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China Digital TV CEO Discusses Q3 2010 Results - Earnings Call Transcript

As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on China Digital TV’s investor relations website. I will now turn the call over to China Digital TV’s president, Mr. Li.

Dong Li

Thank you, Henry. Hello everyone.

We are pleased to report that in the third quarter we achieved 21.1 million US dollars in revenues, exceeding our high-end guidance and hitting a record high. Encouraged by government policies related to three network convergence and ongoing industry consolidation, we saw Chinese cable operators continuing to accelerate investment in digitalization projects over the quarter. As a result of the active industry environment, we shipped about 3.95 million smart cards in the third quarter. At the same time, we expanded our lead over competitors, capturing about 55% market share in CA card shipments during the quarter, according to data compiled by an independent market research firm.

I would like to take you through some policy updates before turning to the operational results.

During the last quarter, the 12 pilot cities and regions in the three-network convergence project submitted their convergence plans to the central government. The plans covered both practical implementation and industry supervision issues. At the same time the national tax bureau published a tax incentive notice, granting digital cable operators in 11 provinces including Shanghai, Chongqing and Jiangsu, exemptions from business tax for three years beginning 2010 for their basic digital TV subscription revenues. We believe this policy will further encourage cable operators to promote digitalization.

We believe China Digital TV is well positioned for long-term development in China’s pay-TV industry with its broad operator customer base, deep understanding of the industry and advanced content protection technologies. In our view, for the fourth quarter of this year and the first half of 2011, operator demand for CA products will remain relatively strong.

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