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BlackBerry handset maker TCL to sell half its smartphone business due to poor sales

Consumer ElectronicsMobility

Chinese smartphone maker TCL Communication Technology Holdings Ltd. – the manufacturer behind the BlackBerry-branded Motion and KeyOne – recently announced plans to sell 49 per cent of its smartphone business.

In an interview with Chinese news outlet Caixin, TCL chair Li Dongsheng said the company, which in addition to producing handsets under the BlackBerry, Alcatel, and its own brands is one of China’s leading TV manufacturers, has no intention of abandoning the mobile communications business.

However, Caixin noted that the unit’s value was approximately $7 billion HKD (around $1.15 billion Canadian) when it was privatized last year, and that it was now being sold for $1 billion HKD (approximately $164.5 million Canadian) – an 85 per cent drop.

And in an October filing the company revealed that unit sales, mainly cell phones, fell 36 per cent to 21 million units during the first half of 2017, while revenue fell by 26 per cent, with the company posting a net loss of 852 million Chinese yuan (approximately $165.6 million Canadian) during the period.

“Right now smartphones and smart TVs have many similar functions. Many of their applications are also similar,” TCL chair Li Dongsheng told Caixin. “Even though the business is losing money, we are constantly looking for a balance, and thus the communications business is something we can’t give up.”

The unit’s buyers are Unigroup, a telecommunications firm affiliated with Beijing’s Tsinghua University, venture capital firm Vivid Victory Developments Ltd., and a second investment firm based in southwest China’s Yunnan province.

According to Caixin, Unigroup and the Yunnan investor will both bring telecom industry expertise to the unit, while Vivid Victory will bring management expertise.

The sale was announced on Oct. 9. In an Oct. 30 interview with ITWC, TCL senior communications manager of North America Jason Gerdon said that while the company does not disclose specific sales numbers for specific handsets, TCL decided to expand the number of markets for the KeyOne based on initial demand.

BlackBerry signed a five-year deal for TCL to produce BlackBerry-branded handsets with TCL last December.

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