Linktone to Acquire Beijing Cosmos Digital Technology, a Leading Provider of Next-Generation WAP Services for China Unicom
Latitude Capital Group Acted as the Financial Advisor to Linktone on the Transaction
2005-01-12

SHANGHAI, China, Jan. 12 /Xinhua-PRNewswire/ - Linktone Ltd. (Nasdaq: LTON - News), a leading provider of wireless value-added services (WVAS) to mobile phone users in China, today announced the signing of a definitive agreement to acquire Beijing Cosmos Digital Technology Co. Ltd. (Cosmos Digital). Cosmos Digital is a leading privately-held provider of next-generation Wireless Application Protocol (WAP) services to China Unicom, one of the two major mobile operators in China. With this strategic acquisition, Linktone expects to strengthen its overall WAP service portfolio and development capabilities, increase its share of the rapidly growing 2.5G WVAS market, and enhance its relationship with China Unicom. Linktone's business with China Unicom accounted for 13% of its gross revenues for the third quarter ended September 30, 2004.

According to China Unicom, Cosmos Digital ranked #6 in revenue contribution among all WAP WVAS providers on its nationwide network in December 2004, up from #10 in June 2004. Cosmos Digital's monthly revenues grew an average of 18% per month sequentially during the second half of 2004.

Cosmos Digital offers 24 types of services on China Unicom's WAP network menu, including a broad portfolio of ringtone and picture products, chat applications, infotainment services, and Korea-licensed games on WAP and BREW, the principal wireless data technology platform of China Unicom. Headquartered in Beijing, Cosmos Digital has an experienced management team and a staff of approximately 40 dedicated WAP and BREW product development and marketing professionals. Following the close of the acquisition, Linktone plans to integrate Cosmos Digital's operations as a wholly-owned subsidiary.

The definitive agreement calls for Linktone's acquisition of 100% of the outstanding shares of Cosmos Digital in cash, which will be paid from the Linktone's existing cash reserves. Linktone currently expects the transaction to close in February 2005, subject to required China regulatory approval and other customary closing conditions. Linktone anticipates that the acquisition of Cosmos Digital will be accretive to earnings for fiscal year 2005. The financial terms of the definitive agreement between Linktone and Cosmos Digital have not been disclosed.

"The acquisition of Cosmos Digital is an exciting strategic step for Linktone that supports our continued expansion into next-generation wireless services and reflects the importance of mergers and acquisitions as an integral part of our overall growth strategy," said Raymond Yang, chief executive officer of Linktone. "In targeting acquisition candidates, our goal is to add proprietary technology and applications that will leverage Linktone's nationwide mobile distribution platform. We believe that Cosmos Digital's core competencies in WAP and operating history with China Unicom will be highly complementary to our existing business."

About Linktone Ltd.
Headquartered in Shanghai, Linktone Ltd. is a leading provider of wireless value-added services to mobile users in China. Working in close partnership with China's mobile operators, Linktone provides a diverse portfolio of wireless content and applications, with a particular focus on media, entertainment and communications. Through in-house development and alliances with international and local branded content partners, the company develops, aggregates and distributes innovative and engaging products for its growing user community.

This press release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including: the risk that this or any future acquisition will not create the operational and financial results that Linktone's management and board of directors expects, including in particular the possibility that this acquisition may not: (i) be accretive to earnings in any future period, (ii) strengthen Linktone's overall WAP service portfolio and development capabilities, and (iii) increase its share of the 2.5G WVAS market or enhance its relationship with China Unicom; the risk that Cosmos Digital may not be able to maintain its rankings on China Unicom's nationwide WAP network for whatever reason; the risk that this and any future acquisition could divert management's attention from the core operations of Linktone's business, which could adversely affect its results of operations; and the risks outlined in our filings with the Securities and Exchange Commission, including our registration statement on Form F-1. We do not undertake any obligation to update this forward-looking information, except as required under applicable law.

For more information, please contact:

Investor And Media Relations
Jie Chen of Linktone Ltd.
Tel: +86-21-6361-1583
Email: jie.chen@linktone.com