The Hartcourt Companies Inc. (OTC Bulletin Board: HRCT; Frankfurt: HCT) responded to shareholder questions by offering further details regarding its recent agreement to purchase 51 percent of Elephant Talk and its relationship with ETNS, which recently acquired permanent usage rights to an 8,307-kilometer optical fiber backbone network in China.
By acquiring Elephant Talk and participating directly in ETNS' network expansion and service offerings, Hartcourt will assist ETNS in accomplishing its goal of going public via IPO, merger or spin-off. This strategic relationship will position StreamingAsia and SinoBull Financial Group to directly support ETNS' market and service development on a short and long-term basis. It is anticipated that these partnerships will generate additional revenue for Hartcourt's StreamingAsia and SinoBull subsidiaries.
The followings five areas are included in Hartcourt's immediate plan to realize revenue and profit growth:
(1) Telecom Services: Elephant Talk is a provider of telecom services in Hong Kong and China. Elephant Talk reported total revenue of HK$202 Million (US$26 Million) and a net profit of HK$7.3 Million (US$0.94 Million) in fiscal year 1999. The company has structured and will continue to progressively expand its telecom services platform in China utilizing the ETNS network. Additionally, in partnership with Innostar, the companies plan to expand an already steady stream of income from IP-based telephone services.
(2) Leased Line Business: ETNS has acquired permanent usage rights to an 8,307km-long optical fiber backbone network in China, and is expanding the global coverage of its network. The network connects 15 major cities and surrounding areas in China including: Beijing, Shanghai, Hangzhou, Fuzhou, Xiamen, Wuhan, Guangzhou, Shenzhen, Zhuhai, Dongguan, Jinan, Nanjing, Suzhou, Changsha, as well as Hong Kong. The ETNS network will begin offering high-speed private leased circuit or frame relay connections for high quality communication needs.
(3) Internet exchange Center (IXC): ETNS has developed next generation, strategically located, fault-tolerant facilities. ETNS now has IXCs for network and facilities outsourcing in Hong Kong, Shenzhen, Guangzhou, Shanghai, Beijing, Singapore and the US. Through this IXC infrastructure, corporate customers will be able to remotely manage their Internet operations that will be hosted at the IXCs. A broad range of co-location server hosting services will be provided.
(4) Virtual Private Network (VPN) services: IP based virtual private network (VPN) services will be offered for corporate clients. These provide fully managed scalable private network connections among geographically distributed customer sites with guaranteed application-level quality of services.
(5) Voice-over-IP (VoIP) Gateway Co-location services: ETNS networks will concentrate high capacity PSTN (Public Switched Telephone Network) lines at each individual IXC for just-in-time provisioning of VoIP service expansion. They will also offer services to exchange voice traffic through ETNS' distributed VoIP gateway to other cities.
Dr. Charlie Q. Yang, CEO of Hartcourt, said, "ETNS has acquired the permanent usage rights to a national optical fiber backbone network. In the past, companies such as China Telecom or China Unicom controlled networks of this scope. Working and investing jointly with ETNS, we can further expand the network and offer value added services such as broadband connectivity, co-location server hosting, e-commerce platform and collaborative systems management in the PRC and Hong Kong.�
Dr. Alan Phan, Chairman of Hartcourt, commented, "The purchase price of Elephant Talk will be disclosed upon the closing of the transaction as required by existing ET shareholders. The payment of cash and shares is already in place. As for the financing of the ETNS project, the $30 million needed to extend the roll out of services is quite small when compared to the total value of the entire project. An IPO or a reverse merger with an equity line would easily satisfy this requirement. Upon completion of this year's scheduled IPO of StreamingAsia, merger or IPO of SinoBull, and spin-off of ETNS, Hartcourt will have fulfilled its stated mission two years ahead of schedule."
About Elephant Talk:
Based in Hong Kong, Elephant Talk is an international long-distance service provider to China and Hong Kong. For more information, visit www.elephanttalk.com.
ETNS is a Hong Kong-based provider of managed co-location and Internet solutions to enterprises. For more information, visit www.etns.net.
The Hartcourt Companies is a holding and development company that is building a network of Internet and telecommunication service companies in The People's Republic of China (China). For more information, visit www.hartcourt.com.