Unicom, Telefonica plan new $1b share swap

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 told Dow 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.