China Unicom and Telefónica deepen relationship

Spanish incumbent Telefónica has struck a deal with China Unicom that will see each company invest $1bn in the other. The arrangement will take Telefónica’s stake in Unicom to more than eight per cent, while the Chinese carrier will own roughly 0.9 per cent of Telefónica.

The two firms, which both operate fixed and mobile networks, have a combined customer base of 550 million, across China, Europe and Latin America.

Telefonica had previously held a 5.4 per cent stake in China Netcom, which was merged with China Unicom under government mandate last year. This latest deal represents the first time a Chinese telecoms firm has invested in a European counterpart.

Both WCDMA carriers, they have committed to co-operation in a number of areas, including infrastructure and handset procurement, wireless service platform development, enterprise solutions for large multinationals, general R&D, roaming, some unspecified strategic initiatives and an exchange programme for employees.

Read’s profile of César Alierta Izuel, chairman of Telefónica

Telefónica Chairman César Alierta described the deal as “far reaching”, adding that the two firms would be made “bigger and more diversified so we can continue to compete globally by offering convergent solutions and best practices.”

“We believe that the partnership will help improve our capacities to provide extensive telecommunication and information application services, and maximize shareholders’ return,” said Chang Xiaobing, chairman of China Unicom.

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