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Telefónica, China Unicom enter broad strategic and investment alliance

Telefónica, Europe’s leading carrier by market cap, is set to increase its interest in China Unicom to above 8%, while China Unicom will become a Telefónica shareholder with an approximately 0.88% stake. This broad strategic deal is intended to reinforce both operators’ market positions: a combined 550 million customers and nearly 10% of the global population...

Telefónica and China Unicom have entered into a strategic alliance agreement whereby both will cooperate in such joint business areas as acquisition of infrastructure and equipment for customers,  development of wireless service platforms, provision of services to multinational enterprises, roaming, R&D, the sharing of best practices and technical, operational and management expertise, development of a set of strategic initiatives within the framework of network and technology development, and establishing an exchange programme for their managers.

In addition, both parties have also entered into a subscription agreement. China Unicom and Telefónica have invested US$1 billion in each other through share acquisition. China Unicom’s shareholding in Telefónica is approximately 0.88% and Telefónica’s shareholding in China Unicom has increased to approximately 8% from 5.38%.

After the signing of the two agreements, Telefónica Chairman César Alierta revealed some of his intentions: “We are delighted with this alliance, which will bolster both of our companies’ leadership positions, giving us a combined global customer base of nearly 550 million. We are fully committed to the alliance and will exploit the synergies offered by this far-reaching cooperation to benefit our shareholders and customers alike, making us bigger and more diversified so we can continue to compete globally by offering convergent solutions and best practices.”

Chang Xiaobing, Chairman of China Unicom, showed a glimpse of his strategy for 3G: “We are pleased to see that the strategic partnership between China Unicom and Telefónica has been further deepened on the current basis. Both of the companies are major full spectrum services carriers in their respective market, and both have third-generation mobile communications business under WCDMA standard. We are looking forward to enhancing the partnership and achieving a win-win situation for both parties. We believe that the partnership will help improve our capacities to provide extensive telecommunication and information application services, and maximise shareholders’ return”.

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