download this PDF-format mini e-book
(now with an extensive follow-up & ‘The global forces behind …’ analysis, later in this post)

Subtitle:
China is the epicenter of the mobile Internet world, so of the next-gen HTML5 web

Put* together by Sándor Nacsa in August 2013

This mini e-book is a follow-up to the findings of “China is the epicenter of the mobile Internet world, so of the next-gen HTML5 web” [Aug 5, 2013] post from my trend-tracking blog “Experiencing the Cloud”, as well as the following posts which lead to those findings:

download this PDF-format mini e-book

Now an extensive FOLLOW-UP
(& ‘The global forces behind …’ analysis after that)

China emerging as ‘mobile only’ in sharp contrast to the US multiscreen market [DIGITIMES, Aug 19, 2013]

With smartphone penetration still in the early stages in China, a new study indicates that the country could become a “one screen nation,” outpacing the US in consumers who use smartphones as their sole or primary media device, according to research developed by the Interactive Advertising Bureau (IAB) and the Interactive Internet Advertising Committee of China (IIACC).

The research revealed that media consumption is more impacted by smartphone ownership in China. More than a quarter of China-based smartphone owners report less TV watching and reduced print consumption as a result of owning a mobile connected device (28% and 27% respectively). In comparison to their US counterparts, China-based smartphone owners are 86% more likely to report less TV usage and 42% more likely to report less print usage.

In contrast to China smartphone owners’ concentrated focus on the small screen, US smartphone owners are much more likely to consume other media with their mobile devices in hand. For example, while watching TV, smartphone users report participating in Internet communication (51% US vs. 10% China), reading social media (38% US vs. 9% China), and conducting a local search (34% US vs. 8% China). The data shows similar disparities when it comes to reading print media, the research found.

The two firms said the research also illustrates Americans’ greater dependency on their smartphones as devices that they would “never leave home without” (69%). In comparison, merely 6% of their China counterparts said the same. Approximately one-third (34%) of Americans said that their smartphone is the “first thing I reach for when I wake up,” as opposed to 7% of China-based smartphone owners.

China-based consumers are also more apt to use their smartphones for web browsing than Americans (32% China vs. 21% US), the research found. More than one fifth (23%) of China-based respondents said that they spent three hours or more per day in the last week accessing the Internet with their smartphones. The top reason they cited for turning to their smartphones was “entertainment.”

Slush 2012: Keynote by John Lindfords (Digital Sky Technologies – DST) [startupsauna YouTube channel, Nov 24, 2013]

How Social Media & E-Commerce Operate in China [Tim Swanson YouTube channel, Aug 13, 2013]

China’s E-Commerce Boom: Millennials Shop Alibaba & ASOS [ForaTv YouTube channel, Aug 3, 2013]

Weibo: How Chinese Microblogs Sneak Fashion Past Censors [ForaTv YouTube channel, June 14, 2013]

Alibaba investment spooks some of China’s online shoppers [Reuters TV YouTube channel, Aug 4, 2013]

Chinese Tech Giant Sets Sights on $265 Billion “Smart TV” Market [TheMotleyFool YouTube channel, July 24, 2013]

In China smartphone market, cheap rules – and Apple suffers [Reuters TV YouTube channel, Aug 19, 2013]

FACTBOX: Will China Mobile deal widen Apple’s wedge? [Reuters TV YouTube channel, Aug 20, 2013]

‘Broadband China’ aims to speed up network [CCTV News YouTube channel, Aug 18, 2013]

More foreign carriers to deploy TD-LTE [China Daily video published on March 14, 2012 via SPHRazorTV YouTube channel]

TD-LTE Subscriptions to Surpass 500 Million by 2017, Representing Annual TD-LTE Operator Service Revenues of $91 Billion Worldwide [Research and Markets announcement via PRNewswire, Aug 16, 2013]

More than 50 mobile carriers worldwide have so far committed to TDD LTE technology, and over 30 OEMs have commercially launched TD-LTE compatible devices, with a major proportion of these devices supporting both FDD and TDD modes of operation.

This forecast datasheet presents revenue and shipment market size and forecasts for both infrastructure and devices, along with subscription and service revenue projections for the LTE market as a whole, as well as separate projections for the TD-LTE and FDD-LTE sub-markets from 2012 through to 2017. Historical figures are also presented for 2010 and 2011, along with vendor market share data.

Driven by large scale TDD spectrum availability and the technology’s lower deployment costs, the industry witnessed several prominent TD-LTE network deployments in late 2011 and early 2012, including Softbank in Japan, Etisalat Mobily and STC in Saudi Arabia, and Bharti Airtel in India. More recently, in October 2012, the TD-LTE ecosystem received a major boost when China’s Ministry of Industry and Information Technology announced that the entire 190 MHz of spectrum in the 2.5/2.6 GHz band will be allocated for TD-LTE deployments in China, which harmonizes its TDD spectrum with Japan and the US, two major LTE markets.

These developments could allow the TD-LTE ecosystem to reach significant economies of scale, boosting further infrastructure and device investments in TD-LTE technology.

20130430 SoftBank、Sprintについての会見。質疑最終部分と囲み [Tamotsu Hashimoto YouTube channel, May 1, 2013]

Sprint shareholders approve $21 6 billion deal with SoftBank [KansasCityNews YouTube channel, news article and video on June 25, video published via YouTube on Aug 13, 2013]

Sprint CFO: SoftBank deal lets us take Clearwire spectrum nationwide [FierceWireless, July 30, 2013]

Sprint (NYSE:S) will be able to deploy Clearwire’s 2.5 GHz spectrum for TD-LTE service on a nationwide basis now that it is flush with fresh capital from SoftBank, which now controls 78 percent of Sprint, according to Sprint CFO Joe Euteneuer. Sprint formally took control of Clearwire earlier this month.

Steve Elfman, president of network operations at Sprint, noted during the company’s second-quarter earnings conference call that Sprint now plans to deploy Clearwire’s 2.5 GHz spectrum on all 38,000 of its planned Network Vision cell sites and even more sites than that in a nationwide rollout. Previously, Sprint had said it would use Clearwire’s spectrum as a “hotspot” LTE network to offload traffic in urban markets.

In an interview with FierceWireless, Euteneuer said SoftBank’s $21.6 billion acquisition–which includes $5 billion in new capital and allowed Sprint to buy Clearwire–spurred Sprint to make the shift in strategy. The move will let Sprint add more capacity to its own FDD-LTE network, which it is still in the process of being built out. Euteneuer noted that Sprint and Clearwire originally planned to deploy Clearwire’s spectrum on around 5,000 cell sites as an offload network in urban markets. Those plans are still proceeding this year, but Sprint now wants to expand that to improve the customer experience.

“Now that we own 100 percent of Clearwire, with the help of SoftBank, we said, how do we take full advantage of the 2.5 GHz spectrum?” Euteneuer said. “The best way to do that is to have it fully integrated with the rest of your spectrum capabilities. And to do that you really need to put it on every tower.”

The Sprint CFO said because of the weaker propagation characteristics of 2.5 GHz, Sprint will deploy small cells and other sites beyond the 38,000 Network Vision sites the company has mapped out. He said it is unclear at this point if the nationwide deployment of Clearwire’s spectrum will be finished by the end of 2014. Clearwire commands around 160 MHz of spectrum in the top 100 markets.

It is unclear exactly how many TD-LTE cell sites using Clearwire’s spectrum will be online by year-end. Iyad Tarazi, head of network development and integration for Sprint, recently told CNET that Sprint will have 5,000 Clearwire sites on air by year-end, but on Tuesday Elfman was less specific, and said “we’ll have several thousand sites up this year because of the work that Clearwire was doing before us.”

“We are working with Clearwire on plans and will share more soon,” Sprint spokeswoman Roni Singleton said in a follow-up statement.

…

Sprint CEO Dan Hesse said the deployment of a nationwide LTE network on 2.5 GHz will help give Sprint “competitive parity” with its rivals. “And the important thing in terms of what we believe will be a better, a superior network experience will depend upon how quickly we roll out the 2.5 [GHz spectrum], because that will give us extraordinary capacity and some speed and performance advantages in the market,” he said. …

Xiaomi CEO: Don’t call us China’s Apple [Reuters TV YouTube channel, Aug 15, 2013]

China’s Tencent tops leaderboard, but rivals loom [Reuters TV YouTube channel, Aug 15, 2013]

WeChat, Made-in-China Messaging App Grows in Popularity [CCTV News YouTube channel, July 30, 2013]

Tencent Corporate Video [Alison Lee YouTube channel, Aug 6, 2013]

---

The global forces behind the overall setup of Chinese Internet giants:

• China Deals Represent Half of DST Global’s Recent Investments [The Wall Street Journal – Venture Capital Dispatch, Jan 29, 2013]

China’s doors may be closed to social network company Facebook, but for its pre-IPO investor DST Global, the gates are wide open.

