DVN has signed a non-binding initial agreement with Nanchong City Broadcasting TV Network Transmission Centre in Sichuan, to establish a joint venture company to develop the digital broadcasting business in the city.
DVNS will own up to 49% stake in the joint venture. It is intended that DVN will be responsible to provide the platform and equipment for the integration of digital broadcasting in such network while NCBN will inject the relevant rights of the network and equipment. The full details of the arrangement will be finalized upon the signing of the formal agreement in 2007.
NCBN will also be responsible to procure the JV to become the exclusive operator to provide digital broadcasting and related services to Nanchong City and obtain all approvals from the relevant government authorities.
Terry Lui, CEO of DVN said, "DVN will be compensated for its sales of its digital set-top boxes to the cable operators and end-users by having a share to the monthly subscription fee paid by the end-users. The Group will also get a share of the profit generated from value-added services. NCBN will be benefited from this arrangement since neither themselves nor their subscribers will have to pay the upfront for the equipment and services. There is also a potential Average Revenue Per Uses upside from the introduction of premium Pay-TV content and VAS."
Nanchong has a population of approximately 7,300,000 with 400,000 cable TV subscribers and it has network coverage of at least 800,000 households in various counties, implying an ample market room for growth. The entire Nanchong has completed converting its cable networks to fully digital-, broadband- and interactive-enabled, providing crucial infrastructure for full digitalization and IPTV.