Edward Tian, dubbed “Mr. Internet” for his role in co-founding AsiaInfo in 1993, is orchestrating a major restructuring of two companies bearing the AsiaInfo name. This move signals a strategic shift for the early trailblazer in China’s private telecoms software sector. Tian, through his company AsiaInfo Security, is acquiring a significant stake in AsiaInfo Technologies, a telecoms software provider listed in Hong Kong. This transaction involves the purchase of shares previously held by Citic Capital, a prominent investment firm.
The deal has seen some adjustments due to recent pressure on AsiaInfo Technologies’ share price, including a 42% decline this year. The final purchase price, though lower than initially proposed, still represents a premium of over 40% to the stock’s current price. This premium reflects Tian’s belief in the company’s potential and his commitment to its future.
This restructuring goes beyond a simple acquisition. It aims to create a holding company structure where AsiaInfo Security effectively controls AsiaInfo Technologies. This move is intended to leverage the strengths of both companies, creating a synergistic entity.
While AsiaInfo Technologies faces challenges from its traditional telecoms customers who are scaling back their spending, the company is seeking new avenues for growth. It has identified digital intelligence, vertical industries digitalization, and operations support systems (OSS) as key growth areas. These new businesses have shown promise, accounting for 40% of the company’s total revenue in the first half of the year.
The restructuring is expected to benefit both companies. AsiaInfo Security can tap into the resources and customer base of its larger sibling, while AsiaInfo Technologies can leverage the expertise and customer base of AsiaInfo Security in information security. This collaboration will create a more robust entity capable of tackling the evolving landscape of the digital economy.
The restructuring is not without its risks. AsiaInfo Security’s recent financial performance has been challenging, with declining revenue and a loss in 2023. However, Tian’s commitment to the project, along with the potential synergies between the two companies, suggests a strategic plan for a more robust and diversified future.
Edward Tian’s restructuring marks a new chapter in the story of AsiaInfo. It aims to reposition the company for growth in the digital economy, building on the legacy of its early success. With a renewed focus on innovation and collaboration, AsiaInfo is poised to navigate the complexities of the modern business landscape and establish itself as a key player in the digital economy.
