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Chinese mobile-phone and device maker Transsion will list in an IPO on Shanghai’s STAR Market, Transsion confirmed to TechCrunch.

The company — which has a robust Africa sales network — could raise up to 3 billion yuan (or $426 million).

“The company’s listing-related work is running smoothly. The registration application and issuance process is still underway, with the specific timetable yet to be confirmed by the CSRC and Shanghai Stock Exchange,” a spokesperson for Transsion’s Office of the Secretary to the Chairman told TechCrunch via email.

Transsion’s IPO prospectus is downloadable (in Chinese) and its STAR Market listing application available on the Shanghai Stock Exchange’s website.

STAR is the Shanghai Stock Exchange’s new Nasdaq-style board for tech stocks that also went live in July with some 25 companies going public.

Headquartered in Shenzhen — where African e-commerce unicorn Jumia also has a logistics supply-chain facility — Transsion is a top-seller of smartphones in Africa under its Tecno brand.

The company has a manufacturing facility in Ethiopia and recently expanded its presence in India.

Transsion plans to spend the bulk of its STAR Market raise (1.6 billion yuan or $227 million) on building more phone assembly hubs and around 430 million yuan ($62 million) on research and development, including a mobile phone R&D center in Shanghai, a company spokesperson said.

Transsion recently announced a larger commitment to capturing market share in India, including building an industrial park in the country for manufacture of phones to Africa.

The IPO comes after Transsion announced its intent to go public and filed its first docs with the Shanghai Stock Exchange in April.

Listing on the STAR Market will put Transsion on the freshly minted exchange seen as an extension of Beijing’s ambition to become a hub for high-potential tech startups to raise public capital. Chinese regulators lowered profitability requirements for the exchange, which means pre-profit ventures can list.

Transsion’s IPO process comes when the company is actually in the black. The firm generated 22.6 billion yuan ($3.29 billion) in revenue in 2018, up from 20 billion yuan a year earlier. Net profit for the year slid to 654 million yuan, down from 677 million yuan in 2017, according to the firm’s prospectus.

Transsion sold 124 million phones globally in 2018, per company data. In Africa, Transsion holds 54% of the feature phone market — through its brands Tecno, Infinix and Itel — and in smartphone sales is second to Samsung and before Huawei, according to International Data Corporation stats.

Transsion has R&D centers in Nigeria and Kenya and its sales network in Africa includes retail shops in Nigeria, Kenya, Tanzania, Ethiopia and Egypt. The company also attracted attention for being one of the first known device makers to optimize its camera phones for African complexions.

On a recent research trip to Addis Ababa, TechCrunch learned the top entry-level Tecno smartphone was the W3, which lists for 3,600 Ethiopian Birr, or roughly $125.

In Africa, Transsion’s ability to build market share and find a sweet spot with consumers on price and features gives it prominence in the continent’s booming tech scene.

Diving deep into Africa’s blossoming tech scene

Africa already has strong mobile-phone penetration, but continues to undergo a conversion from basic USSD phones, to feature phones, to smartphones.

Smartphone adoption on the continent is low, at 34%, but expected to grow to 67% by 2025, according to GSMA.

This, added to an improving internet profile, is key to Africa’s tech scene. In top markets for VC and startup origination — such as Nigeria, Kenya, and South Africa — thousands of ventures are building business models around mobile-based products and digital applications.

If Transsion’s IPO enables higher smartphone conversion on the continent, that could enable more startups and startup opportunities — from fintech to VOD apps.

Another interesting facet to Transsion’s IPO is its potential to create greater influence from China in African tech, in particular if the Shenzhen company moves strongly toward venture investing.

China’s engagement with African startups has been light compared to China’s deal-making on infrastructure and commodities — further boosted in recent years as Beijing pushes its Belt and Road plan.

Transsion’s IPO move is the second recent event — after Chinese owned Opera’s big venture spending in Nigeria — to reflect greater Chinese influence and investment in the continent’s digital scene.

