The Ottawa fiber-to-the-home provider will pay US$3.5 million in cash and $1 million in equipment towards the initial capital investment of $18 million, earning a 49-per-cent ownership stake in the venture.
Dubbed Sunsea-Enablence Optoelectronics, the joint venture is expected to garner $8 million to $10 million in revenues in its first year (between July 2011 and June 2012), and $15 million to $20 million in its second year.
"The Chinese market is still in the initial stages of a growth curve for broadband access equipment that is staggering," stated Wensheng Wang, chairman and chief executive of SUNSEA.
"And yet, until now, China's domestic telecommunications companies have had to rely on foreign suppliers for advanced ... components. We welcome the opportunity to work with Enablence and integrate its innovative optical solutions into our product lines."
SUNSEA is pegged as one of the top developers and manufacturers in its country. In October, it said it expects its fiscal year profits for 2010 to increase 30 per cent to 50 per cent over its fiscal 2009 result, US$10.9million.
Enablence has worked in China before. Past activity this year includes a $20-million equipment reseller agreement with Dalian Huanyu Sunshine Group.
Earlier this month, Enablence closed a $21.2-million public offering in a bid to raise cash.
During the summer, chief executive Tim Thorsteinson said the company had a "disappointing and challenging" fiscal 2010, with its $14 million revenue for the final quarter falling $1 million below market expectations.
The company is expecting more customer growth in 2011 through its $50-million acquisition this year of Teledata Networks, an Israeli firm.
At the time of the merger, the local firm said the merger would help Enablence garner new customers in Brazil, China, Russia and Eastern Europe – areas where Teledata already had traction.
