China Unicom has reached an agreement with several major Chinese technology companies — including Tencent, Baidu and Alibaba — that will bring a combined investment of $11.7 billion (£9.1 billion) into the operator.
Ten investors, a mix of private and state-backed firms, will acquire slightly more than 35% of the shares in China United Network Communications (Unicom A Share Company), the publicly listed subsidiary. As a result, China Unicom’s stake in the listed unit will fall from above 62% to 36.67%.
According to China Unicom, the strategic investors’ businesses are highly relevant to and complementary with the listed company’s core operations. The company said the transaction is expected to strengthen collaboration around network assets, customer bases, data operations and marketing services.
China Unicom added that Unicom A Share Company will form deep strategic partnerships with the newly introduced investors across a range of technology and service areas. These include cloud computing, big data, the Internet of Things (IoT), artificial intelligence, connected-home services, digital content, retail systems and payment and financial services.
Baidu confirmed in a brief statement that it participated in the share purchase agreement. “In connection with the investment, Baidu has entered into a business cooperation agreement with China Unicom,” the company said, noting the transaction is part of China Unicom’s mixed-ownership reform pilot program.
Earlier, China Unicom had denied any definitive deals with Tencent and Alibaba despite recent collaborations with both companies. Reporting at the time suggested that although the operator publicly downplayed the arrangements, the formation of operating centers with Alibaba and Tencent made it likely that the two firms would become new shareholders.
The move comes as part of broader changes in China’s telecom sector, which is dominated by three operators: China Telecom and China Unicom offering both fixed-line and mobile services, and China Mobile focusing primarily on mobile. China Mobile recently faced criticism from analysts — Morgan Stanley issued a downgrade last month, and Jefferies analyst Edison Lee highlighted challenges for the company around Internet of Things standards.
China Unicom has released a full announcement detailing the transaction and related plans.
Picture credit: “China Unicom”, by “Cliffano Subagio”, used under CC BY SA 2.0 / Modified from original