China Tel Group Inc. (NASDAQOTCBB:CHTL.OB)

Bermylizard (< 20) Submitted: 12/19/2009 6:14:42 AM

Recs: 0

This is why I believe ChinaTel is worth a shot:
Chinacomm/ChinaTel JV is the ONLY BTS carrier ("basic telephone service) licensed carrier in China WITHOUT a > $10 billion market cap (the other BTS carriers China Mobile, China Netcom and China Unicom). 37,000 kilometers of fiber-optic network and 3.5Ghz spectrum for wireless broadband in 29 biggest China cities (400 million+) population.

ChinaTel has suffered a great credibility problem on the Street due to a set of failed capital raising deals that failed to close....most recently the Olotoa Investments LLC saga.

But--and this is the $billion but--the delays in their closing equity financing over the last 18 months has been a BLESSING to CHTL shareholders...in disguise.

With the PRC approving a doubling of the Chinacomm Network deployment to 10-12 cities (see recent announcement with PRC) CHTL deployment schedule and revenues DOUBLE...which at 30% margin brings 2010 deployment revenues to over $100M (including payment for 2008 work billed and not collected) and $125M in 2011.

With the 10-12 city deployment (top 12 cities in China) turning on carrier revenues in 2011, our pre-IPO valuation for The Chinacomm Network is over $2.5 billion--making ChinaTel's 49% interest worth in excess of $1.2 billion. We model over $300M in 2014 Ebitda JUST for the Chinacomm Network.

Today's market cap is $120 million. Chinacomm Network is ALREADY approved for an IPO offering on the Shanghai Exchange--they are just waiting for a $2BILLION valuation from investment banks.

Here is what we know on the new PIPE (private investment in public equity)deals CHTL announced in their latest SEC 8K

#1 CHTL management in Asia right now closing final term sheets--confirmed.

#2 The size of the PIPE will undoubtedly be larger and at higher value than the $3.20 Olotoa deal. CHTL's announcments in the last few weeks on $500M+ of new private network business ALONE from PRC mininstries adds $1 a share (or more) to the $3.20 book value that Olotoa was paying for 49% of CHTL. Our analysis: $600M+ PIPE and $4+ Class A share valuation. Today Class A shares closed at .74.

#3 CHTL just closed STOCK only consulting contracts with their key employees on Dec 1. NOBODY takes that deal (.60 stock) in lieu of CASH unless they know a lot about the near future of the PIPE transaction. Nobody.

Based on our analysis, PIPE deal offers disclosed in Oct 8K are from Asian telco/high tech firms itching to capitalize on the China Internet miracle--they are the only market other than India with less than 40% wirless/fixed broadband penetration.

Those are the "dots"--we have advised clients to be positioned NOW ahead of what we consider to be imminent PIPE deal.

Tobin Smith: disclosure I personally own shares in CHTL

XMFSamstevens (32.77) Submitted: 1/1/2010 4:48:00 PM

Recs: 2

why does the company's equity have parentheses around it?