INTERNET—Encino Internet Company Buys Chinese ISP

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In the latest move to become a major player in China’s burgeoning Internet market, Encino’s CBCom Inc. has paid $600,000 for Beijing-based Internet service provider Eastnet.com.

It is the holding company’s third Chinese acquisition this year, part of a plan to swallow up as many struggling ISPs as possible.

In a nation where a privately owned ISP is considered a medium-sized company with as few as 40,000 customers, CBCom now has about 100,000. It still is dwarfed by government-owned ChinaNet, which services 73 percent of the nation’s 20 million Internet users.

With backing of American and Chinese investors, CBCom has spent $2 million this year and plans to invest as much as $4 million more to purchase three or four other struggling ISPs within the next eight months.

“Our goal is to become the largest non-government-owned Internet service provider in China,” said Charles Lesser, CBCom’s chief financial officer, adding that he believes 100 million people in China will be using the Internet by 2010. “These companies are lining up for us to buy them.”

He said CBCom needs a minimum of 150,000 customers to turn a profit a goal he said will be achieved with the next acquisition.

CBCom has requested an extension of the Nov. 14 filing of its third quarter report with the Securities and Exchange Commission, but Lesser estimated a net loss of $300,000 to $400,000, an improvement from a loss of $937,726 in the year-earlier quarter.

Most Chinese pay their ISPs monthly subscription fees or use pre-paid Internet cards a popular device in nation just now embracing the technology.

CBCom owns retail shops in Beijing and Shanghai that sell monthly subscriptions for about $12 per month, prices competitive with those of ChinaNet, a subsidiary of China Telecommunications Corp. the state-owned telephone monopoly.

ChinaNet has undercut competition by offering lower prices to customers as a means of maintaining a near monopoly.

CBCom spent $2 million to acquire East.net, Xinhai Technology Development and Beijing East Telecommunications Co.

The company previously attempted to manufacture and sell alphanumeric wireless pagers that can download news and financial information on the Shanghai and Shenzhen Stock Exchanges. But at $130 each, distributors were not interested in selling the products.

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