As a result, the firm has managed to invest about $1.5 billion into China-based companies over the past four years, translating into around half the amount of capital it has invested worldwide, Partner John Lindfors told Venture Capital Dispatch.

Unlike some foreign investors, DST Global is happy to take a minority shareholding in portfolio companies, and being a late-stage investor with the ability to write bigger checks, it has also encountered less competition among China-focused investors when targeting new deals.

“We don’t want to take control. If you think about it, some of the most successful companies have been run by their owners. We’re trying to find the next Bill Gates, and back him,” said Lindfors.

DST Global counts Chinese e-commerce giant Alibaba and online retailer Jingdong Mall as part of its Asian portfolio. DST, alongside other private equity firms like Silver Lake agreed to buy shares in Alibaba at a tender offer of $1.6 billion in 2011. That same year, DST Global also participated in a $1.5 billion third round of funding in Jingdong, with media reports stating that DST bought a 5% share in the online retailer for $500 million.

Although DST Global spent around $1.5 billion on both of those deals, said Lindfors, he noted that the firm is also “happy” to invest far less in a deal, even from $50 million, as deal sizes in China can often be smaller due to the general market size.

Other firms active in China’s Internet space include Kleiner Perkins Caufield & Byers and Sequoia Capital, which typically target lesser-sized deals than DST Global, opening the playing field for the Russian investment firm.  In fact, KPCB China Investment Partner Wei Zhou last year told Venture Capital Dispatch that it had even started investing in pre-Series A deals.

DST Global, headed by Russian billionaire Yuri Milner, expects to invest in a “few” more deals in the next year or two across China’s Internet sector, specifically in e-commerce and mobile Internet, on expectations that growing domestic consumption and increasing users of mobile devices will bolster growth in these areas, said Lindfors.

“We see an explosion of smartphone usage,” said Lindfors. Indeed, industry insiders, including Kai Fu Lee, founder of Chinese investment firm Innovation Works, predict China will have 500 million smartphone users by the end of this year, jumping up from the current 330 million.

On the other side of the Pacific Ocean, DST Global has invested in the likes of Twitter and now-Nasdaq-listed Facebook–which faces restricted use in China–and manages three funds. Last year, Bloomberg reported that DST Global was raising $1 billion for a new technology fund, and separately reported that DST Global I achieved an annual 151% gross internal rate of return. Lindfors declined to comment on the firm’s funds.

DST Global likes other countries across Asia such as Indonesia and India, but for the meantime, opportunities are too early stage, said Lindfors, who previously worked at investment bank Goldman Sachs.

DST Global, which has an Asia-based office in Hong Kong, was set up by entrepreneur Milner, and is best known for investing $200 million in Facebook in 2009, and then a subsequent round in 2011 worth $500 million with Goldman Sachs.

Milner Discusses Social Networking Companies, Facebook: Video [Bloomberg YouTube channels, March 23, 2012]

2012 – My Recipe for a Better Tomorrow – Mr. Yuri Milner [PresidentialConf YouTube channel, June 24, 2012]

Encouraging Innovation – Yuri Milner at European Zeitgeist 2011 [zeitgeistminds YouTube channel, May 17, 2011]

Юрий Мильнер с 2005 года началась эра социального Интернета [Umid Matnazarov YouTube channel, Sept 20, 2011]

Alibaba Said to Have Applied for HK Listing [The China Perspective, July 23, 2013]

Alibaba Group Holding Ltd, China’s dominant e-commerce service provider, has lodged its application for listing at the Hong Kong stock exchange aimed at raising up to $20 billion, Hong Kong-based Oriental Daily reported. The company is expected to float in October with a valuation of $100 billion. Approximately $7 billion from the money raised will be used to buy back Alibaba’s share owned by Yahoo! Inc (Nasdaq: YHOO), the source said. Alibaba delisted its B2B site Alibaba.com a year ago in preparation for the initial public offering of the group as a whole. Its Taobao.com is China’s top C2C site; its Tmall.com is China’s top B2C site; its Alipay is China’s top third party billing service provider. Japan’s Softbank is Alibaba’s largest shareholder, holding a 35% stake; Yahoo owns 23%, Alibaba’s management owns 24.7%; some private equities and institutional investors own 10.3%; its founder Jack Ma owns 7%.

Masayoshi Son [Wikipedia]

Masayoshi Son (Japanese: 孫 正義 Hepburn: Son Masayoshi^?, Korean: 손정의 Son Jeong-ui; born August 11, 1957) is a Japanese businessman and the founder and current chief executive officer of SoftBank, the chief executive officer of SoftBank Mobile, and current chairman of Sprint Corporation. According to Forbes magazine, his net worth is $8.1 billion as of 2011 and he is the second richest man in Japan,^[1] despite having the distinction of losing the most money in history (approximately $70 billion during the dot com crash of 2000). ^[2] Forbes also describes him as a philanthropist.

Masayoshi Son is known for his extreme persistence to achieve his business goals. As example, when Japan’s Post and Telecommunications Ministry denied his application for a particular telecommunications license, he is reported^[3][4] to have threatened to set himself on fire inside the Ministry if his company is not awarded the desired license (however, he is reported^[5] not have brought any fuel along to back up his threat).

Former Amazon manager takes Chinese e-commerce company global [GeekWire, Aug 16, 2013]

Watch out, Amazon.com. A Chinese e-commerce company is out to redefine notions of customer service. If you think free shipping in two days is fast, how about in three hours?

In cities across China, customers can order everything from fresh produce to a new laptop, get it delivered for free the same day, pay cash on delivery and even refuse the goods at the door if they fail to meet expectations.

It’s all part of a strategy of JD.com (formerly 360buy) to become China’s largest e-commerce company and expand globally. China’s booming and highly competitive e-commerce market gets more interesting all the time, and JD.com is a major player to watch.

JD.com stands for parent company Jingdong, which has grown to become China’s largest online company that sells directly to consumers, with 100 million registered users, 5 million orders a day, and a whopping 60 billion RMB in sales ($10 billion) in 2012. The company rebranded itself earlier this year and may be planning a U.S. IPO.

Jingdong Vice President and General Manager Shi Tao, who spent more than three years working for Amazon China, visited Seattle this week to introduce the company and meet with prospective customers and partners.

JD.com operates differently than its major competitor, Alibaba’s Tmall, in that Jingdong spent years building its own network of warehouses and fulfillment centers, allowing it to manage its own delivery rather than simply matching buyers and sellers or relying on third parties to ship the goods.

“Chinese consumers want to shop on the platform with the best experience, especially shipping and post-sales customer services,” Shi said. In May Jingdong introduced nighttime and three-hour delivery services in six Chinese cities: Beijing, Shanghai, Guangzhou, Chengdu, Wuhan and Shenyang. The company offers same-day delivery in 27 major cities and next-day delivery in more than 150 cities across China.

Tmall is still the leading B2C company in China overall, with more than 51 percent of the market, compared to Jingdong’s 17 percent, according to iResearch. Amazon China has about 2 percent of that market.

…

China’s e-tailing industry has posted 120 percent annual growth since 2003, and online sales in China could reach $650 billion by 2020, according to McKinsey Global Institute.

What was not mentioned in the DST/Lindfors interview earlier:

From Digital Sky Technologies is …

Asia Awards: VC Deal of the Year – Xiaomi [Asian Venture Capital Journal, Dec 5, 2012]

Validation of Xiaomi’s approach was provided by Yuri Milner of DST Advisors who led a $216 million third round of funding in June – valuing the company at $4 billion – with Government of Singapore Investment Corp. (GIC) also involved.

DST Founder Yuri Milner Invests in Xiaomi [Tech In Asia, Dec 23, 2011]

We already knew Xiaomi had scored $90 million RMB in new financing — they announced that at their press conference with China Unicom on Tuesday — but Lei Jun has now revealed on Weibo where at least some of that money came from: DST founder Yuri Milner.

Xiaomi’s market value could reach US$10bn after new financing [WantChinaTimes.com, July 28, 2013]

Xiaomi Technology, a Chinese manufacturer of own-brand budget smartphones, will soon launch another round of financing worth more than US$2 billion, with insiders suggesting the main investor will be Russian venture capital firm Digital Sky Technologies (DST), the Shanghai-based First Financial Daily reports.

Leading Chinese internet firm Tencent Holdings invested US$300 million in DST in April 2010 and would therefore become an indirect investor in Xiaomi, the report said, though both Tencent and Xiaomi have declined to comment.

