China's top internet companies have agreed to invest in telecom operator China Unicom, marking a new step in opening up the state-controlled telecom sector to outside investment. China Unicom said it will sell around CNY 78 billion (EUR 10 billion) in new shares, giving the strategic investors a combined 35 percent stake in the group. The new investors include Tencent, Alibaba, JD.com, Baidu, Didi Chuxing and Suning, as well as financial and industrial companies from China.
In addition to the sale of around 9 billion new shares to the investors, Unicom plans to issue 850 million shares at a discounted price to employees as part of a new share-based incentive scheme. This would leave around 2.7 percent of shares in the hands of employees, 35 percent with the new strategic investors and just over 25 percent publicly traded on the stock market. The state holding company's stake would drop from 62.7 percent to 36.7 percent.
The other new investors include the financial services companies China Life and CRRC, industrial groups Eastone, Kuang-Chi and Yonyou, and the specialist investment funds Qianhai Fof and China Structual Reform Fund. They will also receive representation on the company's board. In addition, the new investors are expected to help Unicom develop services in new areas, such as IoT and system integration verticals, retail distribution, content development, big data and payments.
The proceeds from the investment will go to developing the company's 4G network and preparing for the launch of 5G. Unicom said it's received approval for the new ownership structure from the National Development and Reform Commission. It will hold a shareholders meeting as well once it decides on the structure of the share issue.
