After nearly a year of speculation, the identity of the new stakeholders in Dingqiao Communication has finally been revealedThe National Market Supervision Administration of China has published an official announcement regarding the acquisition of Dingqiao Communication by Huawei and Chengdu Gaoxin Investment Group, among other operatorsThis announcement made it clear that Huawei Technologies Co., Ltd along with Chengdu Gaoxin Investment Group Co., Ltd and others plans to jointly acquire 100% of Dingqiao Communication Technology Co., Ltd, which marks a significant shift in ownership dynamics.

Historically, prior to this acquisition, Nokia and Huawei held a combined stake of 100% in Dingqiao Communication, with Nokia holding 51% and Huawei 49%. Following the transaction, both Huawei and Chengdu Gaoxin Investment will come together through a jointly established holding company to control the entirety of Dingqiao Communication, effectively signaling Nokia's complete exit from its former stakeholder position.

As of the time of this writing, further details about the acquisition were still awaited, as involved parties including Huawei, Nokia, Chengdu Gaoxin Group, and Dingqiao Communication had not made any public comments on the matter

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This silence adds another layer of intrigue to the unfolding situation surrounding this acquisition.

The backdrop of this acquisition is deeply rooted in past eventsIt traces back to a halted transaction from about a year priorOn April 9, 2023, publicly-listed company Dongfang Materials (603110.SH) announced a plan to raise funds through a private placement to purchase a 51% stake in Dingqiao Communication from Nokia for approximately 21.22 billion yuanThis announcement, however, was met with immediate resistance from Huawei, which holds the remaining 49% stakeHuawei released a statement indicating that it had no intentions or prospects for a joint operation of Dingqiao with Dongfang Materials, emphasizing the importance of strategic cooperation with Nokia, whose technical strength and global sales capabilities were vital to Dingqiao's operations.

In its statement, Huawei also reiterated its right to take necessary follow-up actions, including but not limited to exercising the right of first refusal, selling all shares to exit, or terminating technology licenses to TD TECH, a fully-owned subsidiary of Huawei

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Huawei insisted that any purchasing entity of Nokia's shares must share similar strategic capabilities to maintain the foundation for ongoing cooperationUltimately, this standoff led Dongfang Materials to withdraw their acquisition plans in December 2023, with both parties reaching an amicable resolutionThis incident highlights the volatility and complexities of corporate acquisitions, particularly in the tech sector.

Analyzing the implications of Nokia's exit, Omdia's Senior Principal Analyst Yang Guang points out that such thwarted acquisitions are not uncommon in the capital marketsNokia's motivations can be further understood from the historical context of Dingqiao's establishmentFounded in March 2005 as a joint venture between Germany's Siemens and Huawei, Dingqiao Communication was conceptualized around the TD-SCDMA technology, aligning with the interests of both foreign enterprises and domestic firms during the nascent stages of China’s 3G development.

However, the landscape changed in June 2006, when Nokia and Siemens announced a merger of their telecommunications equipment businesses, resulting in the joint establishment of Nokia Siemens Networks

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The following year saw Siemens divest its stake in Dingqiao to this new entity, culminating in Nokia's total acquisition of Nokia Siemens Networks and hence Dingqiao’s stake in 2013. Since then, the ownership structure of Dingqiao has stabilized into a partnership between Nokia and Huawei until now.

With the evolution and growth of Huawei's TD-SCDMA operations, the strategic importance of Dingqiao Communication gradually wanedThe company has progressively shifted focus from public networks to private networks and ascended to a leading position in that niche marketThis change has further solidified Dingqiao’s synergy with Huawei's operational modelYang elucidates that from a business perspective, Dingqiao's private network business aligns more closely with Huawei’s wireless strategies, thus diminishing its value to an increasingly competitive Nokia that also has its private network operations.

For many industry analysts, this transition points towards a logical resolution of past complexities, particularly as both Huawei and Nokia now compete directly within the breadth of telecommunication services and equipment

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This competitive pressure has made the transition of ownership in Dingqiao Communication not just plausible, but preferable.

The emergence of the new shareholders, namely Chengdu Gaoxin Investment Group, Chengdu Gaoxin Jicui Technology Co., Ltd, and Huagai Venture Capital Management (Beijing) Co., Ltd, reflects a strategic shift towards integrating more state-owned enterprises into the ownership mixEstablished in 1996, Chengdu Gaoxin Investment Group is a state-owned entity operating under the auspices of the Chengdu High-tech Industrial Development Zone Management Committee, indicating robust government backing which could facilitate investment and innovation.

The group’s portfolio includes significant investments in industrial parks, including those in emerging technologies like AI, further integrating into the fabric of China’s push towards high-tech infrastructure

Noteworthy is a recent announcement in September 2023 where Chengdu Gaoxin Investment proposed a priority purchase of a 70% stake in Huakun Zhenyu Intelligent Technology Co., a firm aligned with Huawei's Kunpeng ecosystem.

This relationship underscores a broader trend of state investment actors recognizing the potential in collaboration with major tech firms, particularly Huawei, within pivotal domains such as AI and semiconductor technologiesYang indicates that the collaboration could yield beneficial synergies across technology and public digital infrastructures.

dBesides Chengdu Gaoxin, the other new stakeholder, Chengdu Gaoxin Jicui Technology, is also a wholly-owned subsidiary of the Chengdu Gaoxin Investment Group, while Huagai Venture Capital is 70% owned by Huagai Capital Co., LtdAnalysts like Yang emphasize that these partnerships could empower Dingqiao Communication to leverage Huawei's technical strengths to expand its footprint in China’s increasingly competitive wireless communications market.

Currently, Dingqiao Communication boasts five main business sectors: cloud and solutions, network products, IoT, terminals, and emerging businesses, along with research centers in major cities like Beijing, Shanghai, and Chengdu, employing over 2,000 individuals