Rumor: Tencent Invests in Xiaomi via Russian VC [Marbridge Consulting, July 23, 2013]

According to industry insiders, Beijing-based Android handset developer Xiaomi has secured a new round of funding exceeding USD 2 bln from Chinese internet and mobile services firm Tencent (0700.HK), with Russian investment firm Digital Sky Technologies (DST) acting as an intermediary.

The latest round of funding values Xiaomi at approximately USD 10 bln.

Tencent Invests $300m in DST and Establishes Strategic Partnership [Tencent press release, April 12, 2010]

Tencent Holdings Limited (“Tencent” or the “Company”, SEHK 00700), a leading provider of Internet and mobile & telecommunications value-added services in China, and Digital Sky Technologies Limited (“DST”), one of the largest Internet companies in the Russian-speaking and Eastern European markets, today jointly announced that Tencent will invest approximately US$300 million in DST, thereby establishing a long-term strategic partnership between the two companies.

The aggregate consideration of approximately US$300 million, which will be paid in cash, gives Tencent approximately a 10.26% economic interest in DST upon completion of the transaction. Tencent will hold approximately 0.51% of the total voting power of DST and have the right to nominate one observer to the DST Board.

DST and Tencent will embark on a long-term partnership and co-operation as they seek to benefit from each other’s insights gained from their respective markets. DST’s deep understanding of the Russian Internet market, together with its leading brands such as Mail.ru, Odnoklassniki and VKontakte, will enable Tencent to benefit from the high growth of the Russian-speaking Internet market. At the same time, Tencent’s leading position in China will provide DST and its companies with unique and valuable operational insights and access to its regional network that can help DST further accelerate its growth path.

Chief Executive Officer of DST, Mr. Yuri Milner, said, “We are extremely pleased to welcome Tencent as a shareholder in DST. This investment is a vote of confidence in DST from the market leader in China and one of the world’s most successful and dynamic Internet companies overall. Our teams share many common views and beliefs and a clear vision about the significant opportunities that lay ahead. We look forward to working together with Tencent and benefiting from their expertise as we both push forward with our plans to capitalize on this immense growth in our markets.”

President of Tencent, Mr. Martin Lau, said, “We are excited to enter into a long-term strategic partnership with DST, a key global Internet player and a leader in Russian-speaking Internet markets. The investment allows us to benefit from the fast-growing Internet market in Russia, as well as to leverage our technical and operational know-how to strengthen the leadership position of DST and explore new business opportunities in the Russian-speaking Internet markets.”

Details of the transaction can also be obtained from the statutory disclosure documents available on http://www.hkexnews.hk website and http://www.tencent.com/ir .

About Digital Sky Technologies

DST was founded in 2005 and is one of the largest Internet companies in the Russian-speaking and Eastern European markets and one of the leading investment groups globally to exclusively focus on internet related companies. DST, together with its affiliate DST Global, also hold stakes in Internet world leaders such as Facebook and Zynga. DST is a privately held company backed by leading Russian and Western financial institutions. For more information please visit http://www.dst-global.com .

About Tencent

Tencent aims to enrich the interactive online experience of Internet users in China by providing a comprehensive range of Internet and wireless value-added services. Through its various online platforms, including Instant Messaging QQ, web portal QQ.com, QQ Game portal, multi-media social networking service Qzone and wireless portal, Tencent services the largest online community in China and fulfills the user’s needs for communication, information, entertainment and e-Commerce on the Internet.

Tencent has three main streams of revenues: Internet value-added services, mobile and telecommunications value-added services and online advertising.

Shares of Tencent Holdings Limited are traded on the Main Board of the Stock Exchange of Hong Kong Limited, under stock code 00700. The Company became one of the 43 constituents of the Hang Seng Index (HSI) on June 10, 2008. For more information, please visit http://www.tencent.com/ir .

Naspers makes strategic investment in DST [press release, July 14, 2010]

DST to assume full control of Mail.ru upon share swap with Naspers

Johannesburg and Moscow, 14 July 2010 – Naspers Limited (“Naspers”), the broad based international media group, and Digital Sky Technologies Limited (“DST”), one of the largest internet companies in the Russian-speaking markets, announces today that Naspers’s subsidiary Myriad International Holdings B.V. (“MIH”) will take a 28,7% stake in DST. The transaction will be effected by Naspers contributing its 39,3% stake in Mail.ru into DST and investing US$388m in cash. Concurrently, Mail.ru management and other minorities will also convert their shares into DST.

Upon the close of this transaction, DST will own over 99,9% of Mail.ru. Mail.ru is the leading communication and entertainment platform in the Russian-speaking internet world, with over 50m registered email accounts, leading market share in MMO games and one of the leading social networks in Russia.

Naspers and DST have worked closely together over the past three years as co-owners of Mail.ru and today’s transaction will enable them to further strengthen that relationship.

Chief Executive Officer of DST, Yuri Milner, said, “Naspers’s strategic insight has already proven to be valuable in our partnership and we welcome the expertise they will bring to DST. We are delighted to announce this transaction and look forward to creating further value through our relationship.”

Antonie Roux, head of Naspers’s internet operations, commented: “We have known DST and its management for years and we share a similar view and approach. We are excited to strengthen our partnership. This opportunity further expands our exposure to emerging markets and the fast-growing internet sector.”

About Digital Sky Technologies

DST was founded in 2005 and is one of the largest internet companies in the Russian-speaking and Eastern European markets and one of the leading investment groups globally to exclusively focus on internet related companies. DST, together with its affiliate DST Global, also holds stakes in internet world leaders such as Facebook, Zynga and Groupon. DST is a privately held company backed by leading international financial institutions and companies. For more information please visit http://www.dstglobal.com.

About Naspers

Naspers is a leading emerging market media group operating in 129 countries. It is listed on the Johannesburg Securities Exchange (JSE), with an ADR (American Deposit Receipt) listing on the London Stock Exchange. The group’s principal operations are in internet platforms (focusing on commerce, communities, content, communication and games), pay-television and the provision of related technologies and print media (including publishing, distribution and printing of magazines, newspapers and books). The group’s most significant operations in emerging markets include South Africa and subSaharan Africa, China, Central and Eastern Europe, India, Brazil, Russia and Thailand. For more information visit http://www.naspers.com.

Tencent (700 HK) [RHB OSK Securities (Thailand) report, Aug 15, 2013]

Internet – Online Games and Media
Market Cap: USD88,608m

Shareholders (%)
MIH China (Naspers)         33.9
Ma Huateng [Pony Ma]     10.2
JP Morgan                             4.5

…

Good WeChat progress. The pace of development on Tencent’s mobile social platform WeChat has exceeded our expectations since its launch. Monthly active users (MAU) breached 236m in 2Q13 (1Q13: 194m) while new services such as sticker sales, targeted ads and the first game released on the platform, TTAXC (天天爱消除), showed monetisation potential.

…

Online advertising is a major earnings driver at the gross profit level.

…

SWOT Analysis

…

Company Profile

Tencent is a leading internet conglomerate in China with operations in online games, social networks, advertising and e-commerce. The company operates leading online games in China while its mobile chat application, which has expanded globally, has a user base exceeding 300m.

Naspers Fact Sheet June 2013:

Business overview

Founded in 1915, Naspers is a leading multinational group of eCommerce and media platforms, with operations in more than 133 countries. Listed on the Johannesburg Stock Exchange (JSE) since September 1994, it also has an ADR listing on the London Stock Exchange (LSE).

The group’s principal operations are in e-commerce, paytelevision & related technologies and print media. It also has minority investments in listed, integrated social-network platforms Tencent (SEHK 0700) and Mail.ru (LSE: MAIL).

The group focuses on attaining sustainable market positions in growing emerging markets which it believes to present above-average growth opportunities. These markets include South Africa and the rest of sub-Saharan Africa, China, Brazil and the rest of Latin America, Central and Eastern Europe, Russia, Southeast Asia, India and the Middle East.

…

INTERNET

Naspers operates platforms that offer customers fast, intuitive and secure environments where they can communicate, participate, entertain and shop. The group’s e-commerce services include marketplaces, general and vertical e-tail, classifieds, lead-generation and payments.

Naspers major e-commerce operations are:

• Allegro (97%), a leading e-commerce business in Central and Eastern Europe.

• BuscaPé (95%), a major e-commerce platform in Brazil.

• OLX (84%), a strong classifieds operator in a number of emerging markets.

Other investments include 36Boutiques, Avito, Brandsclub, Dealfish, Dubizzle, eMag, Fashion Days, Flipkart, Fixeads, ibibo Group, kalahari.com, Korbitec, LevelUp!, Markafoni, Movile, Netretail, OLX, PayU, PriceCheck, redBus, Ricardo, Sanook!, Souq, Sulit, Tokobagus, Travel Boutique Online and Trendsales.

