PARTNERS CHRISTOPHER W. BETTS GEOFFREY CHAN * SHU DU * ANDREW L. FOSTER * CHI T. STEVE KWOK * EDWARD H.P. LAM ◆* HAIPING LI * RORY MCALPINE ◆ JONATHAN B. STONE * PALOMA P. WANG ◆ (ALSO ADMITTED IN ENGLAND & WALES) * (ALSO ADMITTED IN NEW YORK)
REGISTERED FOREIGN LAWYER Z. JULIE GAO (CALIFORNIA) |
SKADDEN, ARPS, SLATE, MEAGHER & FLOM 世達國際律師事務所
42/F, EDINBURGH TOWER, THE LANDMARK 15 QUEENS ROAD CENTRAL, HONG KONG
TEL: (852) 3740-4700 FAX: (852) 3740-4727 www.skadden.com |
AFFILIATE OFFICES - BOSTON CHICAGO HOUSTON LOS ANGELES NEW YORK PALO ALTO WASHINGTON, D.C. WILMINGTON - BEIJING BRUSSELS FRANKFURT LONDON MOSCOW MUNICH PARIS SÃO PAULO SEOUL SHANGHAI SINGAPORE TOKYO TORONTO |
June 9, 2020
VIA EDGAR
Mr. Larry Spirgel, Assistant Director
Mr. Michael C. Foland, Attorney Adviser
Mr. Robert Littlepage, Accounting Branch Chief
Mr. Charles Eastman, Staff Accountant
Office of Technology
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, D.C., 20549
Re: | UCLOUDLINK GROUP INC. (CIK No. 0001775898) |
Response to the Staffs Comments on the Amendment No. 4 to
Registration Statement on Form F-1 Filed on June 5, 2020
Dear Mr. Spirgel, Mr. Foland, Mr. Littlepage and Mr. Eastman:
On behalf of our client, UCLOUDLINK GROUP INC., a foreign private issuer organized under the laws of the Cayman Islands (the Company), we submit to the staff (the Staff) of the Securities and Exchange Commission (the Commission) this letter setting forth the Companys response to the verbal comment received from the Staff on amendment no. 4 to the Companys registration statement on Form F-1 filed on June 5, 2020 (the Revised Registration Statement). The dictated comment is presented in bold and followed by the Companys response. Capitalized terms used but not otherwise defined herein have the meanings set forth in the Revised Registration Statement.
U.S. Securities and Exchange Commission
June 9, 2020
Page 2
Concurrently with the submission of this letter, the Company is filing herewith amendment no. 5 to the Companys registration statement on Form F-1 (the Revised Registration Statement) including certain exhibit thereto and a free writing prospectus relating to the changes reflected in the Revised Registration Statement via EDGAR with the Commission.
Verbal comment on June 8, 2020
1. | In relation to response to comment 2 in the last comment letter, we noticed service revenue decreased as a percentage of revenue before the COVID-19 outbreak. Please explain the reason and whether this trend may continue regardless of the virus outbreak. |
The Company respectfully advises the Staff that the decrease in the percentage of its revenues from services from 2017 to 2019 was primarily due to the increasing demand from the Companys business partners of the Companys PaaS or SaaS services, which drove up sales of terminals that the partners operate on the Companys platform to utilize its PaaS or SaaS service, while the business partners procured data traffic allowance from local sources given their existing business relationship instead of from us. During the first quarter of 2020, the impact of the COVID-19 pandemic, which has caused a decline in our revenues from international data connectivity services, further contributed to the trend.
Excluding the impact of the COVID-19 pandemic, the Company cannot feasibly predict the future trend with certainty, since the percentage of revenues from services will depend on multiple factors that cannot be ascertained at the moment. For example, after the business partners purchase the Companys PaaS or SaaS service and the related terminals to utilize such service on the Companys platform, the business partners may or may not purchase the Companys data connectivity services depending on the business partners cooperation with local MNOs and carriers, and as a result, the availability and pricing of mobile data traffic. Such availability and pricing may differ from region to region, and partner to partner. Moreover, while the Company sees increasing demand for its PaaS or SaaS service, the timing of and the extent to which such increased demand, along with the recovery and growth of data connectivity services, may offset the increase in sales of products is uncertain. Therefore, the Company expects that the percentage of its revenues from services may continue to decrease after the COVID-19 pandemic.
Accordingly, the Company has revised the disclosure on page 96 of the Revised Registration Statement.
* * *
If you have any questions regarding the Companys response, please contact the undersigned by phone at +852 3740-4863 or via e-mail at julie.gao@skadden.com.
Very truly yours, |
/s/ Z. Julie Gao |
Z. Julie Gao |
Enclosures
cc: | Chaohui Chen, Chief Executive Officer, UCLOUDLINK GROUP INC. |
Zhiping Peng, Chairman of the Board of Directors, UCLOUDLINK GROUP INC.
Yimeng Shi, Chief Financial Officer, UCLOUDLINK GROUP INC.
Shu Du, Esq., Partner, Skadden, Arps, Slate, Meagher & Flom LLP
Ricky W Shin, Partner, PricewaterhouseCoopers Zhong Tian LLP
David Zhang, Esq., Partner, Kirkland & Ellis LLP
Steve Lin, Esq., Partner, Kirkland & Ellis LLP