Chinese mobile phone maker TCL Communication said on Tuesday (May 17) it would buy out Alcatel's stake in their joint venture, moving to fix a business that has weighed heavily on its bottom line. TCL Communication Technology Holdings Ltd would use HK$63.3 million (US $8.12 million) in new shares, to do so, the company said in an announcement in the Shanghai Securities News. TCL Communication, a unit of China-listed TCL Corp, said the buy-out would enlarge its current share base by 5 percent, with new shares used to pay for Alcatel's 45 percent stake in the venture, TCL & Alcatel Mobile Phones Ltd.
The joint venture, built around Alcatel's poorly performing cellphone-making operations, has struggled since its formation last year, pulling TCL Communication into the red for the past two quarters. The joint venture lost HK$357 million in the first quarter of this year while TCL Communication, China's second largest domestic cellphone maker, posted a net loss of HK$386 million.
In reporting its first-quarter results, the company said it had begun transferring a small amount of the joint venture's manufacturing to its China-based TCL Mobile unit, and that it expected a larger quantity would be transferred by year end. On Tuesday, TCL Communication also said it would transfer most of the joint venture's research and development personnel that it inherited from Alcatel back to Alcatel. It said Alcatel would pay TCL Communication 20 million euros.
TCL Communication Chairman Li Dongsheng called the buy-out the latest move to turn around the venture.
"This is a critical step forward and will help lay foundations for TCL Communication to prosper and grow in the future," he said in a statement.
Comments
Comments are closed.