Unicom, Telefonica plan new $1b share swap

Dylan Bushell-Embling
24 Jan 2011
00:00
News
Daily News

China Unicom will extend its alliance with Telefonica by executing an agreement whereby each company will acquire $500 million worth of the others' shares.

Unicom said it will increase its stake in Telefonica to 1.37%, purchasing 21.8 million shares at €17.16 ($23.38) each.

Telefonica will meanwhile purchase Unicom shares from third parties at market prices, lifting its holding to an expected 9.7%.

Telefonica will also propose adding a Unicom representative to its board. Telefonica chairman Cesar Alierta already has a seat on the Unicom board.

The operators already co-operate on procurement and roaming and in areas such as platforms and wholesale carriers, and plan to deepen this collaboration.

Alierta said the two companies share a combined customer base of 590 million people, roughly 10% of the world's population.

He toldDow Jones that China's mobile market was growing at a rate equivalent to Spain's entire population every six months.

Telefonica and Unicom have had a strategic alliance since 2009, when each invested $1 billion in the other. This deal marked the first time a Chinese telco cross-invested in a foreign operator. Telefonica held over 5% of Unicom prior to the transaction.

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