Tuesday, 26 September 2017

China Unicom confirms Alibaba, Baidu, Tencent as new shareholders

By Nick Wood, Total Telecom
Wednesday 16 August 17

Telco expects to raise €9.5 billion from group of 14 investors; will use funds to upgrade 4G network, implement 5G strategy.

As expected, China Unicom on Wednesday confirmed that Web giants Alibaba, Baidu, and Tencent are among more than a dozen companies that will invest a combined 74.72 billion yuan (€9.53 billion) in the operator in a bid to revive its fortunes. Alibaba rival JD.com and ride-hailing firm Didi are part of the group as well (see below for a full list). China Unicom said it expects net proceeds to come in at CNY61…

As expected, China Unicom on Wednesday confirmed that Web giants Alibaba, Baidu, and Tencent are among more than a dozen companies that will invest a combined 74.72 billion yuan (€9.53 billion) in the operator in a bid to revive its fortunes.

Alibaba rival JD.com and ride-hailing firm Didi are part of the group as well (see below for a full list).

China Unicom said it expects net proceeds to come in at CNY61.73 billion. It will use the funds "for upgrading 4G capabilities, technology validation and enablement of 5G network related technologies," it said. It will also "launch trial programmes in relation to the 5G network and develop innovative businesses, so as to further enhance the core competitiveness of Unicom."

Under the plan, China Unicom will issue the new investors with 9.04 billion new shares and 1.90 billion existing shares priced at CNY6.83 each, giving the new shareholders a combined 35.2% stake in the company. It has also proposed to grant select employees 848 million restricted shares, priced at CNY3.79 each.

The total amount of capital raised by issuing new and existing shares to the new investors comes in at CNY74.72 billion. The restricted shares granted to select employees brings the total up to CNY77.91 billion.

Unicom "also proposes to introduce new state-owned and non-state-owned shareholder representative directors to serve as directors of Unicom...so as to further optimise the diversified composition of the board," China Unicom said.

Wednesday's announcement is the culmination of months of speculation about which companies might take a stake in China Unicom.

The operator is among several state-owned enterprises (SOEs) included in the government's mixed-ownership reform programme, which aims to improve their efficiency by diversifying their ownership structures.

The announcement was made the same day that China Unicom published its interim results.

As previously warned, revenue for the six months to 30 June fell to CNY138.16 billion (€17.61 billion) from CNY140.26 billion a year ago; service revenue increased 3.2% year-on-year to CNY124.11 billion. EBITDA increased 5.5% to CNY43.56 billion, while net income surged 68.9% to CNY2.42 billion.

China Unicom added 34.26 million 4G subscribers during the first half, giving it 138.81 million overall. Its total mobile subscriber base stood at 269.45 million.

China Unicom's new shareholders

Alibaba (e-commerce giant)
Baidu (Internet search provider)
China Life (insurer)
China Structural Reform Fund (state-owned investment fund for reforming SOEs)
CRRC (rolling stock manufacturer)
Didi (ride-hailing service)
EastOne (investment advisor)
JD.com (e-commerce company)
Kuang-Chi (technology conglomerate)
Qianhai (fund of funds)
Suning (retail giant)
Tencent (Internet giant)
Wangsu Science and Technology (content delivery, data centre services provider)
Yonyou (software company)

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