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21Vianet Group, Inc. Announces Strategic Joint Venture With Dongguan Government

Stocks in this article: VNET

BEIJING, Sept. 4, 2013 (GLOBE NEWSWIRE) -- 21Vianet Group, Inc. (Nasdaq:VNET) ("21Vianet" or the "Company"), the largest carrier-neutral internet data center services provider in China, today announced that it has entered into a strategic joint venture with the Dongguan Municipal People's Government in Guangdong province ("Dongguan Government") to jointly build a new Internet data center, provide cloud computing related services in Dongguan as well as create a joint-R&D team that will focus on developing and implementing next generation networking technologies. These advanced technologies include Content-Centric Open Networking ("CCON"), also known as information-centric networking, Software-Defined Networking ("SDN") technologies as well as the development of a China-wide ecosystem that leverages cross connection capabilities.

Through a series of agreements, 21Vianet's subsidiary and consolidated affiliated entities have entered into a joint venture with the Dongguan Government and Dongguan Government's investment arm, Dongguan Dongcai Investment Holdings Limited ("Dongguan Dongcai"). Through these agreements, 21Vianet and Dongguan Dongcai will invest RMB900 million and RMB100 million in return for a 90% and 10% equity interest in the joint venture company, respectively. In addition, Dongguan Government will provide 21Vianet an initial RMB900 million loan at 4% interest for a term of two years. The money will be held in escrow for registered deposit purposes for applying for any necessary licenses. The Company believes that the interest expense will be offset by the interest income received from the deposit in the custodian account and from local government subsidies. 

Mr. Frank Meng, President of 21Vianet, stated, "In an effort to expand and diversify our client offerings in China we are very excited to partner with the Dongguan Government for the development of a new IDC in southern China as well as co-develop and implement next generation networking technologies in our data centers nationwide. Most importantly, customers will be connected through an advanced open network that is more reliable, faster, flexible and economical than China's traditional network architecture, further strengthening our position as a leading internet infrastructure and data center services provider in China." 

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