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Vtion Wireless Technology AG is adapting to market change

Company Statement

 

Frankfurt, 23. February 2011

Vtion Wireless Technology AG, one of the leading suppliers of wireless data solutions for mobile computer use in China, is currently in the process of adapting its strategy to changes in the Chinese mobile market and developing new products and services that will be introduced in the second half of 2011. The company's strong cash position allows Vtion to invest in these developments as well as pay a dividend. Management intends to suggest paying a dividend in 2011 consistent with previous statements in the amount of 10%-30% of 2010 net profit. Though 2011 will be a year of transition for Vtion, the management is confident not only in reaching the guidance it has set out for 2011, but also that the company will be able to emerge from the process more competitive for the long term.

"We have had a difficult start to 2011 with our business and on the capital markets," says Guoping Chen, CEO of Vtion Wireless Technology. "Therefore, we believe it is important to provide clarity on our dividend policy and demonstrate to investors we are confident in our future," he continued. "Our guidance for 2011 reflects adverse changes that have occurred in our target market, particularly with regard to the telecom operators' market development strategy. However, we remain very well capitalized, finishing the first nine months of 2010 with net cash of just under Euro 86 million, allowing us to both pay a dividend and invest in our development, and an equity ratio of 85%."

 

Introduction of new products and associated services in 2011
The network operators' market development strategy mainly features greater product diversity. This means that particularly the market for smartphones and tablet PCs will be developed - at the expense of wireless data cards. Therefore Vtion is experiencing strong pricing pressure from the wireless operators in the wireless data card business segment following the latest round of negotiations. The company has therefore adapted to these changes and is currently developing solutions for the tablet PC and mobile apps spaces. Vtion will continue to sell its current product offerings, including wireless data cards, wireless modules, 3G routers and e-readers, through both operator and retail sales channels, while looking to roll out new products in the second half of the year. Vtion will feature tablet PC devices targeted at business and corporate clients, and develop application integration capabilities for the Android platform in order to provide comprehensive solutions tailored to the needs of particular clients in certain industries. States CEO Guoping Chen, "Instead of producing a one-size-fits-all product for the general populace, as a smaller company, we are agile enough to develop solutions that are tailored to the sector-specific needs of professionals or companies. We will continue to use the ties we have to China's telecom operators to sell these solutions, and offer a competitive combination of both hardware and integrated applications."

Since its IPO Vtion has focused its R&D activities on the development of new hardware and application solutions for China's sizeable 3G market. The first new products were introduced in Q4 2010, which included two 3G routers and an e-reader. Consistent with Vtion's value-chain strategy the production of these new products is outsourced.

Further details on these new products and associated services will be announced as the company begins to sell and market them.

 

Relationship with China's mobile network operators maintained

China is the only country in the world with three different 3G wireless standards, the CDMA 2000 EVDO Network operated by China Telecom, the WCDMA Network operated by China Unicom and the TD-SCDMA Network operated by China Mobile. The network operators bring users onto these networks through laptops, which use wireless data cards, as well as smartphones, e-readers and tablet PCs, all of which feature embedded connectivity. Recently the operators have begun emphasizing the latter three devices, bringing the Chinese market into the early stages of the mobile internet era. As a company still designated a "top-tier qualified supplier" by both China Unicom and China Telecom, Vtion will remain a key supplier of wireless data cards while also having opportunities as a supplier of newer products.

 

About Vtion

The Vtion Group is one of the three leading suppliers of wireless data cards and associated services for the mobile use of computers via broadband wireless networks in the People's Republic of China. The company also offers e-reader, 3G router and embedded module products through network operator and retail distribution channels, as well as several online services. For 2010, the company reached sales revenues of Euro 101 million. Vtion Wireless Technology AG shares are being traded in the Prime Standard on the Frankfurt Stock Exchange with the ISIN DE000CHEN993. The company's ticker symbol is V33.

 

For further information, please contact:
Kirchhoff Consult AG
Dr Kay Baden, tel.: +49 40 60 91 86 0, baden@kirchhoff.de
Janina Wismar, tel.: +49 40 60 91 86 50, janina.wismar@kirchhoff.de

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