info.afrindex.com
China-Africa Trade Information Service
info.afrindex.com
China-Africa Trade Information Service
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China's budget smartphone maker Transsion has dominated Africa with its Tecno brand. Now it is ready to raise its profile by joining China's hot new technology stock market.
Chinese budget smartphone maker Transsion is already dominating Africa with its Tecno brand. Now it's ready to raise its profile even more by joining China's splashy new market for tech stocks.
It will seek final approval from China's Securities Regulatory Committee, the country's top securities regulator, before launching an initial public offering.
An IPO could push Transsion's valuation above $4 billion. It would also take the company public on a market that got off to a stunningly positive start this week.
Transsion, which was founded by Chinese entrepreneur Zhu Zhaojiang in 2006, wants to raise at least 30 billion yuan ($436 million) to build smartphone factories and research and development centers in Chongqing, Shanghai and Shenzhen, according to its prospectus.
It plans to issue at least 80 million shares, though it hasn't set exact terms yet. That would give the company a valuation of at least 30 billion yuan ($4.4 billion).
It controls nearly half of the African market, according to some figures — putting it way ahead of rivals Samsung, Huawei and Apple (AAPL). Transsion also has nearly a 7% share of India's market, making it the fourth-largest cellphone vendor there.
In 2018, it sold 124 million cell phones worldwide, generating 22.65 billion yuan ($3.3 billion) in revenue.
Public documents also spell out why Transsion says it has done so well in Africa. The company said in its prospectus that it has features that "highly suit our target market" — including phones that use nighttime photography settings that are designed for darker skin tones.
Transsion's technology also includes heat protection for electronics and cellphones that have a large battery capacity. In Nigeria, South Africa and Ethiopia, for example, the government frequently shuts off electricity to conserve power, leaving people unable to charge their phones for hours.
Price is another advantage. Transsion sells phones without smart features for as little as $9. It sold nearly 60 million Itel phones at that price last year. It also sold more than 30 million Tecno phones at about $11 each.
The company's smartphones are more expensive, but still cheaper than its rivals. In 2018, Transsion sold 34 million phones for between $45 and $91.
There are challenges, though. The company admitted in its prospectus that other smartphone vendors, including India's Lyf, are also selling low-priced devices.
Rivals like Huawei, Xiaomi and Samsung are also pushing harder into Africa and India.
Huawei, for example, has launched an e-commerce platform in South Africa through which it sells phones and other products. And Xiaomi has partnered with African e-commerce website Jumia to sell phones.
"We face risks of losing our customers and market shares if we can't maintain innovation ... and increase investments in technological research and development, brand management, marketing, after-sale service and supply-chain management," Transsion wrote in its prospectus.
