Ideanomics Inc (NASDAQ: IDEX) announced Thursday that its Mobile Energy Group (MEG) has entered into a deal with Zhongsen Tower whereby both parties will establish the leading 5G and IoT infrastructure service provider in Qingdao, China.
The deal represents the official launch of MEG's Energy Services Unit and paves the path for MEG to grow its most potentially lucrative division, the company said in a statement.
Under the terms of the deal, MEG will own 30% of the venture, making it the largest co-shareholder.
Additionally, as a significant shareholder of Zhongsen Tower, MEG will be able to capture both recurring rental sales revenue as well as energy sales from powering the base stations.
Ideanomics noted that MEG's business model is based on sales to financing to charging (SFC). While the market opportunities for electric vehicle (EV) sales and financing are substantial, the charging-based energy sales or energy services market opportunity is larger and has reoccurring revenues.
According to Zhongsen Tower, some six million base stations are needed for China's 5G nationwide network deployment. Through MEG's deal with Zhongsen Tower, MEG has taken a significant step to monetize its energy sales by powering Zhongsen's base stations.
Base stations are critical components to new energy infrastructure as they are at the heart of enabling all things technology-driven such as smart cities, smart shipping ports, IoT, and IoV, among others.
Zhongsen Tower offers a broad array of services including the build-out of 5G tower infrastructure, as well as leasing and financing of supporting infrastructure. It is affiliated with a division of China Tower Holdings, which was ranked 71st in the Forbes Top 100 Digital Companies List and 22nd in the Fortune Future 50 in 2019.
Zhongsen's partners include prominent companies such as China Mobile, China Telecom, China Unicom, China Power Construction, China Railway Construction, State Development Bank, CITIC, China Life, China Agriculture Bank, China Merchant Bank, China State Construction Engineering Corporation, and China Electric.
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