However, Tencent, is not alone in seeing the huge and growing potential that a stake in EMU and the monopoly access to the on-train market for WiFi in China that it represents, Chinese Internet giant Alibaba is also said to be mulling a bid for the 49% of shares on offer. Recent reports in the Chinese press of a meeting between the General Manager of China Railway and representatives from Alibaba to discuss the integration of high-speed rail networks and the Internet seems to have added fuel to these rumours.
Given the pair’s rivalry and the possibility of even greater investment and growth in China’s rail infrastructure, the price for a minority stake in EMU may well rise climb even higher in the near future. Watch this space.
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