Naspers also holds minority positions in:

• Tencent (34%) – China’s largest and most used internet services platform.

• Mail.ru Group [DST] (29%) – the leading internet company in Russian-speaking markets.

Naspers rides Tencent to Internet fortune [TechCentral (South Africa), Aug 31, 2012]

When Naspers stumbled on a little-known Chinese Internet company in 2001, it could not have dreamed that a US$32m investment would account for more than 80% of the media conglomerate’s R200bn market cap now.

Tencent Holdings is the largest Internet solutions provider in China and Naspers, which owns a 34% stake, is its largest shareholder. R4,8bn of Naspers CEO Koos Bekker’s personal fortune of R6bn in shares is linked to Tencent.

…

It [Naspers] has a market capitalisation of about $57bn and its total revenue for the year to 31 December 2011 was up by 45% to $4,4bn. Profit attributable to equity holders was $1,6bn — 27% higher year on year — and its profit for the second quarter of 2012 was up by 32%. The p:e ratio (share price compared with  its earnings) is 33.

…

Founded in November 1998, Ten­cent has become one of China’s largest and most widely used Internet service portals and, in 2004, it was listed on the main board of the Hong Kong Stock Exchange.

More than 50% of Tencent employees are research and development staff and the company has obtained patents relating to technology for instant messaging, e-commerce, online payment services, search engines, information security, gaming and more.

Its leading Internet platforms in China include instant messaging, social networking (with 580m active users) and a mobile chat and micro-blogging service known as Weixin. It is also the largest online gaming company in the world.

---

And the DST money is said to come from:

• Faces of the Facebook Corruption [Americans For Innovation or FB Cover-up opinion blog, Jul. 11, 2013]
  47 million “likes” undermine the U.S. Constitution and the Rule of Law

THE THREE KINGS & THEIR PRINCES(S)

“Larry Summers is ethically challenged.”
   Former Economist Colleagues

Larry Summers and his Facebook Friends conspire to undermine U.S. “checks & balances” and take control of the world economy by stealth, we believe.

…

First see a specially written article to understand very easily the whole affair with the judicial and other systems in U.S. in Facebook — a force for freedom perhaps, but at odds with the rule of law in the U.S. [Americans For Innovation (AFI) via Open Trial, July 26, 2013] from which I will include here only the following excerpts:

…

In the late 1990s Innovator Leader Technologies invented a technology we now call “social networking.” By the time they filed for their first patents in 2002, they had invested 145,000 man-hours and over $10 million. Literally within three months of Leader perfecting the lynch-pin of their invention, Mark Zuckerberg and his PayPal associates were in the market, on February 4, 2004. Zuckerberg claims to have done all the work himself in “one to two weeks” while chasing girls and studying for finals.

New evidence indicates he received Leader’s source code from a mole who was cooperating with Zuckerberg’s apparent mentor, James W. Breyer, of Accel Partners LLP and with Fenwick & West LLP, who was also Leader’s attorney at the same time. It appears that they were waiting for Leader to finish debugging its invention so that they could roll out the Harvard-boy-genius-Facebook-origins myth, with Zuckerberg in the leading role.

Not so coincidentally, Lawrence Summers was President of Harvard at the time. Summers arranged for the 19-year old Zuckerberg to get more Harvard Crimson news coverage than any world leader or event. Breyer was a big alumni contributor. PayPal COO, Reid Hoffman (later LinkedIn CEO) was coaching Zuckerberg and feeding him spending money, as was Peter Thiel, co-founder of PayPal. Tellingly, these three sold over $6 billion of their Facebook stock on Day 3 of the Facebook IPO, at the highest price anyone received for their stock before it crashed. Summers popped up in Silicon Valley before the IPO too—as “special advisor” to Instagram that sold their 13-man company to Facebook for $1 billion. Could it be that their CEO, Matt Cohler was able to exert some influence over Zuckerberg, as he knew about the theft of the Leader invention?

Forty-four months after filing for their patents, Leader received their first patent on November 21, 2006—U.S. Patent No. 7,139,761. On November 19, 2008, Leader filed a patent infringement lawsuit against Facebook. Leader Technologies, Inc., v. Facebook, Inc., 08-cv-862-JJF-LPS (D.Del. 2008).

…

Current Federal Reserve Chairman candidate, Lawrence “Larry” Summers has mentored Facebook’s COO, Sheryl Sandberg since the early 1990’s. He also mentored Russian Yuri Milner, who has close ties to Russian oligarch Alisher Asmanov and the Kremlin. Summers was one of the Harvard-wunderkind architects of the disastrous Russian voucher system in the early 1990’s while Chief Economist for the World Bank. Milner is Facebook’s second largest shareholder and is partnered with Goldman Sachs and Morgan Stanley. With Goldman’s and Morgan’s help, Milner moved billions of dollars into Facebook pre-IPO. Curiously, Cohler helped Hoffman start LinkedIn in 2004. There appears to have been a feeding frenzy surrounding the debugging of Leader’s invention.

This occurred after the US taxpayers bailed out Goldman and Morgan Stanley in 2008. To this day no one knows the origins of those funds, which pumped Facebook’s valuation up to $100 billion. Milner is also connected with Bank Menatep, which was caught laundering $10 billion in Russian mob funds and diverting $4 billion in IMF funds. Summers’ conduct here has never been scrutinized, even though he was appointed to oversee the bailout soon after Barack Obama was elected President. See Congressional Briefings.

…

Georgia [Beardslee] interviews the real inventor of social networking, Michael McKibben, CEO of Leader Technologies, Columbus, Ohio: GEORGIA! KSCO AM 1080, Apr. 10, 2013 Michael McKibben interview, CEO of Leader Technologies, Inc. [leadertv100 YouTube channel, April 12, 2013]

Georgia: “One of the most interesting, complicated and disturbing stories of the decade.” On April 10, 2013, news-talk show host Georgia Beardslee interviewed Michael McKibben, CEO of Leader Technologies, Columbus, Ohio on her weekly radio show GEORGIA! KSCO 1080 (Santa Cruz, CA) about Leader’s battle with Facebook over Leader’s U.S. Patent No. 7,139,761.

The interview covers

1. background on the LEADER V. FACEBOOK patent infringement lawsuit;
2. [18:30] the suspicious split verdict;
3. [34:25] the Harvard back story;
4. the Federal Circuit judge’s stock in Facebook;
5. the refusal of the Federal Circuit court to disclose their Facebook stock holdings;
6. the likely undue influence of the federal courts by financiers, bankers, underwriters, Silicon Valley venture capitalists;
7. the questionable conduct of the U.S. Patent Office;
8. the judges’ ignoring of Zuckerberg’s concealment of 28 hard drives and Harvard emails;
9. the Facebook-doctored trial evidence;
10. the ruling against Leader without a shred of evidence;
11. the involvement of billions of pre-IPO investments in Facebook by Russian companies,
12. Goldman Sachs’ and Obama bailout director Larry Summers’ involvement, and now
13. the interference of the White House at the U.S. Patent Office. This case appears to have exposed an underbelly of corruption at the national and international levels that is much worse and even more organized than we might have otherwise suspected.

While the video plays, pages from Leader’s Petition for Writ of Certiorari, Leader Technologies, Inc. v. Facebook, Inc., No. 12-617 (U.S. Supreme Court Nov. 16, 212) will display, page by page (41 pages not counting the appendices). This document can be obtained at: http://www.scribd.com/doc/113545399/P…

For background facts, see also http://americans4innovation.blogspot….

This broadcast and these notes may contain opinion. As with all opinion, the information should not be relied upon without independent verification.

Obama is protecting his 47 million Facebook “likes” at the expense of the U.S. Constitution [Georgia! KSCO-AM1080, May 31, 2013]

(My collaboration with a listener, 5/31/2013):Washington D.C. is toxic and fiendishly deceptive these days. Speaker John Boehner described the flow of scandal developments as “Drip, drip, drip.” I take this to mean that the Deception Tank is full and starting to leak. (At last!)

Investigators are now uncovering common people driving these scandals. The Leader v. Facebook property rights debacle seems to have been another one of their pet deception projects. Remember, Facebook was judged guilty on 11 of 11 counts of stealing the inventions of Columbus-based innovator Leader Technologies, Inc., yet the federal courts ruled for Facebook anyway. They had to ignore the Consitution to do it.

