DVN to Migrate Nanchong in Sichuan to Digital Leveraging on Innovative Business Model to Further Expand Leadership in China Digital TV Market

DVN to Migrate Nanchong in Sichuan to Digital Leveraging on Innovative Business Model to Further Expand Leadership in China Digital TV Market

HONG KONG, Nov. 28 /Xinhua-PRNewswire/ -- DVN (Holdings) Limited ("DVN" or "the Group", HKEx: 0500) is pleased to announce that its wholly-owned subsidiary ("DVNS") has entered into a non-legally binding letter of intent ("LOI") with Nanchong City Broadcasting TV Network Transmission Centre ("NCBN") of Sichuan, to establish a joint venture company to develop the digital broadcasting business in Nanchong City, Sichuan of the People's Republic of China ("PRC").

According to the LOI, both parties intended to set up a joint venture ("JV") with DVNS owning up to 49% stake and NCBN taking the remaining 51% stake. 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. 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.

Mr Terry Lui, CEO of DVN said, "DVN will be compensated for its sales of its digital set-top boxes (STBs) 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 (VAS). 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 ("ARPU") upside from the introduction of premium Pay-TV content and VAS."

Terry continued, "This innovative business model creates win-win partnerships between DVN, NCBN and the cable TV subscribers in Nanchong, driving the roll-out of digitalization."

The details of the LOI will be finalized upon the signing of the formal agreement.

Commenting on future development, Terry stated, "DVN will continue to develop its digital broadcasting business in other provinces with similar business models and will continue to strengthen its capital base and financial position, in order to facilitate its rapid roll-out of TV digitalization in China."

Recently, 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. In 2004, Nanchong municipal has appointed the city to build, execute and operate digital cable broadcasting platform. Nanchong is now the only digital TV operator in the municipal region.

DVN is the leading provider of digital TV broadcasting systems integrator and terminal products in China. It has installed more than 40 digital broadcasting systems, with its patented products extensively deployed. In 2005, DVN cooperated with the Qingdao City Radio and Television Bureau to migrate the entire city to digital, building the first "model city" in digital broadcasting in China. DVN also scored success in shifting Foshan to digital broadcasting. In 2006, DVN achieved further success in migrating Guangxi to fully digitalized and making Guangxi the first "digitalization model" at a province level. DVN's STBs has received license from China's State Administration of Radio Film and Television ("SARFT") and are widely adopted in the China market.

In June 2006, DVN announced a strategic agreement with a wholly-owned subsidiary of CITIC Group ("CITIC"). CITIC will acquire 25% stake in DVN, thereby becoming DVN's largest shareholder. The agreement gave DVN an order of a minimum of 6,000,000 STBs and numerous channels for valued-added services.

In July 2006, the Group entered into a supplemental agreement with Motorola (China) Electronics Limited ("MCEL"), its second largest shareholder, to purchase specified amounts of STBs from MCEL ending 31 December 2009. Also, the terms of the Non-exclusive Distributor Agreement signed with MCEL has extended to 31 December 2009.

About DVN

DVN (Holdings) Limited is the largest digital TV broadcasting systems integrator and terminal products provider in China. It operates R&D and after-sales services centres in Shenzhen, Shanghai, Suzhou and Guangxi in China. It has so far installed more than 40 digital broadcasting systems, with its patented products extensively deployed. On the back of its digital TV broadcasting platform, the company is now seeking to develop and roll out a range of value-added solutions, including e-government, TV commerce, online games and TV SMS services. DVN scored digital cable success in Qingdao, Foshan, Guangxi and Hunan etc. These cities are named the "digitalization model" of China by the China's State Administration of Radio Film and Television ("SARFT").

In June 2006, DVN announced a strategic agreement with a wholly-owned subsidiary of CITIC Group, China's leading investor in cable operators in the PRC. CITIC will acquire 25% stake in DVN, thereby becoming DVN's largest shareholder. With the rapid growth in the digital STB industry in China, the CITIC deal will likely provide DVN orders of at least 6 million STBs as well as the opportunity to participate in value-added service opportunities in their territories.

DVN's set top box (STB) is well recognized in China for its quality and extensive usage. A nationwide survey report conducted by the Academy of Broadcasting Science, SARFT of China ranked it the most widely adopted STB by TV operators in the country in 2002. In 2004, DVN received the "Best Set Top Box" award in the first Digital TV Public Survey, as well as a "Top Quality Brand" honour in the STB category in the first China Consumer Products Quality Survey. In 2005, DVN was further named by SARFT as one of the country's "Top Ten Broadcasting Enterprises". In 2006, DVN and Mr. Lui, DVN's CEO, were awarded prizes for being leading innovators in the broadcasting industry. Based in Hong Kong and listed on the Stock Exchange of Hong Kong in 1989, DVN has been operating in the technology sector since 1982.

For further information, please contact:

DVN (HOLDINGS) LIMITED
Sam Wong
Tel: +852-2585-7295
Fax: +852-2511-5522
Email: samwong@dvnholdings.com
Website: www.dvnholdings.com

Synchronic Communications Limited
Avan Fung / Lina Chan
Tel: +852-9633-4904 / +852-9228-6570
+852-2136-8188
Fax: +852-2136-8192
Email: avan@synchronic.com.hk / lina@synchronic.com.hk
Website: www.synchronic.com.hk

Source: DVN (Holdings) Limited

CONTACT: Sam Wong of DVN Holdings, +852-2585-7295, or fax,
+852-2511-5522, or email, samwong@dvnholdings.com; or Synchronic
Communications Limited fro DVN Holdings, Avan Fung or Lina Chan,
+852-9633-4904, or +852-9228-6570, or+852-2136-8188, or fax, +852-2136-8192,
or avan@synchronic.com.hk, or lina@synchronic.com.hk

Web site: http://www.dvnholdings.com/
http://www.synchronic.com.hk/

-------
Profile: intent