China’s ZTE proposes $10.7 billion credit proposal, new board

Chinese telecommunications giant ZTE last week agreed to pay a $1 billion fine to the US government. (Reuters)
Updated 14 June 2018
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China’s ZTE proposes $10.7 billion credit proposal, new board

HONG KONG: Chinese telecommunications giant ZTE Corp. has proposed a $10.7 billion financing plan and nominated eight board members in a drastic management overhaul, as it seeks to rebuild a business crippled by a US supplier ban.
The news, announced late on Wednesday, indicates China’s No.2 telecom equipment maker is working toward meeting the conditions laid out by the US so it could resume business with American suppliers, who provide about 25-30 percent of the components used in ZTE’s equipment.
Investors cheered the development, driving up ZTE’s Hong Kong-listed shares as much as 3.7 percent on Thursday morning, outperforming the Hang Seng Index that dipped slightly.
A day earlier, its shares plunged a record 41 percent in Hong Kong and 10 percent in Shenzhen, wiping out almost $3 billion off embattled ZTE’s market value, as it resumed trading after being suspended for almost two-months due to the US ban.
The US imposed the seven-year supplier ban on ZTE in April after it broke an agreement to discipline executives who conspired to evade US sanctions on Iran and North Korea.
ZTE last week agreed to pay a $1 billion fine to the US government. The ban will, however, not be lifted until ZTE places another $400 million in an escrow account in a US-approved bank for 10 years.
ZTE was also ordered to radically overhaul its management and hire a US-appointed special compliance coordinator.
As part of the agreement, ZTE needs to replace its 14-person board and fire all members of its leadership at or above the senior vice president level, along with any executives or officers tied to the wrongdoing. The US commerce department can exercise discretion in granting exceptions.
In filings late on Wednesday, ZTE said its controlling shareholder, ZTE Holdings, had nominated 8 new board members.
This includes 5 non-independent directors — Li Zixue, Li Buqing, Gu Junying, Zhu Weimin, and Fang Rong — all from state-linked firms that are shareholders or investors of ZTE Holdings, which has a 30.34 percent stake in ZTE.
Cai Manli, Yuming Bao and Gordon Ng have been nominated as independent non-executive directors.
Voting on this will take place at an AGM on June 29.
ZTE also proposed to amend a company statute at the AGM to remove a clause that required the chairman to be elected from directors or members of the senior officers of the company who have served for three years or more.
In addition, ZTE proposed to allow the board to apply for a $10.7 billion credit line, including a 30 billion yuan ($4.69 billion) from Bank of China and $6 billion from China Development Bank.
ZTE’s Shenzhen-listed shares dropped by the maximum daily permitted limit of 10 percent on mainland exchanges for a second day on Thursday.


Meet the Dubai ad men who pay you to sit in traffic

Updated 20 August 2018
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Meet the Dubai ad men who pay you to sit in traffic

  • Blockchain technology challenges traditional outdoor media
  • Adverts connect to driver mobile phone

LONDON: A new startup founded by UAE-based entrepreneurs is in the process of test-running a blockchain-based technology that could help people turn their cars into mobile advertising vehicles.
It could challenge the use of traditional advertising methods such as outdoor billboards, the founders of The Elo Network claim.
The platform — which has been set up by Mohammed Khammas and Mohammed Bafaqih and incorporated in the Cayman Islands — will enable people to be paid for displaying adverts on the side or back of their vehicles while they go about their daily routines of driving to work, the mall or doing the school run.
The adverts will feature low-frequency bluetooth ‘beacons’ that connect to the drivers' mobile phone which will be able to monitor when the driver is in the car and where the car is being driven.
There is a minimum threshold for the number of miles being driven a day, but the main prerequisite is that the driver is in the car. Drivers will still be paid even if stuck in a traffic jam.
Advertising clients will be able to put out requests that drivers head to a particular area — for instance to be close to a new brand launch — with drivers being paid up to 4 or 5 times more than their standard rate if they accept.
While the concept of paying people to use their cars for advertising is not new, it is the use of blockchain technology that will make The Elo Network particularly grounding-breaking in the advertising world, its founders said.
“Billboards are very expensive and static and don’t give you the KPIs and insightful information that brands want these days. You solve that by getting them that data,” Bafaqih said.
The Elo Network collates detailed data by tracking the movements of the drivers and their day-to-day activities. Data points such as a particular area’s population density can been collected.
The information will be encrypted ensuring that the brand will never know the identity of the driver, said Bafaqih.
“It creates data sets that didn’t exist before. You don’t have to worry about privacy but at the same time the brand can know about your patterns. They can know where you go in mornings, where you drive, what normal patterns are created in certain areas and countries,” he said.
This level of detail is increasingly important for brands looking to run targeted campaigns, and it is something that traditional billboards are unable to offer.
The technology will also be used to overcome the payment problems that other similar car advertising schemes have faced.
“Historically what happens, where there is a authority that is issuing payments, it causes a lot of problems. There can be disputes on how much they (the drivers) are owed or how many miles were driven or what campaign someone has done,” he said.
Under the Elo Network program, the blockchain technology allows you to create so-called “Smart Contracts” — which is a software protocol that enforces and verifies the performance of a contract.
“It says driver A is going to be paid — for example — a dollar per mile — so as the person drives he starts receives ‘IOUs’. Those IOUs are convertible at any time,” he said.
With no ‘middle man’ involved, the driver is able to redeem their IOUs and get paid as and when they want.
The network is currently at ‘proof of concept’ stage and is test-running the platform with a number of brands. It is anticipated that the network will be rolled out to the public toward the end of this year and early 2019.