Many people lusted after Leader’s innovations that we know as “social networking.” Obama and his handlers needed it to raise election dollars and polish Obama’s persona many times a day. Larry Summers, Accel Partners and the PayPal Mafia wanted it as their global financial transactions platform, Zuckerberg and his fellow thieves wanted it as a global voyeur platform to invade everyone’s privacy, the Kremlin wanted it as a money-laundering vehicle, James W. Breyer wanted it as his ‘pump and dump” stock manipulation scheme, the greedy law firms wanted it to rake in fees. And, at least two Federal Circuit Judges Alan D. Lourie and Kimberly A. Moore were beefing up their financial portfolios with the pump of their undisclosed Facebook shares at the IPO. Wow, that’s a lot of interests all lusting after Michael McKibben’s innovation! (I have interviewed him on this show twice.)

Beware of McBee Strategic lobbyist Jeff Markey bearing gifts

Americans for Innovation has smoked out intimate, undisclosed relationships among Facebook’s chief litigator in Leader v. Facebook, Cooley Godward LLP’s Michael Rhodes, Obama’s Justice Department Cooley “Advisor,” Donald K. Stern, the failed $1.6 billion BrightSource Obama “green” stimulus project, big Facebook IPO winner J.P. Morgan Chase and McBee Strategic’s Steve McBee and Jeff Markey.

This is so convoluted I asked by resident artist to do me a diagram of these relationships. No wonder Washington is so confused. It’s intentional on the part of some morally bankrupt people and organizations (click to enlarge):

Figure 1: Conflicts of Interest Map among Barack Obama, Executive Branch, Justice Department,  Cooley Godward Kronish LLP, Michael Rhodes, Donald K. Stern, McBee Strategic, Steve McBee, Jeff Markey, Judge Leonard P. Stark, Judge Alan D. Lourie, Judge Kimberly A. Moore, Leader v. Facebook, BrightSource, Solyndra,Tesla Motors, Solar City, Elon Musk and 47 million “likes” on Facebook.

McBee Strategic and their lobbyist Jeff Markey have lied at least twice on disclosures that we have already identified. On their BrightSource Senate disclosure on 11/20/2009 they answered “No” to affiliated organizations that actively participate in their activities. This was false since on 4/23/2009 they had publicly announced their alliance with Facebook’s attorney Cooley Godward Kronish LLP specifically about helping companies access Obama’s “green energy” money. That’s LIE #1. Then, we discover that Jeff Markey is accustomed to lying whenever it is to his benefit. On 4/30/2004 Markey lied on a financial disclosure that he was an Executive for SAIC in an apparent deception to gain access to the National Congressional Republican Committee. That’s LIE #2.

Markey clearly plays on both sides of the ball in Washington. While he is busy spending Obama’s billions, he donates mostly to Republicans, including MITCH MCCONNELL, ROB PORTMAN, ARLEN SPECTER, LINDSEY GRAHAM. Republicans beware of this wolf in sheep’s clothing. Such cynical parlaying of contacts just to keep one’s job in Washington is why Washington is failing. These people are there for the wrong reasons. They need to get real jobs. Professional bureaucrats and politicians (and the lobbyists who feed on the rotted meat) are the death knell of a democracy.

While we’re on the subject of lying to Congress, then Magistrate Judge Leonard P. Stark told Congress in his 4/22/2010 confirmation hearing that he would follow the decisions of the Supreme Court and the Appeals Courts. However, three months later he ignored that promise and even after instructing the jury to do so, he ignored the Supreme Court’s Pfaff test of on-sale bar evidence, as well as the Federal Circuit’s Group One tests. Obama and his Facebook “friends” just seem to lie all the time.

Don’t believe me? Check out the source material yourself. Here are some of them we downloaded quickly. Please share more as you find your own information.

…

Detailed information is available in Mark Zuckerberg used Leader white paper to build Facebook [Origin of Facebook technology?, Aug 27, 2011] post, from which I will include just the most relevant excerpt in my opinion:

…
The court documents reveal how Mark Zuckerberg was able to accelerate from 0-to-60 mph in “one or two weeks” while studying for his Harvard finals to start Facebook on February 4, 2004. The idea for the student facebook was already known at Harvard from three well-documented sources prior to Mr. Zuckerberg: (1) the Winklevoss twins’ ConnectU,[1] (2) Aaron Greenspan’s houseSYSTEM,[2] and (3) from the Harvard computer administration.[3] And, if Leader Technologies (“Leader”) is right, Mr. Zuckerberg lifted the ideas for the structure of the platform from Leader Technologies’ patent pending white papers, one published on October 22, 2003, along with Leader’s first patent publication on June 24, 2004—exactly when Mr. Zuckerberg says “Steven Dawson Haggerty” was hired to build the “groups functionality” which is disclosed in the Leader patent publication.[4][5][6][7]
…

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More on Yuri Milner:

Mark Pincus, founder of Zynga: I Love Yuri Milner [PandoDaily YouTube channel, July 19, 2012]

Russian Billionaire buys $100 Million U S Mansion Yuri Milner [estarcobusiness10 YouTube channel, (originally made the news on March 31, 2011) April 2, 2012]

Home Brings $100 Million [WSJ.com, March 31, 2013]

A Russian billionaire investor paid $100 million for a French chateau-style mansion in Silicon Valley, marking the highest known price paid for a single-family home in the U.S.

The purchase of the 25,500-square-foot home in Los Altos Hills, Calif., underscores the strength of some luxury properties in an otherwise depressed housing market.

The buyer, Yuri Milner, 49, who heads Digital Sky Technologies and whose investments include Facebook Inc., Groupon Inc. and Zynga Inc., had no immediate plans to move into the home, said a spokesman.

Mr. Milner is the stocky founder of DST, a Moscow-based fund that’s made a splash in Silicon Valley via its investments. Its first in the U.S. was a $200 million check for Facebook in 2009. His primary residence is in Moscow, where he lives with his wife and two children.

The sky seemed to be the limit for Mr. Milner’s new house, a symmetrical limestone mansion with San Francisco Bay views that was inspired by 18th-century French chateaux.

The home has indoor and outdoor pools, a ballroom and a wine cellar. The grounds include a tennis court and inside are chandeliers and a frieze around a skylight in the entryway, among other details.

…

Mr. Milner bought the home through a limited-liability company; the home wasn’t on the market, according to people familiar with the deal.

Mr. Milner, who studied theoretical physics in Moscow and attended the University of Pennsylvania’s Wharton School of Business, began his career in Moscow in the 1990s. By 1999, he had focused on the Internet after dabbling in everything from private equity to a macaroni-and-cheese factory. …

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Larry Summers:

• Update: Larry Summers had already a much larger influence over the global affairs since 1990 than anybody could have only imagined. Read Greg Palast’s latest finding of  Larry Summers and the Secret “End-Game” Memo [Aug 22, 2013] related to second half of 90s when Summers was Deputy Secretary of U.S. Treasury and Summers was leading what Palast calls “top US Treasury officials secretly conspired with a small cabal of banker big-shots to rip apart financial regulation across the planet”. Note as well that the author of the secret “End Game” memo written to Summers was nobody else than Timothy F. Geithner than Assistant Secretary to Summers. 
• AFF 2013 Keynote Luncheon with Lawrence Summers [HKTDC YouTube channel, Jan 23, 2013]

• Larry Summers Seeks Edge in Search for Next Fed Head [Bloomberg YouTube channel, July 29, 2013]

• The Disastrous Larry Summers For Fed Chair? [golefttv YouTube channel, Aug 10, 2013]

• Peter Schiff – Next Fed Chair Will Lead US to ‘Economic Ruin& Crisis’ economy, economic, crisis, collapse, dollar, crash, us, debt, 2013, 2014 [Gold, Silver & Economy News YouTube channel, Aug 15, 2013]

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Alisher Usmanov (+Irina Viner):

• Sunday Times Rich List 2013 reveals wealthiest members of UK Jewish community [JewishNewsOne, April 22, 2013]

BBC News – Sunday Times Rich List: Alisher Usmanov [BBCWorldNewsWatch YouTube channel, April 21, 2013]

Moshiri Becomes Billionaire Helping Usmanov [jagan washpost YouTube channel, July 9, 2012]

Russia’s Usmanov – Fed Tapering ‘Vital & well-balanced’ (CNBC) [gmshadowtraders YouTube channel, July 11, 2013]

Full video: Russia’s Richest Man Supports Fed [CNBC, June 20, 2013]

Форум в Давосе. Интервью А.Усманова [Моше Кац YouTube channel, Jan 23, 2013]

Алишер Усманов: на Россию надвигается этап сложностей [Моше Кац YouTube channel, June 23, 2013]

Без галстука с Ириной Винер [Russia24TV YouTube channel, Nov 7, 2012]

Russian Billionaire Usmanov Bets $100M on Apple’s Rebound [Bloomberg YouTube channel, April 30, 2013]

• Results of the year for Alisher Usmanov [Моше Кац YouTube channel, Dec 21, 2012]

• USM Holdings – Internet [Feb 24, 2013]

USM Holdings is a leading global investor in companies in the digital space. Its deep understanding of the internet sector has played a key role in the success of its businesses and the development and diversification of
internet services.

