HK-based Mobile Data Traffic Sharing Platform UCloudlink Files For $50m Nasdaq IPO

Hong Kong-based mobile data traffic sharing marketplace uCloudlink has moved towards an initial public offering (IPO) on the Nasdaq on Tuesday to raise $50 million.

The company, which filed confidentially on May 24, 2019, has yet to finalize on the pricing terms of the IPO offering.

Established in 2014, uCloudlink leverages proprietary cloud SIM technology and architecture to power a marketplace that allows users to gain access to mobile data traffic allowance shared by network operations. The company has aggregated mobile data traffic allowances from 230 mobile network operators (MNOs) in 144 countries and regions in its cloud SIM architecture, according to its prospectus.

The firm has developed the cloud SIM technology based on remote SIM connection, which means that SIM cards are not embedded in the mobile terminals but remotely connected on the cloud. This enables dynamic selection of network services based on signal coverage and cost, among others, compared to the traditional telecommunication business model in which users can only access the wireless network provided by their contracted MNOs.

uCloudlink owned 43 patents relating to the cloud SIM technology as of December 31, 2019. In addition to mobile data users, the firm also serves MNOs, smartphone and smart-hardware companies, and mobile virtual network operators (MVNOs).

The company now operates the business under what it refers to as “uCloudlink 1.0” model for cross-border travellers who need mobile data connectivity services across different countries, and “uCloudlink 2.0” model, which delivers mobile data connectivity services to local users across different MNOs in a single country.

It is expected to launch uCloudlink 3.0 model in the next two to three years, which will allow users to share and trade their unused data packages.

Entities affiliated with Hong Kong-based brokerage firm Haitong International, and Chinese state-backed Beijing Cash Capital Venture Partners, hold 13.4 per cent and 10.1 per cent shares in uCloudlink, respective. The company co-founder and CEO Chen Chaohui is the largest shareholder with a 24.8 per cent stake, followed by another co-founder and chairman Peng Zhiping at 23.2 per cent.

Financially, uCloudlink primarily generates revenues from mobile data connectivity services and hardware terminals that incorporate the services.

The company’s revenues increased 25.3 per cent from $126.4 million in 2018 to $158.4 million in 2019, according to the prospectus. It registered a net loss of $19.3 million and $26.6 million in 2017 and 2018, respectively, before it gained a net income of $5.2 million in 2019.

Proceeds of the IPO will be used for R&D, potential strategic investments and acquisitions, as well as general corporate purposes like funding sales and marketing.

uCloudlink plans to list on the Nasdaq under the symbol “UCL.” New York-based I-Bankers Securities, which focuses on small-cap equity markets, Hong Kong’s Valuable Capital, Chinese online brokerage Tiger Brokers, and Chicago-based investment bank Loop Capital Markets are the joint bookrunners on the deal.