So in coming years, China could be less known for building roads and bridges in Africa and more for selling smartphones and providing VC for African startups.

Opera founded startup OPay raises $50M for mobile finance in Nigeria

The Chinese government has been using a private company jointly owned by a U.S. investment firm and its Chinese counterpart to expand its surveillance and telecommunications capabilities using American technology, The Wall Street Journal reports.

At the center of the Journal’s reporting is a company called Asia Satellite Telecommunications (AsiaSat). It’s a satellite operating company acquired back in 2015 by U.S. private equity firm The Carlyle Group and Chinese private equity firm CITIC Group. Both Carlyle and CITIC are known for their ties to government in their respective home nations.

While the U.S. government basically bans American companies from exporting satellite technology to foreign governments like China, there have been no controls put in place on how bandwidth from launched satellites is used once those satellites are in orbit.

Based in Hong Kong, AsiaSat isn’t subject to the same sort of export controls and regulations that the U.S. places on companies headquartered in mainland China, which has allowed the company to acquire U.S. satellites.

The Chinese government, through its connections with CITIC, has leveraged that loophole to bolster its surveillance and telecommunications capabilities for security activities, the Journal reports.

At issue are satellites bought by AsiaSat from Boeing and Maxar Technologies subsidiary SSL, of Palo Alto, Calif. We’ve reached out to Maxar and AsiaSat for comment.

“Boeing follows the lead of the U.S. Government with respect to the use of export controlled items,” the company said in a statement to TechCrunch.

The U.S. and China are in a highly public contest over who will control the future of networking technologies — with the U.S. accusing China’s leading commercial telecommunications vendors of collaborating with the Chinese government to spy on partners.

Huawei is suing the US government over ‘unconstitutional’ equipment ban

U.S. officials also accuse their counterparts in Beijing of using physical and cyber espionage to acquire American technology. However, in this case, China was able to use corporate interests and profit-seeking to gain access to core U.S. satellite technologies, the Journal reports.

Since at least 2011, CITIC has touted Chinese intelligence branches and armed services as customers of its satellite company’s services, according to the Journal’s reporting.

In other marketing materials, CITIC’s satellite company has touted its link to government agencies — as a tool to link national broadcasters to far-flung towns and cities across the sprawling nation. Meanwhile, China’s Ministry of Public Security has documented how it used AsiaSat 5 — a satellite made by SSL — to develop rapid-response forces with audio and video capabilities provided in real time, the Journal is reporting.

CITIC’s ownership stake in AsiaSat predates the Carlyle Group’s acquisition. The company previously was a joint venture between the Chinese private equity firm and General Electric, and its surveillance activities extend back to that period, as well.

In 2008 and 2009, AsiaSat assets were used to help authorities communicate and coordinate efforts to put down antigovernment protests over religious and ethnic persecution in Tibet and Xinjiang — a mineral-rich region in Northwestern China populated mainly by an ethnic minority called Uighurs, a group comprised predominantly of practicing Muslims.

In a statement provided to the Journal, AsiaSat disputed the company’s reporting, saying that the Chinese military wasn’t a direct customer, but used in a capacity for disaster relief. Several cities in the Chinese province of Sichuan were decimated by an earthquake that hit in 2008.

AsiaSat also declined to comment on whether its bandwidth was being used in Xinjiang currently or whether it had been used in the Tibet and Xinjiang uprisings that occurred roughly 10 years ago. In the past few years, Chinese authorities have built a pervasive surveillance network in Xinjiang and sent as many as one million ethnic Uighurs to internment camps, according to multiple reports.

In statements to The Wall Street Journal, Carlyle said that AsiaSat’s equipment supports internet and phone communications for Chinese telecommunications carriers.

“It is effectively a pipe,” Carlyle said in a statement to the Journal, “and AsiaSat, because of privacy issues, doesn’t monitor or regulate the content that flows through it.”

Africas top mobile phone seller Transsion to list in Chinese IPO

China is reportedly using US satellite technologies to bolster its surveillance capabilities

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