USM Holdings is a major shareholder in Mail.ru Group, with a 17.9% economic stake and 58.1% voting power, and the largest investor in the Digital Sky Technologies (DST ) family of funds, an investment company specialising in late stage, high growth private businesses in the global internet sector. USM Holdings recognises the future growth prospects of e-commerce, social networks, online video, online gaming, mobile internet and online advertising.

MAIL.RU GROUP

Founded in 1998, Mail.Ru Group is the number one internet company in the high growth Russian-speaking internet market reaching c. 85% of Russian users on a monthly basis. It is the world’s fourth largest internet company based on total page views, with a global monthly audience of 97.4 million users.

In line with its ‘communitainment’ strategy, the company is moving rapidly to build an integrated communications and entertainment platform. Mail.Ru Group comprises the most popular Russian free email service Mail.Ru and two popular Russian-language internet instant messengers. The company operates two leading Russian social networks, My World and Odnoklassniki.ru, and owns a 40% stake in VKontakte, Russia’s number one social networking site. Mail.Ru Group is also a leading player in the online games market.

In 2010, Mail.Ru Group successfully completed an IPO on the London Stock Exchange worth c. US$92 million.

Mail.Ru Group’s aggregate segment revenue in 2012 was RUR 21,151 million, representing a 39% year-on-year increase.

PORTFOLIO INVESTMENTS WITH DST

DST was the group’s first internet investment. In 2008, DST became a backer of Facebook based on a firm belief in the strong growth potential of the internet, and particularly social networking. The current market valuation of Facebook exceeds the initial value at the time of DST ’s entry by approximately seven times.

In 2009, DST spun off DST Russia, later renamed Mail.Ru Group (see above), which is a separate business at present.

Through DST and Mail.Ru Group investments, USM Holdings gained international prominence with stakes in some of the world’s leading and most valuable internet assets, including Facebook, Twitter, Groupon, Zynga, Spotify, Zocdoc, Airbnb, Alibaba and 360buy.

• USM Holdings – Telecoms [April+, 2013; extracted on Aug 22, 2013]

USM Holdings is a major investor in some of Russia’s leading telecoms businesses. It is ideally positioned to leverage its assets
and experience in the rapidly growing market
for 4G and other mobile services.

USM Holdings owns 82% of Garsdale, a telecoms holding, which in turn controls 50% plus 100 shares of MegaFon, Russia’s second largest mobile operator; 100% of Yota, a pioneering international 4G services provider; and 51% of Peter-Service, a billing services company. Through Garsdale and MegaFon, USM Holdings owns 50% of Euroset, Russia’s number one mobile retailer.

MEGAFON

Formed in 1993, MegaFon is Russia’s second largest mobile operator in terms of revenue and subscribers and the market leader in the mobile data segment.

With over 33,000 employees, MegaFon is a leading universal telecommunications provider with c. 62.7 million wireless subscribers in the Russian Federation as of 31 March 2013. The company offers a full range of voice, data and other mobile and fixed-line telecommunications services, including digital TV and IP telephony, to retail customers, businesses, government clients and telecommunications services providers. MegaFon operates one of the most extensive 3G networks in Russia and renders a wide range of mobile services in Tajikistan, Abkhazia and South Ossetia. The company has a strong track record in innovation and pioneered the introduction of a number of services in Russia, including the launch of MMS and mobile TV in 2004, free incoming calls in 2006, 3G services in 2008, significant reduction in roaming charges in 2011, and 4G/ Long Term Evolution (LTE ) services in 2012.

Through MegaLabs, a fully owned subsidiary, the company develops a variety of new projects in the promising value-added service (VAS) market in a number of areas, including content and media, mobile finance, mobile advertising, cloud and IT solutions, M2M, e-government and m-health.

MegaFon owns a large distribution network. As of the end of 2012, it included 1,785 owned and operated stores and 1,757 third-party points of sale operating solely under the MegaFon brand. In addition, its acquisition in late 2012 of a 25% stake in Euroset, the largest wireless mobile equipment retailer in Russia, is expected to enhance the company’s initiatives focused on improving the quality of MegaFon’s subscriber base and broadening the marketing of its products.

In November 2012, the company listed c. US$1.7 billion worth of shares in an IPO. The company’s shares are traded on MICEX-RTS , and its GDR s on the London Stock Exchange.

In 2012, MegaFon’s revenue grew 12.4% year-on-year to RUR 272.6 billion. The company demonstrated a strong performance in Q1 2013, achieving consolidated revenue growth of 7.6% y-o-y to RUR 67.7 billion.

YOTA

Yota was founded in 2007. It is the leader of the mobile broadband sector in Russia. It was the first company to offer its subscribers access to services based on WiMAX and LTE technologies, and is one of the leading companies in this segment globally.

In 2013, Yota was divided into two companies: Scartel, which is involved in construction and management of 4G infrastructure, and Yota (Yota LLC), a mobile operator.

Scartel operates LTE networks and provides access to its networks for telecom operators using a mobile virtual network operator (MVNO) model. It was the first company worldwide to launch LTE-Advanced technology for a commercial network, enabling data transfer rates of up to 300 Mbps. The company’s LTE networks are currently available in 31 regions and more than 100 cities in Russia. Its total investments in LTE infrastructure in Russia to date exceed US$400 million and are set to reach US$1 billion by the end of 2014.

Yota provides communication services to its subscribers through Scartel’s platform. Yota owns an extensive retail and dealer network throughout Russia, offering its users a truly unlimited LTE experience, coupled with the provision of hardware and the highest level of customer service. At present, Yota services are available in more than 20 major cities in Russia.

Yota and Scartel are 100% owned by the telecoms holding Garsdale, which is part of USM Holdings.

EUROSET

Founded in 1997, Euroset is the largest mobile retail chain in Russia, with more than 5,000 outlets. Its stores offer a wide range of goods, such as handsets, accessories, tablets and netbooks; and services, such as mobile top-ups, repairs and financing.

Euroset is one of the best known brands in the Russian market for consumer goods and services. The retailer’s share of Russia’s mobile phone market is approximately 30%. The company operates in more than 1,500 towns and cities in Russia and Belarus, and attracts more than 40 million customers to its stores each month.

The company today is one of the largest Russian employers, providing jobs to over 30,000 people.

PETER-SERVICE

Peter-Service is the first Russian developer of billing systems for telecoms operators. It provides billing solutions along with product installation, integration and support services. The company has regional offices across Russia and in Ukraine. Since its establishment in 1992, Peter-Service has completed over 100 projects for more than 50 operators of fixed and mobile networks in 10 countries.

• USM Holdings – Media [Feb 23, 2013]

USM Holdings owns 50% of UTH Russia, one of the country’s fastest growing commercial television broadcasters. The company aims
to capitalise on the expansion of the youth entertainment
market and the ever increasing interest
in youth lifestyle and wellbeing.

UTH RUSSIA

Through UTH Russia, USM Holdings owns some of the country’s most popular outlets in broadcast and digital media. Building the main framework on its two free-to-air channels – the Disney Channel and U channel – and the cable MUZ-TV channel, UTH Russia is on its way to becoming the leader in youth entertainment and lifestyle programming. U channel and the Disney Channel broadcast in more than 880 cities, and the company continues to expand its market share.

The UTH platform also houses the specialist online video service ClipYou, which offers licensed content from leading Russian and international music companies, including some of the top labels, such as Universal Music, Warner Music Group, Sony Music Entertainment and EMI.

• USM Holdings – Steel & Mining [Feb 23, 2013]

USM Holdings invests in a number of Russia’s steel and mining companies. It owns 100% of METALLOINVEST, a leading global iron ore
and hot briquetted iron (HBI) producer
and one of the regional steel producers.

METALLOINVEST

METALLOINVEST extracts and exploits iron ore from the second largest measured reserve base in the world (c. 14.9 billion tonnes).

In 2011, the company was the largest commercial iron ore producer in Russia/CIS and the fifth largest globally, the leading producer of pellets in Russia/CIS and the third largest globally, and the leading producer of merchant HBI globally.

The main production assets of the company are strategically located in the European part of Russia and the Urals.

