Telefonica confident of Chinese relationship

19 Jun 2008

According to an interview in the Financial Times with Cesar Alierta, chairman of Telefonica, the Spanish telco is confident that it will become the strategic partner of China Unicom, China’s second mobile phone operator. The Spaniard told the British broadsheet he hoped to secure a 10% stake in China Unicom following a sweeping restructuring of China’s state-controlled telecoms industry. As it stands, Telefonica has invested around USD1 billion on a 7.22% stake in China Netcom, China’s second largest fixed line company. However, China Unicom is due to acquire China Netcom later this year in an all-share transaction. Telefonica’s stake in the enlarged company will be diluted to about 3%, but Mr Alierta said Telefonica is ‘very well placed’ to become China Unicom’s strategic partner. Asked how big a stake Telefonica was seeking in Unicom, Mr Alierta replied: ‘Anything that approaches 10% for us would be excellent.’ SK Telecom, South Korea’s leading mobile operator, currently has a 6.6% stake in China Unicom which will be diluted to about 4% post-merger. SK Telecom told the FT that it had no plans to sell its stake in China Unicom, but admitted it was exploring other opportunities, including China Telecom.

China, China Netcom, China Unicom, Telefonica