Yangtze Telecom Corp.
TSX VENTURE : SMS

Yangtze Telecom Corp.

December 01, 2006 18:33 ET

Yangtze Telecom Announces 3rd Quarter 2006 Financial Results and Provides an Update on Business

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Dec. 1, 2006) - Yangtze Telecom Corp. (TSX VENTURE:SMS) today reported its financial results for three months ended September 30, 2006. The Company operates through a 75%-owned subsidiary in Mongolia, NBC Co. Ltd., and two subsidiaries in China - wholly-owned Wuhan Chengxi Information Technology Company Ltd. ("ChengXi") and 65%-owned China United Telecom Technology Company ("UTT"). All dollar amounts are in Canadian dollars unless otherwise noted.

Revenue for the quarter ended September 30, 2006 was $2,045,000, an increase of 31% over the last quarter ($1,564,000) or 73% over the first quarter ($1,185,000) in 2006. Comparison with 2005's results was not appropriate where a significant portion of 3Q 2005 revenue ($1,113,000) was derived from the SMS business which the Company has since exited. The large increase in third quarter revenue was a result of continuing strong performance in UTT's education business, which, at $1,990,000, accounted for 97% of the total revenue and showed an increase of 32% over that of the second quarter. The balance of 3% of revenue or $55,000 was from Wuhan Chengxi's voice information business. The Company has trained over 2600 graduates during the third quarter or 6500 graduates for nine months ended September 30, 2006. This compares with 4200 graduates in the entire year of 2005. The strength in the education business was principally the result of the popularity of the CFO course, which accounted for 76% of the 3Q YTD education revenue.

The consolidated net loss for the third quarter in 2006 was $244,000, a decrease of 31% from a loss of $354,000 in the second quarter. UTT reversed a slight loss of $10,000 in the last quarter to record a profit of $42,000 in the third quarter, as a result of higher sales and lower expenses compared with the last quarter. ChengXi accounted for $116,000 of the loss, compared with a loss of $145,000 in the second quarter. Canadian head office expenses were $155,000 compared with an average of $159,000 in the last two quarters. Non-cash expenses included amortization and write-offs of $14,000, and stock-based compensation of $9,000.

During the third quarter, the Company has incurred startup costs of about $131,000 and increased fixed assets of $110,000 in the wireless TV business in Mongolia. The cash balance of the Company as at September 30, 2006 was $743,000 compared with $1,220,000 at the end of the second quarter.

Paul Deng, Managing Director of Yangtze Telecom, is pleased to report that Wuhan Chengxi has commenced a new IVR (Interactive Voice Response) business starting in November, 2006, providing services in, among others, hotel reservations, weather forecasting, health hotline, career training and job opportunities.

"We are gratified to see that the technical aspects of the wireless digital TV business are largely completed. The marketing of the TV service began in earnest in early October. However, we encountered a temporary setback because of equipment malfunction reducing the number of channels we can broadcast. At the same time, we are negotiating with different vendors for more popular channels in Mongolia. While we are confident that our service will be well received, we have decided to defer the delivery of the set top boxes until the content we offer is competitive with what is available to the cable customers. We will secure some short term financing to deal with the delay in the rollout of the TV service. In the Credit Management business, we are pleased to announce that we have re-launched our service using a new proprietary software we have developed in conjunction with a software company associated with Beijing University. There are about twenty corporate applicants thus far," said Kevin He, CEO of Yangtze Telecom.

Yangtze Telecom's 2006 third quarter report and Management's Discussion and Analysis are accessible on the Company's web site (www.yangtzetelecom.com) and on SEDAR (www.sedar.com).

About Yangtze Telecom Corp.

Yangtze Telecom Corp. is a provider of telecom value-added services for consumers and businesses in China and Mongolia. The Company is focused on business applications utilizing a combination of satellite platform, the internet and wireless data communication technologies. Key applications to date are the Credit Management System, Wireless digital broadcasting and Distance Learning. For further information on Yangtze Telecom Corp., please visit the Company's web site at www.yangtzetelecom.com.


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