The company is organised into three integrated operating segments focusing on mining operations, steel production and auxiliary businesses and other assets. The mining segment includes Lebedinsky GOK and Mikhailovsky GOK, and the steel segment includes OE MK, Ural Steel and Ural Scrap Company. In addition to its mining and steel businesses, the company owns several supporting businesses and other assets that provide services and raw materials to the mining and steel segments.

Lebedinsky GOK is a leading manufacturer of iron ore products in Russia and operates as an integrated mining company whose assets comprise iron ore extraction facilities and secondary processing facilities, including beneficiation and secondary beneficiation plants, a pellet plant and two HBI plants.

Mikhailovsky GOK is the second largest iron ore extraction and processing operation in Russia, after Lebedinsky GOK. In 2014, Mikhailovsky GOK intends to finish construction of what is expected to be the largest pelletising plant in Russia, with a capacity of five million tonnes a year.

OEMK is one of the most modern steel mills in Russia, employing Midrex DRI technology. The unique application and properties of the steel and finished products from OE MK have ensured stable demand in Russia, the CIS and worldwide. It is located close to Lebedinsky GOK, which supplies OEMK with high grade iron ore concentrate through a 26-kilometre slurry pipeline. OEMK sells products for engineering, automotive, pipe, hardware and bearing industries in the domestic market, and exports its high quality pipe and cast billets and long rolled products such as wire coil and bar to foreign customers.

Ural Steel is a major manufacturer of strips for large diameter pipes, pipe billets, bridge construction steel and heavy plates. Ural Scrap Company purchases, processes and delivers ferrous scrap to METALLOINVEST’s steel producing assets.

Baikal Mining Company, a subsidiary of METALLOINVEST, holds the licence for the development of the Udokan copper deposit, which has a mineral resources base of c. 2.7 billion tonnes. Udokan is one of the world’s largest undeveloped deposits of copper amounting to c. 25.7 million tonnes of metal. The licence covers 60% of copper deposits in Russia.

With a 21% holding, METALLOINVEST is a major shareholder of the Canadian company Nautilus Minerals. Nautilus Minerals commercially explores the seafloor for massive sulphide systems, which are a potential source of high grade copper, gold, zinc and silver. The company is developing the world’s first seafloor copper-gold project in Papua New Guinea.

METALLOINVEST has a shareholding of approximately 5% in Norilsk Nickel, the world’s largest producer of nickel (18% of the market) and palladium (41%), as well as a leading producer of platinum (11%) and copper (2%). Norilsk Nickel also produces multiple by-products, such as cobalt, rhodium, silver, gold, iridium, ruthenium, selenium, tellurium and sulphur.

In 2012, METALLOINVEST’s net income grew by 20.4% year-on-year to US$ 1.7 billion.

USM Holdings – Alisher Usmanov Founder of USM Holdings [June 12, 2013]

Mr. Usmanov is an investor, industrialist and philanthropist.
He created and built up USM Holdings by identifying
and focusing on growth businesses.

Mr. Usmanov was born in 1953 in the town of Chust in the Namangan region of Uzbekistan, which was then part of the USSR . He graduated in 1976 from the Moscow State Institute of International Relations, a leading Russian university, with a degree in international law. In 1997, he received a degree in banking from the Finance Academy under the Government of the Russian Federation. He is fluent in English, French, Russian and Uzbek.

Mr. Usmanov has played a number of key roles in businesses essential for the advancement of the Russian economy. Since February 2006, he has been a member of the Board of the Russian Union of Industrialists and Entrepreneurs, and currently heads its Committee for Updating of Control and Supervision and Elimination of Administrative Barriers. Mr. Usmanov has served as General Director of Gazprom Investholding since 2000, prior to which he was as an Advisor to the Chairman of Gazprom and was First Deputy General Director of Gazprom Investholding. From 1994 to 1998, Mr. Usmanov held the position of General Director of Interfin Investment and Finance Company. From 1995 to 1997, he served as the First Deputy Chairman of MAPO-Bank, and from 1994 to 1995, he was an Advisor to the General Director of Moscow Aviation Industrial Enterprise. From 1990 to 1994, Mr. Usmanov worked as the Deputy General Director of Intercross JSC.

Mr. Usmanov is the President of the International Fencing Federation and a member of the councils of the 2014 Sochi XXII Olympic Winter Games and XI Paralympic Winter Games, the 2013 Kazan XXVII Summer Universiade and the Russian Olympian Sportsmen Support Fund. He is a Trustee for a range of social, educational and cultural organisations, including the Russian Geographical Society, Moscow State Institute of International Relations, National Research University Higher School of Economics, and European University at St. Petersburg.

Mr. Usmanov is the founder of the Arts, Science and Sports Charity Foundation.

In 2013, Mr. Usmanov was awarded the Order for Service to the Fatherland IV class in recognition of his services to the state, as well as his community and charitable activities. In 2004, he was presented with the Order of Honour of the Russian Federation for his contribution to business and charity.

In 2011, he received the Order of Friendship of the Republic of Kazakhstan.

Alongside his investments within USM Holdings, Mr. Usmanov owns Kommersant Holding, the leading Russian business media group, as well as almost 30% of Arsenal, an English football club.

USM Holdings – About us [June 21, 2013]

USM Holdings Limited (“USM Holdings”) is a diversified, international company with significant interests across the metals and mining,
telecoms, internet and media sectors. It was established in 2012
to consolidate the various investments and holdings of
Alisher Usmanov, which are the result of more than
30 years of his investment and business
development activities.

In consolidating Mr. Usmanov’s interests into one company, USM Holdings has the right structure to enable the sharing of both intellectual and financial capital amongst its various businesses. The group’s companies benefit from a global network of relationships and a wealth of experience, which enable them to access international investment opportunities. Through its structure, reporting and transparency, USM Holdings aims to ensure that its companies adhere to the highest international standards of corporate governance.

In carrying out its operations, USM Holdings acts in a socially responsible way, investing in long-term sustainable enterprises, stimulating economic development and creating employment opportunities in Russia. The group cares about the communities in which it conducts its business, and supports them through a wide range of social projects in the fields of education, sports, arts, science and ecology.

The main shareholders of USM Holdings are Alisher Usmanov, Vladimir Skoch and Farhad Moshiri. Their economic interests are divided 60%, 30% and 10% respectively, while Mr. Usmanov holds 100% of the voting rights with respect to USM Holdings.

Russian Billionaire Usmanov Links Fortune to Partnership [Bloomberg, Feb 6, 2013]

Alisher Usmanov, Russia’s richest man, and two of his long-time billionaire investment partners have joined all of their assets in USM Holdings, a limited liability company based in the British Virgin Islands.

Conceived in early 2012 and completed in December, the new formation holds the trio’s assets in mining, technology, telecommunications and media, and carries a value of more than $29 billion, according to the Bloomberg Billionaires Index.

“We have completed the process of consolidating assets into USM Holdings,” Usmanov, 59, said by e-mail Feb. 5. “The formation of a single holding company enables us to optimize business processes, enhance the efficiency of managing subsidiary companies, and provide more opportunities to access international capital markets.”

According to the company’s website, which went live late last month, USM was established to consolidate the holdings Usmanov has built up during the last 30 years, including closely held Metalloinvest Holding Co., Russia’s largest iron ore producer, publicly-traded mobile phone company MegaFon OAO and Internet company Mail.Ru Group Ltd., as well as the technology investments he has made through the DST investment funds.

USM shareholders include Usmanov, who holds 60 percent; Vladimir Skoch, who holds 30 percent on behalf of his son, Russian Duma deputy Andrey Skoch; and Ardavan Farhad Moshiri, an Usmanov adviser of 23 years, who owns 10 percent.

Usmanov and Moshiri continue to hold their shared 29.9 percent stake in London-based Arsenal Football Club Plc separately. Usmanov owns all of newspaper Kommersant outside of USM.

‘One Roof’

Usmanov controls all of USM’s voting rights and also has the ability to block his partners from selling any assets it holds without his consent. He first disclosed his plans for the holding company in April 2012, and released further details of its formation in MegaFon’s preliminary prospectus, which was released in November.

Ivan Streshinskiy, who has helped manage Usmanov’s investments since 2006, was appointed to the USM Holdings board and named chief executive officer of USM Advisors, an affiliated company that will provide advisory services to the holding entity.

“Having all of the assets under one roof makes it easier to manage them and value them,” Kirill Chuyko, head of equity research at BCS Financial Group said by phone Jan. 21, explaining the possible reasons for structure.

Longtime Allies

The two minority partners acquired their stakes in USM by swapping their existing equity in holding companies controlled by Usmanov and making a cash investment. After the transaction, Usmanov has a net worth of $21.4 billion, according to the Bloomberg Billionaires Index, while Moshiri controls a $1.7 billion fortune. Skoch is valued at $6.2 billion.

