China Unicom and Telefonica have agreed to broaden their alliance through an initial deal to buy equity stakes in each other worth USD1 billion apiece, writes the Financial Times. It is the first time a Chinese telco has taken an equity stake in a European operator. The Spanish company said in a regulatory filing that it would increase its holding in the Chinese operator to just above 8%, from the current 5.4%. The move is aimed at rebuilding the presence it had in China Netcom, the fixed line operator absorbed by Unicom as part of a broader restructuring of China’s telecoms sector last year. Unicom, meanwhile, will take 0.9% of the Spanish company. Unicom hopes to use its strengthening alliance with the Spanish group to enter Latin America, where China is forging relationships to secure supplies of metals and hydrocarbons.
The companies said on Sunday they had reached agreement on a ‘broad strategic alliance that includes cooperation in infrastructure and equipment purchasing, joint development of mobile services platforms, the provision of services to multinational clients, roaming and research and development’. Telefonica has agreed to pay HKD11.17 a share for new equity to be issued by Unicom. The China group has agreed to pay EUR17.24 a share for its Telefonica stake: Telefonica has yet to decide whether to issue new shares or use treasury stock. The two groups have also agreed not to issue, offer or sell significant stakes, or invest heavily in any of their main competitors. SK Telecom, which owns about 3.8% of Unicom, is still studying Telefonica’s move and had no official reaction, according to spokeswoman Lauren Kim.