Rollo Head, a spokesman for Moshiri at London-based RLM Finsbury, said Moshiri declined to comment on his net worth. Albert Istomin, a spokesman for Skoch, declined to comment on the net worth calculation. Usmanov also declined to comment.

Usmanov first met Andrey Skoch in 1992, when he was importing cigarettes to Russia and Skoch was working as an oil trader. At the time, the country was suffering from a deficit of consumer goods, which enabled Usmanov to build a thriving trade business.

He and Skoch purchased metal and mining assets during and after the country’s chaotic privatization years, including a steel plant in the Belgorod region, central Russia, and iron ore producer Lebedinsky GOK. In 2006, after buying Mikhailovsky GOK from Georgia’s current prime minister, billionaire Bidzina Ivanishvili, they created Metalloinvest, now Usmanov’s most valuable asset.

Government Ally

Usmanov’s rise to prominence was boosted in the early 2000s, when he proved to be an ally to the new government led by Russian President Vladimir Putin. As head of Gazprominvestholding, the investment arm of Russia’s gas monopoly OAO Gazprom, Usmanov helped negotiate the return of assets to state-run Gazprom that had been moved out of the company under previous management.

In 1999, Skoch was elected as a deputy of the State Duma, Russia’s main legislative body, representing the Belgorod region. He later transferred the fortune he had built to his father, Vladimir, shielding himself from public criticism. He was re-elected to the Duma four times.

Iranian Emigrant

Moshiri, an Iranian emigrate to London who now resides in Monaco, first met Usmanov in 1989, and has served as Usmanov’s financial consultant ever since. Through the years, he earned shares in some of Usmanov’s most important assets, including Metalloinvest, MegaFon and Arsenal.

The former accountant, who is a British citizen, resisted Usmanov’s diversification into technology investments, which began in 2008, using billionaire Yuri Milner’s DST funds.

“Moshiri also didn’t believe in the prospects for investments in Facebook and Groupon,” said Usmanov in an April 2012 phone interview with Bloomberg News.

His hesitation did not prevent Usmanov from allowing him the chance to participate, which has given Moshiri holdings through DST in publicly-traded Facebook Inc., Zynga Inc. and Groupon Inc., as well as other investments in a number of closely-held technology companies, including Twitter Inc.

USM did not disclose how much Moshiri and Skoch may have paid to make those investments, or their exact stakes.

New Valuation

The new holding company requires a revised method for the Bloomberg ranking to calculate the net worth for Usmanov and Moshiri, and established a valuation for Skoch’s fortune.

Prior to the transaction, Usmanov and Moshiri controlled half of Metalloinvest through Cyprus-based Gallagher Holdings Ltd., which has since been renamed USM Steel & Mining Group Ltd. That stake was combined with the 30 percent held by Skoch. The remaining 20 percent of Metalloinvest was bought back by the company from Moscow-based OAO VTB Bank at the end of 2012 through debt financing, consolidating all of the company under the control of USM.

Further details on the debt financing will be provided when Metalloinvest releases its earnings in April, the company said.

Alisher Usmanov: Uzbek eyes a prize listing [Financial Times, Nov 16, 2012]

The billionaire businessman reflects the new style of oligarch that puts a premium on loyalty and predictability

When Alisher Usmanov met Lloyd Blankfein on the sidelines of the St Petersburg Economic Forum in June, the two men appeared to strike up a rapport. The Uzbek-born billionaire and the chairman of Goldman Sachs discussed the planned initial public offering of Megafon, the mobile phone company owned by Mr Usmanov, say people familiar with the conversation. Mr Blankfein courted Mr Usmanov, one of Russia’s most powerful and best-connected businessmen, for an insight into upcoming deals.

Within months, everything had changed. By early October, Goldman had dropped Mr Usmanov and the Megafon deal, throwing a spanner in the company’s IPO plans and launching a storm of bad publicity around Mr Usmanov personally.

Goldman declined to comment on its reasons for quitting the IPO. Morgan Stanley, Sberbank, Citigroup, Credit Suisse and VTB are still working on the deal, which began formal marketing on Thursday after receiving delayed approval from the UK regulator, which appeared to have been shaken by Goldman’s exit.

Should the deal, which could raise as much as $2.1bn, go through, it would be the biggest flotation by a Russian company in nearly three years. If it flops, it will be another setback for Mr Usmanov, a symbol of a class of powerful Russian businessmen who work closely with the state, and his plans to take his empire public.

Businessmen close to the 59-year-old oligarch say he was dumbstruck by Goldman’s move. In his world, loyalty and predictability are prized above all else, and it is partly because of his strict adherence to such a code that he has risen so far in the Russia of President Vladimir Putin.

Today’s oligarchs are not the brash, buccaneering variety of the 1990s, who wielded both wealth and influence in Boris Yeltsin’s Kremlin. Putin-era billionaires such as Mr Usmanov are expected to respect state power in order to thrive.

It was in this context that Mr Usmanov – worth $18bn, according to Forbes – bought the art estate of cellist Mstislav Rostropovich and then donated it to the state. It was also for that reason, analysts say, that he agreed to take a stake in Megafon, interceding in a years-long shareholder feud that was damaging Russia’s investment climate.

“Usmanov is known as a person able to resolve delicate situations to the satisfaction of all the parties,” says Ivan Streshinsky, a long-time associate.

That is not all he is known for. The 45 pages of Megafon’s IPO investor prospectus entitled “Risk factors” includes “media speculation” about Mr Usmanov’s alleged mafia ties and the six years he spent in an Uzbek jail in the 1980s, along with more media speculation that the real owner of a large share in Megafon might be Leonid Reiman, a former communications minister.

This week it also emerged that a public relations firm had tampered with Mr Usmanov’s Wikipedia page to remove mention of an incident in which the billionaire had allegedly threatened bloggers who repeated allegations that he was a “gangster and racketeer”, and also edited out mentions of his jail term.

Mr Usmanov and his partners deny issuing such threats, deny having any ties to organised crime groups, and he and Megafon’s management deny Mr Reiman is a shareholder. Andrei Skoch, a long-time friend and business partner, blames Mr Usmanov’s fraud conviction in 1980 on enemies of his father, a local Uzbek prosecutor. The criminal charges were overturned in 2000.

The criminal conviction did dash Mr Usmanov’s dreams of a career as a diplomat moving between the world’s capitals, an ambition forged in a remote corner of central Asia in his native Uzbekistan, where he was born in 1953 in the small city of Chust, a place renowned as home of the traditional Uzbek skullcap.

Once out of jail Mr Usmanov built up a number of small businesses before consolidating some of Russia’s biggest metal and steel holdings into holding company Metalloinvest in 2006. Since then he has expanded outside Russia: acquiring stakes in internet groups such as Facebook and Groupon, and buying properties and trophy sporting assets in London as well as some of Russia’s most prestigious media properties.

Some international ventures have been less than happy. At Arsenal, the English Premier League football club in which he holds a near 30 per cent stake, he has waged a running battle with the board, criticising strategy and complaining that the best players have been let go.

Football is one of his passions, along with opera, ballet and fencing.

His approach to business involves close attention to detail. Despite poor eyesight, he is said to read up to 300 pages of analytics, reports and news items a day that are tirelessly rewritten into Russian by a retained group of round-the-clock translators.

Close links to the Kremlin have not harmed his prospects, say analysts. In 2009, at the height of the financial crisis, Metalloinvest received Rb61bn in bailout loans from state bank VTB, allowing Mr Usmanov not only to emerge from the crisis unscathed but also in the same year to spend $200m on a 2 per cent stake in Facebook through Digital Sky Technologies, a company in which he is a shareholder.

Associates say any political connections are normal. “With the scale and size of his business it would be misleading to say he has no relationship with the authorities – just like any major business leader in the world,” says Mr Streshinsky.

But Mr Usmanov’s political allegiances came under scrutiny last year when he fired two executives at his news weekly Kommersant Vlast because of a cover, published at the peak of mass anti-government protests in Moscow, that featured an obscene comment about Mr Putin.

Critics saw this as trampling on editorial freedom. Friends say he acted for reasons of taste. “He’s an old-fashioned guy. This overstepped the bounds of decency,” says Mr Streshinsky. “This has nothing to do with freedom of speech”.

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The ‘Facebook Corruption’ accusations via a U.S. Congress Representative:

• Briefing For Representative Jim-Jordan [better to use PDF from Leader]
  CORRUPTION OF US FINANCIAL SYSTEMS and COURTS Oct 19, 2012

…

in addition a page from Who is Lawrence “Larry” Summers? [FB Cover-up opinion blog, Jul. 31, 2013]